Myths And Facts About Net Metering For Solar Energy

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MYTH: Net Metering Is Costly

  • The Helena Independent Record published a letter from the executive director for governmental affairs at NorthWestern Energy, who wrote that net-metered electric generation from solar panels “is not efficient and very expensive” and “will only increase the cost of electricity to other customers on the system.” [Helena Independent Record1/6/15]
  • The American Enterprise Institute’s Benjamin Zycher wrote in a FoxNews.com op-ed that the adoption of net feeds “more expensive power” into the grid, “and prices are forced up.” [FoxNews.com, 9/24/14]
  • The South Mississippi-based Sun Herald published a reader’s letter that said, “Want your power bill to triple? Then support net metering.” [Sun Herald, 6/30/15 via Nexis]
  • The Las Vegas Review-Journal editorial board wrote: “Let homeowners who want to generate their own power pay full price for solar panels — and subject their surplus power to market conditions. If [public utility] NV Energy’s customers don’t need the solar power, its customers shouldn’t have to buy it. The people deserve energy policies that make power cheaper.” [Las Vegas Review-Journal4/25/15]

FACT: Net Metering Brings Significant Economic Benefits

Environment America Study: Economic Benefits Of Net Metering Outweigh Costs. A report from the Frontier Group for Environment America details the different benefits that arise from net metering. Net metering provides economic benefits to the electric grid, including savings from reduced electricity transmission (net metered solar energy is provided on-site), avoided capital and capacity investment, reduced financial risks, increased grid resiliency, and avoided environmental compliance costs. The report also explains benefits for “the environment and society at large,” including avoided greenhouse gas emissions, reduced air pollution, and increased economic development and job creation. [Environment America, Summer 2015]

Analyses By Multiple Utilities Found Benefits Outweigh Costs. Several studies done by utility and non-utility groups alike found the net benefits of net metering to be approximately equal to, or greater than, its costs.

  • In a report by the Massachusetts Net Metering and Solar Task Force, task force member Eric Krathwohl stated that economic benefits of solar installation exceed $14 billion, or 20 cents/kWh — close to the residential price of electricity in Massachusetts of 19.52 cents/kWh, according to the most recent data from the Energy Information Administration. Further, a report from the Acadia Center on the “value of solar” – which factors in climate benefits — found that the value that solar photovoltaic systems provide to the grid ranges between 22 to 28 cents/kWh, with additional societal benefits of 6.7 cents/kWh. [Mass.gov, 4/30/15; EIA.gov, 7/27/15; The Acadia Center, April 2015]
  • A report carried out by Crossborder Energy for VoteSolar found California’s net metering policies bring $92.2 million in economic benefits per year [Vote Solar, accessed 7/16/15, Crossborder Energy, January 2013]
  • A study conducted by Energy and Environmental Economics for the Nevada Public Utilities Commission found that net metering systems “benefit all ratepayers by a total of $36 million,” including non-participants in the state’s net metering program. [State of Nevada Public Utilities Commission, July 2014]
  • A study by Synapse Energy Economics for the Public Service Commission of Mississippi concluded: “Net metering provides net benefits (benefit-cost ratio above 1.0) under almost all of the scenarios and sensitivities analyzed.” [Synapse Energy Economics, 9/19/14]
  • The Missouri Energy Initiative, a nonprofit association of public and private sector entities, found that “the net effect of net metering in Missouri is positive. This is because, even valuing cross-subsidization effects at their full estimates and including administrative costs as if they were a flow instead of a stock, benefits in every year (2008-2012) are greater than the costs.” [Missouri Energy Initiative, Winter 2015]
  • The Natural Resources Council of Maine (NRCM) reported that a study by the Maine Public Utilities Commission found that the “value of solar power produced in Maine is 33 cents/kilowatt-hour. In comparison, customers who put solar panels on their roofs only receive a credit on their bill worth about 13 cents/kilowatt-hour.” NRCM concluded, “Net-metering is the policy, used in Maine and many states, that allows homes and businesses with solar arrays to be credited for power they provide to the grid at the same rate they pay for power they take from the grid. Electric utilities in Maine and elsewhere have attacked net-metering because they have undervalued the benefits that solar provides. The Maine study, like others conducted around the nation, provides evidence that net-metering is providing a substantial public benefit.” [Natural Resources Council of Maine, 3/3/15]

Environment America: Majority Of Cost-Benefit Analyses Show Positive Benefit. Environment America compiled 11 cost-benefit analyses that have been carried out on solar net metering and found that most show the economic benefits outweighing the costs:

  • All 11 analyses reviewed here found that solar energy brought net benefits to the grid.
  • Eight analyses out of 11 found that the value of solar energy was worth more than the average residential retail electricity rate in the area at the time the analysis was conducted. The three analyses that found different results were all commissioned by utilities.
  • Of these 11 analyses, the median value of rooftop solar energy was 16.90 cents per kWh, compared with an average U.S. residential retail electricity rate of 11.88 cents per kWh in 2012.
  • The studies that estimated lower values for solar energy consistently undervalued, or did not include, important environmental and societal benefits that come from generating electricity from the sun.

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[Environment America, accessed 9/14/15

DOE’s Lawrence Berkeley National Lab: Net Metering Impacts On Retail Rates Will Be “Relatively Modest.” In a report that looked at the financial impacts of net-metered energy on utilities and ratepayers, the U.S. Department of Energy’s Lawrence Berkeley National Lab found that while high use of net-metered solar generation may decrease utility shareholders’ earnings, it will have a “relatively modest” impact on ratepayers. The report examined solar penetration levels that are “substantially higher than exist today” — 10 percent compared to today’s 0.2 percent — and concluded that the “impact of customer-sited PV on average retail rates may be relatively modest (at least from the perspective of all ratepayers, in aggregate).” The report said that utilities and regulators “may have sufficient time to address concerns about the rate impacts of PV in a measured and deliberate manner.” [LBNL, September 2014]

Read the rest of the Myths and Facts For Solar Net Metering at Media Matters

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