Just What Is Net Metering and Why Are We Spending So Much Time Talking About It?

Solar power produced from all sources in Maine had a historic day in August 2015. Production reached 16 megawatts, or 1% of the power used in Maine. That triggered a Public Utilities Commission review of our renewable energy net metering policy, based on rules adopted in 1998 to encourage renewable energy generation at the time Maine’s electric market was deregulated.

If you’d like a deep dive on the PUC rule, click here and choose Chapter 313, but suffice it to say: absent any intervention from the Legislature, net metering is up for review, and could be eliminated.

Net metering is an interesting policy. Like you were chopping wood all summer to fill the shed, it allows those with solar panels to lay in a supply of electricity for the winter. Essentially the way it works is if you produce more power than you use, your meter can ‘spin backwards’, crediting on-site energy production after your usage is deducted. Formulas vary, but in Maine, we do this on a 12 month basis, which allows one to ‘bank’ in the summer when production is high. Bill credits (not for dollars but for kilowatt-hours) are then available as solar panel production tails off in the winter. As such, for a properly sized solar installation and an energy-efficient household, net metering can dramatically reduce electric bills.

By code, it is not generally allowed to connect the power you make with your solar panels directly to your house. Instead, the electricity must travel into the electrical grid writ large.  This is a safety measure, in the case power goes down – otherwise, an electrician working on reconnecting power to your home could be unexpectedly exposed to the voltage generated by your solar panels. More than 80% of Maine’s solar installations are connected to the grid, and net-metered. That means you are not using your own power behind the meter, but rather becoming an electricity supplier.

Net metering is not perfect. In particular, it is not a policy that works for commercial or industrial users that face a type of electrical service charge called demand charge.  That has held back Maine’s commercial solar industry (for example, installations on big box stores, so common in other parts of the country, are rare here). However, net metering as a policy has worked well for residential and small commercial users with simpler electric bills that are easy to ‘net out’.  And the solar industry is a major source of employment growth. Revision Solar, just one of many Maine-based solar installers, has more than 100 employees, and is putting in hundreds of installations each year.

I’m sure the crafters of the original net metering legislation had no idea that renewable energy would be so successful, and they probably never conceived we would hit the 1% energy cap. However, now that we have arrived there, we are presented with an opportunity to review and make improvements. In an upcoming blog, I’ll discuss the give and take of the various policy considerations that are being discussed, to further the growth of the industry, which employs more than 400 around the State, and develop a wider policy that works for commercial, community, and industrial users, all while holding electric rates down and helping us hedge against the inevitable return of high fossil fuel prices.

Comments

4 Comments

  1. I’m not a constituent in the strictest sense, so take these comments with the proverbial grain of salt. That said, without net metering small scale solar can not exist. It’s important to remember that utility companies,as they are now configured, are not in the business of helping themselves to sell less, so it’s expecting too much of them to support the concept of net metering – and one might argue renewals in general. We need creative new business models that respect the need for profound expansions of renewables while at the same time recognizing that the grid was and is a huge investment. Nyserda, New York States’s very forward thinking energy planning entity, held such a competition a few months ago. It might be interesting to take a look at that result. http://www.nyserda.ny.gov/About/New-York-State-Energy-Plan

    1. Thanks for your comment Lynn. I agree that New York’s REV plan is forward thinking. In the works in Maine, if our coalition can hold together, is a program that I believe will improve upon net metering and also build in a mechanism for community solar farms.

  2. Marty,

    Just a small correction: net metered solar systems in Maine (and elsewhere) ARE typically connected to the load on the customer side of the meter. Net metering just relates to the treatment of the ‘excess’ generation, beyond that which is consumed on site in real time.

    No question net metering is an effective way to get solar built at small scale and the Value of Solar study tells us it is a good deal for all rate payers too. But there is no reason to believe it is the ONLY way to get solar built and to fairly compensate individual customer/generators for their investment. As we contemplate alternatives we just need to be 100% sure that we are treating all customers (existing solar customers, potential new solar customers and non participating customers) fairly. That is a substantial challenge, but not insurmountable, I believe.

    Thanks for your hard work on this important issue.

    ~fortunat