Net-metering is a tool that’s been used in many states to help incentivize solar, and while homeowners, businesses and solar installers like net-metering (NEM) policies, utilities are having a much harder time liking them. To help address the issues that utilities have with net-metering the Solar Electric Power Association introduced a new report, “Ratemaking, Solar Value and Solar Net Energy Metering—A Primer,“ this week, July 16 that attempts to untangle the often complicated world of net-metering and distributed generation to help all players better understand other stakeholders wants and needs in terms of NEM policy.

"The report highlights the different approaches taken by state regulators for ratemaking, and underscores that there is no 'one-size-fits-all' approach for all situations," explained SEPA President and CEO Julia Hamm.


SEPA contracted with with Cliburn and Associates, LLC to produce 
the report, who consulted with regulators and utilities to create a foundation for constructive and sustainable distributed solar policies and transactions, SEPA said.The heart of the issue is that utilities, particularly publicly traded utilities are challenged by net metering, since it runs counter to the way they’ve done business for more than 100 years in the U.S. Instead of doing large-scale transmission and generation projects, utilities are now having to purchase power from their rate-payers, or at least reimburse them as a credit for the power they put back on the grid under NEM policies. But NEM doesn’t have to be acrimonious to utilities while benefitting home and building owners as well as solar installers.

"SEPA worked with multiple stakeholders representing all facets of the NEM discussion to balance perspectives from across the growing solar distributed generation and net metering markets," said Eran Mahrer, Vice President of Utility Strategy at SEPA. "The goal of the primer is to give readers a common understanding of key industry terms that can benefit discussions aimed at creating a sustainable future for distributed generation."

The report comes as some utilities are starting to see more net-metered customers, sometimes much more than they anticipated. Part of this is because PV prices have fallen so rapidly over the past few years, catching utility companies off-guard with richer incentive programs than they may otherwise have offered. “The debate on NEM policies and impacts is intensifying. Utilities in some regions have observed distributed solar adoption at rates not previously forecast and are now seeing significant amounts of grid-tied solar on their systems,” according to the paper.

“The path forward for distributed solar is not simply mapped; it must be created by a broad collaboration of educated and creative problem solvers,” the report said. While not providing a roadmap for NEM policies, it does make some recommendations for understanding NEM and its value better. “There is some misalignment between traditional cost-of-service ratemaking and the introduction of customer-based strategies (e.g., distributed generation, as well as other demand-side strategies), which are beginning to redefine the utility industry today,” the report said. It called for, among other things, conventional cost-of-service studies to better understand the costs and benefits of distributed solar.