INDUSTRY date. However, there is no statutory formula for compensation. Therefore, each cooperative has discretion regarding the amount and timing of compensation for excess generation.
Is net metering new? Net metering programs have been around nationally since 1983. Since then, 38 states and the District of Columbia put their policies and requirements into law. Additionally, states started passing other laws, such as renewable portfolio standards, that require electric utilities to have certain amounts of their power generated by renewable energy resources, to encourage solar, wind and other forms of alternative energy.
What makes net metering challenging? The basic challenge with net metering is that sometimes the policies require electric utilities to pay high costs for what is often “low-value power.” The reason it’s low-value power is you can’t count on it. There’s no solar energy at night and no electricity from wind during calm weather. Renewable energy advocates argue that net metering rates are a great way to support green power, but utilities say it’s not fair for them to have to buy electricity from a rooftop solar owner at a rate that covers round-the-clock service when that’s not what the homeowner is providing. The results of that imbalance are where the net metering issue gets complicated. One Half Page Horizontal result is that the economics of net metering
create a subsidy for rooftop solar owners paid for by those who don’t have solar panels. The cost difference between buying wholesale electricity at retail rates didn’t matter so much at first, but solar energy is booming, potentially reshaping the effect net metering could have on the energy industry. The number of rooftop solar installations grew 63 percent from 2012 to 2015, according to the National Rural Electric Cooperative Association. As a result of that kind of growth in potential net metering use, many states started rethinking their net metering rules. Another result affects the ability of the utility to plan for its basic job of supplying reliable and affordable electricity. The engineers and accountants who run an electric utility that provides power 24/7 need to place a higher value on dependable electricity, like from a natural gas or coal power plant, than from several homeowners who may or may not be generating electricity when it’s needed. Net metering payments also don’t cover the costs of setting up a billing system, paying taxes or any of the utility’s other fixed costs.
What alternatives are there to net metering? Net metering programs that set the price at wholesale cost are more likely to ensure appropriate levels of compensation for both utilities and consumers who are generating electricity. Also, net billing programs provide a more equitable compensation to the net metered consumer without leaning on other consumers who don’t have solar panels
HOW NET METERING WORKS
Net metering is a billing mechanism that compensates consumers who own private solar panels (or other renewable energy systems) for any excess power that is sent back to the electric grid. A renewable energy system, in this case privately-owned solar panels, converts energy from sunlight into electricity.
The electricity is used to power the home. (It should be noted that solar panels do not provide electricity during a power outage.)
An inverter, which is connected to the electric grid, converts the electricity from direct current (DC) to alternating current (AC) to make it safe for use in homes. If the solar panels produce more electricity than the home needs, the consumer is compensated for excess electricity sent back to the electric grid.
To learn more about how net metering credits and policies work in your area, contact your local electric cooperative.
or other ways to generate power at home. Additionally, NRECA suggests other policies for supporting renewable energy without implementing net metering. Those could include tax credits for installing renewable energy systems and dedicated research funds aimed at lowering costs for alternative energy.
How are electric co-ops supporting renewable energy programs that benefit all consumer-members? Electric cooperatives are leaders in community solar programs that offer their members the opportunity to participate in renewable energy programs that are more affordable and reliable than privately-owned solar panels. Community solar arrays can be sized and priced to fit consumer demand, reducing risks of cross subsidization. With the help of NRECA, co-ops are also working to minimize costs of large solar projects. As the energy industry continues to undergo major changes, whether to technology, renewable energy use or other emerging trends, electric cooperatives continue working with all co-op members to ensure the delivery of the safe, affordable, reliable and environmentally-sustainable energy our communities depend on. The Colorado Rural Electric Association expects legislation in the 2019 session to encourage the development of renewable resources, potentially including net metering. CREA and Colorado’s electric cooperatives supported the legislation to create the current laws regarding net metering and believe they are still appropriate. The law established reasonable thresholds for net metering and allow individual cooperatives flexibility to be as expansive and creative as their consumer-members want to encourage the development of net metering. Paul Wesslund writes on consumer and cooperative affairs for the National Rural Electric Cooperative Association.
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