Solar Net-Metering: A just Compensation Rate for Renewable Electricity Generation

Several state policy initiatives are being introduced to cripple the just monetary compensation rates for generated solar electricity. The proposed bills will have an impactful negative effect on reaching the climate goals during the coming years.

It is clear that this is not a partisan issue. Whether in California under Democratic Governor Newsom, or in Florida under Republican Governor DeSantis, Investor Owned Utility corporations (IOU) like PG&E, Florida Power & Light, California Edison and Duke Energy are currently lobbying legislatures across the county to establish state policies which would harm the growth of distributed solar PV installations.

A strong grass-roots, bi-partisan effort is needed to fend off these attacks on just compensation rates for generated solar electricity. 

Especially for low and moderate income Americans, the payback time for solar power installations is the deciding factor to “go solar” and produce homemade electricity. The goal is to drastically reduce or eliminate the electric bill and reduce greenhouse gas emissions simultaneously.

Electricity demand in a home and electricity generation by a distributed solar PV system sometimes match, but not all the time, so there is a need to “do something” with the generated solar electricity when the home consumption is lower than the power production, and there is the need to be able to operate electric appliances at night when the solar system does not generate electricity.

Installing a backup battery together with a solar system is currently a popular solution for the affluent US population, but Americans with lower or moderate income have to think more than twice whether US$10k - US$15K extra cost for an additional home battery which might last 5 -7 years before it needs replacement is a sustainable investment.

Home backup batteries do not generate renewable energy, and this solution creates a significant carbon footprint during the production process. 

Installing a smart bi-directional electric meter which runs backwards when the solar power generation exceeds a home’s power consumption has been an effective way to eliminate the extra cost associated with home battery installations and an effective way to incentivize solar installations during the past decades.

The price for Solar PV installations has come down so much during the past years, that Investor Owned Utility Corporations can see the threats to their entitlements and to their future revenue if everybody would start to generate their own homemade electricity.

In order to understand how the Utility Corporations became so powerful, we must look at their history. When the US electricity market structure was first established, large, centralized power stations generated all the electricity for the surrounding consumers. Since distributed power production did not exist, many people called this a “natural monopoly”. 

We now have many active “prosumers” (meaning they both produce AND consume) operating distributed renewable solar power generators who have successfully or are poised to enter the electricity market. These prosumers have the ability to both generate and consume electricity. This new business model has the potential to destroy the traditional vertical monopoly structure with one single electricity provider combined with many passive consumers.  

To prevent the threat of distributed solar power production, Investor Owned Utility Corporations have recently launched impactful disinformation campaigns to discredit the just compensation rates for distributed renewable power production. The Utility Corporations argue that “net metering”, where the electric meter runs backwards harms lower income Americans without a solar system. They are trying to misconstrue net-metering as a “cross-subsidy,” claiming that consumers without solar systems have to pay for the maintenance of the electric grid.

This is not true. The present rates already have separate grid-connection charges in place which are dedicated to the fixed costs associated with grid-maintenance.

Investor Owned Utility Corporations also argue that “utility scale” solar is more cost-effective than distributed solar installed at people’s homes. They want to establish a regenerative energy production technology where the utilities build large solar farms on publicly owned lands or get paid by the ratepayers to buy large tracts of land so they can sell the sun’s energy to everyone like they are selling fossil fuel based energy today.

If Utility Corporations would pay the same price for the usage of lands and the same property tax rates which most Americans have to pay for the usage of their land, then the economic equation would look very different.

• Allowing Utility Corporations to use massive amounts of public lands for free for the grid infrastructure is a subsidy. 
• Paying Utility Corporations to buy land for building solar farms is a subsidy.
• Charging Utility Corporations lower property taxes through agricultural zoning discounts for their solar farms is a subsidy.
• Allowing Utility Corporations to operate in a risk free market environment without competition is a subsidy.
• Allowing Utility Corporations to operate in a risk free market environment where all expenses are automatically paid for by the ratepayers is a subsidy.

Net-metering is not a “cross-subsidy,” net-metering is a just compensation rate for cost effective renewable power generation directly at the location where the power is needed.

Intervene now by writing to your political representatives to prevent HB1024 and HB741 against the solar net-metering compensation rates introduced in Florida.

If you are interested in a more detailed substantiation in support of net-metering, follow this link to the author's 2020 Petition before the Federal Energy Regulatory Commission FERC