The net metering settlement recently approved in Nevada ensures that residential customers who have already put solar on their roofs will get the compensation promised when they made the decision to install solar. This is an important compromise and win for sensible clean energy policy. However, it leaves unresolved the problem of how to encourage rooftop solar installations going-forward.
Regulators in Nevada unanimously approved the settlement, proposed by Nevada’s biggest utility (NV Energy), SolarCity, regulatory staff, and the state’s consumer advocate. The settlement restores net metering at full retail rates for the around 30 thousand residential customers that had installed rooftop solar systems under the state’s net metering program.
A bit of background: net metering gives customers a simple pricing structure and has been critical to the growth of rooftop solar around the country. At the end of the month, a customer pays the utility for the net amount of energy they consumed: the amount of electricity the utility sent to the house minus the amount of electricity their solar panels produced. Rooftop solar customers have learned to love it, but many utilities do not, because it gives customers the same amount of money for the electricity they produce on-site as they pay for electricity they get from their utility. Utilities argue that they still have to spend a lot of money to provide customers their connection to the grid, costs they are not able to recoup from net metered customers. Actual costs and benefits of rooftop systems vary across the country based on a range of factors, including retail electricity rates.
Regulators’ approval of the settlement was unquestionably a step forward. There’s no kind way to put this: the December 2015 decision ripped the rug out from under customers who had already installed solar, drastically reducing the amount they receive for the electricity they send to the grid. The regulator then argued that “rates always change,” as if they had just straightened up the rug instead of running a bulldozer through the room that the rug had previously tied together.
So is the Nevada net metering issue resolved?
Unfortunately, no. The December 2015 decision still applies to new rooftop solar customers, if any exist. Under the new rates, rooftop solar is unattractive, and valued similarly to commodity electricity—the kind produced in a distant natural gas combined cycle unit—even though it is renewable, carbon emissions-free, and can be used by the utility to avoid expensive investments in the transmission and distribution system. These benefits were explained in a paper I wrote with SolarCity earlier this year.
In the paper, we found that the benefits of rooftop solar are big enough that it probably makes sense for Nevada to just continue with net metering for both existing and new rooftop solar customers. That’s still a good idea, and we hope reasonable people can come together to develop a rate structure that recognizes the value of rooftop solar. The new settlement is reason for hope that such a solution is possible.