Issue 76

Net Metering or Not Metering: That is the Question

Lurking in the background of the debate over climate change and the need to convert from fossil fuels to renewable energy sources like solar energy, is a more complex and insidious issue.  While many have jumped on the clean energy bandwagon, for some it’s just another way to make a buck. 

For-profit utilities in California and the International Brotherhood of Electrical Workers (IBEW), while claiming to support clean solar power, are now sponsoring a bill that will make it much more costly to install rooftop solar systems, providing a significant setback to meeting the state’s goal of 100% clean energy by 2045. Former CA governor, Arnold Schwarzenegger has called them out in a strongly worded Op Ed in the New York Times.   

Most rational thinkers understand the dangers of continuing business as usual while greenhouse gases are building up in our atmosphere and threaten our existence on Planet Earth. The data is in and there really is no debate over why the polar icecaps are melting at an alarming rate, or hurricanes, tornadoes, and wild fires are on the rise. There is no defensible, rational argument against eliminating fossil fuels from the portfolio of energy sources used to generate the power we rely on. The question of how and how quickly we get there, however is more difficult and is now the subject of contentious controversy.

Solar farm in Madera County CA

Solar energy can be generated in a number of ways, but one major distinction is whether it is produced in large centralized solar farms built to convert megawatts of electricity to power the grid or by distributed rooftop panels on homes and businesses that generate smaller kilowatt quantities, but taken together make a significant contribution.

Either way of course, the energy from the light of the sun is converted into electrons that we rely on for power. And both ways of producing solar energy are equally effective (and important) in eliminating fossil fuel generated power. The big difference boils down to a question of, you guessed it, money.

Solar on low-income housing

If a homeowner or small business makes the substantial investment (typically in the tens of thousands of dollars) to install a roof-top solar panel system, they will obviously greatly reduce or eliminate their need to buy power from the utility. As this option becomes more affordable and attractive (with tax incentives and financing, solar is now available to low-income households), more people are choosing this option.

Selling fewer kilowatts means lower revenues for the utility. In addition, depending on the size of the installation and specific conditions, there are times when more power is generated by the homeowner/business than they are using, resulting in an excess of power that the utility “buys back” in the form of credits. This system, known as net metering, provides greater incentive to install rooftop solar by lowering the overall cost but further reduces revenue to the utility.

So if you are a private, for-profit utility, which method of solar power generation would you prefer? Through their powerful lobbies, the utilities are fighting back and trying to pass legislation to eliminate net metering so they don’t have to pay the consumer very much for excess power generated and to apply monthly surcharges on solar power to increase their profits. A bill in the California legislature supported by the utility lobby and unionized workers in the utility industry threatens to do just that. It is so draconian it would move California’s solar incentives from among first in the nation to dead last. Florida has similar legislation under consideration.

It doesn’t take an expert to realize the removal of solar incentives will have a negative effect on the adoption of solar energy just at the critical moment we need them most. Nevertheless, in the NYT, Mark Jacobson, a professor of civil and environmental energy at Stanford declared, unequivocally,

“The only thing this [legislation] is going to do is reduce rooftop solar. That will mean there will be more natural gas in the system. Every rooftop should have solar on it. You should be encouraging more of it.”

And David Feldman, a senior energy analyst at the U.S. Department of Energy’s National Renewable Energy Laboratory said,

“You can understand why utilities don’t like distributive resources [e.g., roof-top solar panels]. The more electricity they sell, the more money they make.”

The federal and state governments have long supported policies to reduce energy consumption in buildings (e.g., through better insulation, improved efficiency of HVAC systems) and transportation sector (e.g., improved fuel economy standards, mass transit) because these are common sense solutions to climate change. No one argues that we shouldn’t incentivize energy conservation, despite the fact that it ultimately reduces consumption and profits for energy companies. Such an argument would be considered ludicrous. Why are incentives to increase solar power generation any different?

The utility lobby has successfully marshalled the official support of the IBEW whose workers install and maintain the electrical grid and who feel that distributed solar will result in fewer jobs. Even with advancements in battery technology that will enable less reliance on the grid, it’s hard to imagine a future where the network that supplies bulk power across the country is threatened. Plus, there have been many additional jobs added since the home solar market began its recent exponential growth (larger projects attract union labor and smaller jobs are often non-union; hence the union has gone all-in for solar farms and is now attacking distributed installations.)

And even if there were any merit to IBEW fears of job loss, it is the same argument that coal miners raise in resisting change. The consequences are too dire to let the self-interests of any group of workers derail the necessary steps that are needed to end climate change.

IBEW maintaining the power grid

The union and utilities claim that providing solar incentives is unfair because it raises the cost of power to those who don’t have solar rooftop systems. And because it requires a large investment up front that can take many years to pay off, it favors the wealthy. But both of these arguments are disingenuously deceptive; framing the debate on solar incentives by making it a class issue pitting poorer working-class customers against wealthier customers is like pitting poor working-class whites against blacks, while the 0.1% power brokers sit back and count their money. It’s an old Three-card Monty trick played time and time again on the public.

In the end, everyone needs and deserves the benefits of clean energy. With current tax incentives in place, solar is in fact, affordable to people with modest incomes. Convincing workers that solar energy is a frill to be enjoyed by the rich is just another example of The Big Lie perpetrated by a well-financed and coordinated disinformation campaign. Who would want to do such a thing? The answer is simple and found in the now familiar phrase, Follow the Money.

There’s no good reason why private, for-profit utilities should be allowed virtual regional monopolies for the generation and distribution of most of the electric power in the U.S. In fact, there are currently almost 2000 publicly owned utilities that are run entirely for the benefit of their 23.7 million customers, not stockholders. And there’s an historical precedent: In the 1930s, for-profit utilities didn’t want to invest in the infrastructure to bring electric power to rural communities so President Roosevelt’s Rural Electrification Program subsidized communities to form their own publicly owned utilities.

These public utilities can offer the rate payers lower costs than privately owned utilities and any surplus revenue goes back into the system rather than line the pockets of CEOs and private investors.

If this practice were universally adopted, profits would no longer be an obstacle to maximizing incentives for rapid implementation of renewable energy, our best hope for winning the war on climate change. It’s as simple as that.