Net Metering Not Necessarily a Burden on Those Without Solar

Nevada utility NV Energy’s net metering program does not significantly impact homeowners without rooftop solar, according to a study prepared for the Nevada Public Utilities Commission (NPUC) this month. 

The study was conducted by San Francisco–based Energy and Environmental Economics (E3) at the request of the NPUC after the passage of a Nevada law last year requiring an analysis of net metering impacts on consumers. The process was initiated by the Nevada Attorney General’s Bureau of Consumer Protection, which asked the NPUC to look into creating two classes of ratepayers depending on whether they generate their own energy.

According to the study, as of December 2013, there were about 3,300 systems comprising more than 60 MW of generation enrolled in NV Energy’s net metering program, but that is projected to grow to nearly 300 MW by 2016.

Net metering has become increasingly controversial as rooftop solar generation has grown dramatically the past few years. Critics contend that—because electricity rates include charges for more than just generation—net metering allows customers who generate their own energy to essentially use the grid as a storage battery without paying their fair share of transmission and distribution costs. This essentially shifts those costs from customers with solar—who are typically more affluent homeowners—onto those without it, who typically have a lower income. Supporters contend that this analysis fails to take into account benefits from distributed solar generation, particularly that it functions as peak shaving during the hottest parts of the day, thus reducing the need for peaking generation.

Quantifying those costs and benefits, however, has been difficult. AB 428, the Nevada law that spurred the NV Energy study, was intended to address this gap in data.

The E3 study looked both at whether self generation was cost effective for those with solar and whether there was a significant cost impact on non-participating customers. It also looked at larger issues of whether the program affected overall utility bills and the cost of energy in Nevada.

The NV Energy net metering program has undergone substantial changes recently, and will both expand eligibility while reducing incentives beginning in 2014. Previously, eligibility was based on a lottery. In addition, a multiplier on self-generation that applies toward Nevada’s 25%-by-2025 renewable portfolio standard will terminate in 2016.

Largely Neutral Impact

E3 found that while the old system provided a significant benefit to participants, the changes made it slightly ($0.02/kWh to $0.04/kWh) more expensive to self-generate, though this could be offset by further reductions in the cost of rooftop solar. Likewise, though there was a burden to non-participants under the pre-2014 approach, going forward, the impacts are nearly neutral to slightly beneficial, because NV Energy will be able to avoid purchasing a certain amount of generation.

On the other issues, E3 found that total electric bills will decrease due to self generation (though this will mostly accrue to self-generators), but that the overall cost of energy in Nevada would increase moderately, mainly because large renewable generation is more efficient than small distributed generation, even when avoided transmission and distribution costs are factored in.

Finally, the study also considered whether non-economic benefits of self-generation changed the analysis. E3 found that the pre-2016 system actually increased overall emissions because of how it was structured: The multiplier on self-generation means NV Energy will need to construct or purchase less renewable generation in the long run. Overall, however, consideration of non-economic effects did not change the study’s conclusions.

The study results would suggest that a carefully designed net metering program can support self-generation without creating a burden on non-participants.

The Solar Energy Industries Association (SEIA) was naturally quick to praise the study. “This new reports confirms what we have been saying all along: utilizing solar energy benefits Nevada families, schools and businesses,” said Rhone Resch, SEIA president and CEO.

The debate in Nevada is not yet over, though. The NPUC will be using the study to help prepare its report to the legislature, which is due Oct. 1. Hearings on the issue are expected some time this summer.

—Thomas W. Overton is a POWER associate editor.