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Solar News

Net Metering Gets a Boost in California


[Updated: February 24, 2010] 

According to a report in the San Francisco Chronicle, a new bill passed by the California State senate may provide even greater incentives to residential solar energy projects. Assembly Bill No. 510, which passed on a near-unanimous 53-1 vote, would raise the net metering cap for electric utilities.

Since 1996, homeowners in California that operate residential renewable energy systems have had special electricity meters that carefully track the amount of electricity the system produces. If at the end of the month, the homeowner produced more electricity than they used, net metering laws allow the customer to sell the excess electricity to the utility company at retail value. This provides homeowners with a strong financial incentive to build and operate personal renewable energy systems. In states without net metering laws, the utility companies do not purchase the excess electricity from customers and the energy must be stored in a battery bank or wasted.

According to the Database of State Incentives for Renewables & Efficiency, California requires energy utilities to purchase 2.5% of their electricity from customers through net metering on a first-come-first-served basis. The new bill, which is expected to receive the endorsement of Governor Arnold Schwarzenegger, raises the utilities' net metering requirements to 5%. Proponents of the legislation, including in the bill's author Nancy Skinner, believe that the new allowances will promote solar energy in California:

California leads the nation in solar energy, accounting for more than 65% of the all the solar installed in the USA. Net metering has been absolutely fundamental to that success. The passage of this bill means continued green job growth, further energy bill savings, progress in the fight against climate change, and a brighter future for California.

Currently more than 50,000 customers participate in California's net metering program. According to a blog on the Los Angeles Times web site, these buyers would not get the benefits of net energy metering.

Instead, they would have to use the energy they make at the time their systems are making it - during the day, when many residential customer-generators are not around; buy an expensive battery system to store the energy off-grid; or, if they don't use it as they make it, donate their extra electricity to the utility and also purchase utility-generated power when needed.

The Times article quotes a solar advocacy group Vote Solar in San Francisco that asserts that net metering is key to the growth of solar: "Without this policy, customers would probably be forced to either put in a much smaller solar system or to put in large battery systems and store the electricity. With net metering, you're lending electricity to a neighbor who needs it. It's a real cooperative way of making solar work for everybody."

Some consumer advocate groups, like the Utility Reform Network, claim that the bill is flawed. Matthew Freedman, an attorney for the group, explains that under the new law, none of the solar or wind power sold to the utilities will count toward renewable energy mandates. California will require electricity companies to generate 33% of their power from renewable energy sources by 2030. Energy from net metering does not count toward these renewable energy credits unless the electricity companies pay a surcharge.

Opponents, like Mr. Freedman, argue that energy from consumer-based renewable energy projects is more expensive than the energy from utility-scale projects. They fear that the bill will increase the price of electricity for California rate payers. Rachel Arrezola, a spokesperson for Governor Schwarzenegger, counters these claims by suggesting that the new net metering bill will actually decrease energy bills, increase clean energy jobs, and benefit Californians in a number of important ways: "The bill will help California achieve its renewable energy goals by allowing for increased solar installation, more jobs created and more renewable energy in California,"

Regardless of the bill's flaws or merits, the new allowances put forth by the California state government are part of a recent trend that increase financial incentives for the installation of small-scale photovoltaic electricity programs. In the past two months, New York and Maryland passed laws supporting distributed solar energy projects. The New York bill eliminates the peak load limitation on the size of non-residential solar and wind systems that are eligible to participate in the net metering program. Like net metering laws, allowances for distributed solar energy also favor photovoltaic technologies since they are based on small-scale local energy systems.