Will Utilities Continue To Oppose Net Metering Policies For Solar Energy?

Written By: Thatcher Michelsen September 3, 2013 0
Solar power is grown exponentially in part as a result of net metering policies.
Solar power is grown exponentially in part as a result of net metering policies.

One of the biggest successes in the effort to promote renewable energy generation has been net metering. With this system, a household that has solar panels can sell any excess electricity produced back to the grid, earning a per-kilowatt-hour rebate that can offset their power expenses at night when solar panels stop generating.

While these policies have been popular with rate payers, they've been decidedly unpopular with utilities. To understand why, one needs to know a little about how the electricity industry operates.

In order to be profitable, utilities must be given monopoly power over a particular municipality's electricity infrastructure. The reason for this is that the construction and operation of a large power grid is expensive, and in order to make up for those costs, utilities need to charge higher prices. If a competitor were allowed to come in and deliver power without having to make such an enormous investment in distribution and delivery, the business of running a municipal electricity system would be unprofitable.

The advent of rooftop solar generation threatens to upend the advantage of monopoly pricing power for utilities, or so these companies say. If more customers switch to solar power, then the costs of maintaining a grid will be shared with fewer rate payers, thereby causing a steady increase in prices. This could result in more residents and business migrating to photovoltaic panels, creating an endless cycle that could make fossil fuel-based utilities obsolete.

The problem with this story is that rooftop solar panels provide less than one percent of the country's electricity. It's hard to imagine the death spiral that utilities are predicting will occur any time soon, and in the meantime it's not in the interests of environmentalists or public officials to slow the growth of this technology. The threat of climate change and environmental catastrophe are too great for public utility commissions to give into the fears of power companies that are simply trying to defend their profits.

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