Net metering for solar a benefit to all ratepayers, growing industry
Last week a bill was halted in the Kentucky Senate that would have undermined the use of solar energy and threatened the loss of many jobs in Kentucky’s emerging solar industry. Senate Bill 214 was sponsored by Senator Jared Carpenter (R-Berea) but then withdrawn by him after a vocal outcry from citizens and solar business-people. During a hearing March 1, Sen. Carpenter announced that he was shocked by the public outcry generated by SB214 and that he had had no intention to harm the solar industry. Rather than rush through a problematic bill, he chose to withdraw it to allow time for a better bill to be developed.
I am grateful for Sen. Carpenter’s willingness to listen to his constituents and the people who would be affected by this bill, and his thoughtful respect for our concerns.
Senate Bill 214 concerned net metering, which allows electric customers with solar (or other renewable) energy systems to earn kWh credits for energy they supply to the power grid. Net metering customers are able to use the solar power they generate on-site or feed excess power back into the electric grid. Under net metering, solar energy supplied to the power grid is valued at the same rate as power used from the utility (although net metering customers are never paid for this power generation – they only receive kWh credits that can be redeemed at a later time).
Many electric utilities lobbied in favor of SB214, which would have enabled them to impose new fees on net metering customers. These fees and the complicated regulatory process created by the bill would have undermined solar companies’ ability to stay in business in Kentucky and would have made it difficult for people to invest in solar on their property.
The utilities’ argument for SB214 is that net metering customers are subsidized by the general ratepayer and not paying their fair share. This argument runs counter to mounting evidence from across the United States, which shows that net metering imposes no net costs on ratepayers while providing many benefits.
I have been involved in the development of Kentucky’s net metering policies for more than 10 years and have participated in lengthy negotiations between solar energy advocates and the electric utilities. Last week I released a report that uses KU/LG&E’s own data to show that net metering has had a negligible impact on electric rates. This analysis shows that net metering may add, at most, one half penny per month to the average KU/LGE customer’s electric rates. Significantly, KU/LGE’s cost data fails to account for the many benefits net metering provides to the electric grid, meaning the actual cost – if any – is almost certainly even less than this amount.
These findings are consistent with the conclusions of numerous studies from across the U.S. on the value of solar net metering. A recent report from the US Department of Energy states, “for the vast majority of states and utilities, the effects of distributed solar on retail electricity prices will likely remain negligible for the foreseeable future.”
A 2016 report by the Brookings Institution concluded that “the economic benefits of net metering actually outweigh the costs and impose no significant cost increase for non-solar customers. Far from a net cost, net metering is in most cases a net benefit—for the utility and for non-solar rate-payers.” These net benefits are found even before considering the value of economic development, job creation, and public health.