Net Metering has been one of the big value contributors in the residential solar market. Allowing homeowners to receive equal bill credits for every kWh of energy they send back into the grid via a Net Metering program makes the incentive to go solar easy to understand.
However, the complexity of Net Metering is rarely understood as the value a utility receives from solar in small amounts from residential assets is no longer equal to what you pay for electricity.
Ameren – in a quick move – just abolished its Net Metering program all together, forcing solar installers and advocacy groups to freak out as the whole basis for their businesses to exist may have disappeared.
Installers Depend On Net Metering To Get More Price Conscious Buyers To Go Solar.
Fun fact, most homeowners that go solar don’t even know about the chaos of solar net metering. It’s not even the installers fault here – it’s the issue of changing rules and policy that no one can be expected to keep up with.
Net Metering provides an easy way for installers to design a system that typically can meet a persons annual energy consumption by up to 110%. This allows them to “0” out their utility bill and make a compelling case for investing in solar.
Hawaii Is The Biggest Example Of Why Net Metering Doesn’t Work
Hawaii now has a non-export rule for all new solar systems. This isn’t because the utility is anti solar – it actually has been highly supportive of it.
Having too much capacity with not enough users is the big issue now days.
Now in the Midwest and even in California there likely isn’t a situation of “Too Much Solar Capacity”.
Utilities Use Net Metering To Compensate Based On THEIR Value Of That Electricity
The value of renewable power from small residential systems isn’t huge and Net Metering pricing changes reflect that. Utilities don’t want more systems interconnected and in a way this is spurring a building electrification movement as self-consumption is likely going to provide a higher value to the homeowner.
Ameren in their move is showing that they don’t value small scale residential solar anymore in this move.
However, Ameren does still have investments into renewable power sources and microgrid research – likely not for show, but because they realize eventually they will have to switch their entire portfolio to renewables.
Larger scale solar projects and community solar projects are far easier and more valuable to companies and utilities and can reduce the complexity of selling to a homeowner.
It is our belief that Net Metering will either be fully gone or abolished all together in the coming years – either spurring a massive growth in community solar projects or a huge building electrification movement. We believe it’s going to be the latter.
About The Author
Swarnav S Pujari
Founder of The Impact
Swarnav has over 10 years of experience in the energy & climate tech space, holds 2 patents and is active in the tech, climate and media industries. He specializes in Product/Product Innovation as well as Go-To-Market and Growth Strategy.
By training he’s a Materials Engineer with a background in research from his time at Georgia Tech and University of Illinois (UIUC).
He founded TouchLight a utility backed energy company focused on developing IP for utilities and startups pushing electrification forward. He also serves as the appointed Chairman for the Town of Yorktown’s Climate Smart Communities Task Force, where he helps with drafting legislation and enabling sustainability efforts within the town.
Concurrently, Swarnav founded The Impact to help investors, emerging founders and driven climate enthusiasts discover and identify new climate-tech startups, technologies and opportunities before they hit the traditional media sources.