Earlier this week, NAATBatt member Tucson Electric Power (TEP) announced a change in its net metering program, whereby TEP will compensate new solar PV customers for net metered electricity at the same rate that TEP pays for power from large solar arrays, rather than at the higher retail electricity rate. It is expected that the typical customer with rooftop solar will see their bills increase by about $22 per month as a consequence of this change.
The move by TEP to reduce the benefits of net metering to customers with rooftop solar underscores a longstanding tension between grid operators and solar PV advocates. Net metering—the ability of solar PV owners to sell to the grid PV-generated electricity they cannot use—has long served as an important and effective subsidy for PV technology. Historically, solar advocates have loudly protested reductions in net metering benefits, seeing them as an attack on the technology of distributed solar PV itself.
My sense in reading about TEP’s action this week, and the somewhat muted criticism of it, is that the world of net metering in changing. That change has a lot to do with storage. The falling cost of solar PV means that the need to subsidize solar PV deployment is falling as well. But more importantly, the falling cost of solar PV combined with the falling cost of electricity storage means that it is becoming increasingly economic for solar PV owners to self-generate, i.e., to save the electricity they cannot immediately use and use it themselves at another time.
After years of pushing hard for net metering programs, the solar industry is slowly waking to the realization that customers who perceive a benefit to maximizing their self-generation (i.e., by using storage) will buy more solar panels than those customers who do not. The benefit of self-generation to storage suppliers is obvious.
The real issue begged by net metering is the non-dispatchability of solar power. There simply is a cost to not being able to control when electric energy is generated. Customers that self-generate bear this cost themselves, either by spilling excess electric power or investing in a storage system. Customers that net-meter simply offload this cost onto the grid.
The answer to the question of which alternative is more fair and socially beneficial is inherently subjective. But from a business standpoint it is important to remember that grid operators who must bear the cost of solar non-dispatchability (because they are obligated to net meter) have many ways to defray that cost, including, but by no means limited to, storage. By contrast, solar PV customers that self-generate have no way to defray the cost of non-disptachability other than to store their excess electricity generation. This is something worth thinking about as the storage industry’s position on net-metering evolves.