ABSTRACT

Net metering (or net energy metering, NEM) allows consumers who generate some or all
of their own electricity to use that electricity anytime, instead of when it is generated. This is
particularly important with wind and solar, which are non-dispatchable. Monthly net metering
allows consumers to use solar power generated during the day at night, or wind from a windy day
later in the month. Annual net metering rolls over a net kilowatt credit to the following month,
allowing solar power that was generated in July to be used in December, or wind power from
March in August.

Net metering policies can vary significantly by country and by state or province: if net
metering is available, if and how long banked credits can be retained, and how much the credits
are worth (retail/wholesale). Most net metering laws involve monthly roll over of kWh credits, a
small monthly connection fee, require monthly payment of deficits (i.e. normal electric bill), and
annual settlement of any residual credit. Unlike a feed-in tariff (FIT), which requires two meters,
net metering uses a single, bi-directional meter and can measure current flowing in two
directions. Net metering can be implemented solely as an accounting procedure, and requires no
special metering, or even any prior arrangement or notification. Net metering is an enabling policy
designed to foster private investment in renewable energy.

Solar energy is an increasingly important part of our nations current energy mix and will
play a vital role in our clean energy future. Today there are a number of ways that customers can
obtain solar energy, including through large-scale utility projects, residential rooftop solar panels,
and policies designed to utilize more green power Large-scale utility solar projects amount to
approximately 60 percent of the countrys total installed solar capacityand this capacity is
expected to triple by the end of 2016. These projects offer the most cost-effective way to increase
the use of solar that benefits all electricity customers.
 INTRODUCTION

This issue brief illustrates the substantial subsidy created by current net energy metering
(NEM) practices and reveals the need to modify these practices. Today, when a DG customer
produces onsite energy, this correspondingly reduces the amount of energy the customer purchases
from the local utility, thereby avoiding payment of that portion of the energy rate in the customers
retail tariff that is designed to recover the customers contribution to the utilitys fixed costs. This
is the source of the NEM subsidy it is the direct result of the energy rate in a customers retail
tariff exceeding the utility's avoided energy cost. In our analysis, we define the NEM subsidy as
the difference between the customers bill savings due to the onsite energy production and the
utilitys costs avoided by not having to deliver the electricity displaced by the energy produced
onsite. Customers who purchase and install rooftop solar PV generation (distributed generation or
DG customers) receive the NEM subsidy, which is mostly paid for by non-DG customers, i.e., DG
customers shift the cost of the subsidy onto non-DG customers. DG customers who lease solar PV
facilities or sign power purchase agreements (PPAs) with solar leasing companies receive only a
fraction of the NEM subsidy; the bulk of the subsidy goes to the solar leasing companies. Except
for a few jurisdictions in the U.S. (e.g., Austin, Texas and the few states that do not have NEM in
place), NEM policies allow DG customers to avoid paying a portion of their share of the cost of
grid services. This cost avoidance is the primary source of the NEM subsidy, which is paid for by
non-DG customers. A recent study conducted by Energy Environmental Economics, Inc. (E3) for
the California Public Utilities Commission (CPUC) estimates that, by 2020, approximately $1.1
billion would be shifted annually from DG to non-DG customers if Californias current NEM
practices (and rate structures) remain unchanged.1 That same study also revealed that non-DG
customers are less affluent than the DG customers they are subsidizing, which raises a serious
equity issue.

Today non-energy charges comprise a large percentage of the utilitys costs that are
recovered through a residential customers retail tariff. These charges typically cover the fixed
costs associated with grid services such as the transmission system, the distribution system,
balancing and ancillary services, and the utilitys investment in generation capacity. NEM, as
practiced today, allows DG customers to avoid paying their fair share of the costs of these grid
services, which then gets shifted onto non-DG customers.3 Alternative regulatory approaches exist
for reducing, or totally eliminating, NEM cost shifting. Increasing the fixed monthly customer
charge and/or adding one or more demand charges to better reflect the utilitys actual cost structure
is one approach.4 Adopting a straightforward buysell arrangement, where the customer buys all of
the energy consumed on site through the utilitys retail tariff and sells to the utility all of the solar
energy produced on site at the utilitys avoided cost, is another approach. Properly implemented,
either of these approaches could eliminate NEM cost shifting. The primary beneficiary of the NEM
subsidy changes when a residential customer chooses to lease a solar facility or to enter into a PPA
with a solar leasing company. In this case, most of the NEM subsidy goes to the leasing company
not to the DG customer. In California, leasing companies install approximately 75 percent of all
new rooftop solar PV facilities.5 Thus, non DG customers are predominately subsidizing solar
leasing companies an unintended consequence of the current NEM policy.

LITERATURE SURVEY
Net metering originated in the United States, where small wind
turbines and solar panels were connected to the electrical grid, and
consumers wanted to be able to use the electricity generated at a different
time or date from when it was generated. Minnesota is commonly cited as
passing the first net metering law, in 1983, and allowed anyone generating
less than 40 kW to either roll over any kilowatt credit to the next month,
or be paid for the excess. In 2000 this was amended to compensation "at
the average retail utility energy rate." This is the simplest and most general
interpretation of net metering, and in addition allows small producers to
sell electricity at the retail rate.

Utilities in Idaho adopted net metering in 1980, and in Arizona in

1981. Massachusetts adopted net metering in 1982. By 1998, 22 states or
utilities therein had adopted net metering. Two California utilities initially
adopted a monthly "net metering" charge, which included a "standby
charge," until the PUC banned such charges.[5] In 2005, all U.S. utilities
were required to offer net metering "upon request." Excess generation is
not addressed. As of 2017 43 U.S. states have adopted net metering, as
well as utilities in 3 of the remaining states, leaving only 4 states without
any established procedures for implementing net metering.

Net metering was slow to be adopted in Europe, especially in the

United Kingdom, because of confusion over how to address the value
added tax (VAT). Only one utility company in Great Britain offers net
metering.

In the Philippines, Net Metering scheme is governed by Republic

Act 9513 (Renewable Energy Act of 2008) and it's implementing rules
and regulation (IRR). The implementing body is the Energy Regulatory
Commission (ERC) in consultation with the National Renewable Energy
Board (NREB). Unfortunately, the scheme is not a true net metering
scheme but in reality a net billing scheme. As the Dept of Energy's Net
Metering guidelines say, "

Net-metering allows customers of Distribution Utilities (DUs) to

install an on-site Renewable Energy (RE) facility not exceeding 100
kilowatts (kW) in capacity so they can generate electricity for their own
use. Any electricity generated that is not consumed by the customer is
automatically exported to the DUs distribution system. The DU then
gives a peso credit for the excess electricity received equivalent to the
DUs blended generation cost, excluding other generation adjustments,
and deducts the credits earned to the customers electric bill.

Thus Philippine consumers who generate their own electricity and

sell their surplus to the utility are paid what is called the "generation cost"
which is often less than 50% of the retail price of electricity.

Net Metering:

For electric customers who

generate their own electricity, net metering allows for the flow of electricity both to and from the
customer typically through a single, bi-directional meter. When a customers generation exceeds
the customers use, electricity from the customer flows back to the grid, offsetting electricity
consumed by the customer at a different time during the same billing cycle. In effect, the customer
uses excess generation to offset electricity that the customer otherwise would have to purchase at
the utilitys full retail rate. Net metering is required by law in most U.S. states, but state policies
vary widely.
 Net metering is a billing system that allows electric customers to sell to their electric utility
any excess electricity generated by their DG systems. Many different DG sources may be eligible
for net metering credits, but rooftop solar installations are the most common type of DG promoted
with net metering. While net metering policies vary by state, customers with rooftop solar or other
DG systems usually are credited at the full retail electricity rate for any electricity they sell to
electric utilities via the grid. The full retail electricity rate includes not only the cost of the power
but also all of the fixed costs of the poles, wires, meters, advanced technologies, and other
infrastructure that make the electric grid safe, reliable, and able to accommodate solar panels or
other DG systems. Through the credit or payment they receive, net-metered customers effectively
avoid paying these costs for the grid.

Net metering allows residential and commercial customers who generate their own
electricity from solar power to feed electricity they do not use back into the grid. Many states
have passed net metering laws. In other states, utilities may offer net metering programs
voluntarily or as a result of regulatory decisions. Differences between states' legislation and
implementation mean that the benefits of net metering can vary widely for solar customers
in different areas of the country.

Net metering is a billing mechanism that credits solar energy system owners for the
electricity they add to the grid. For example, if a residential customer has a PV system on
the home's rooftop, it may generate more electricity than the home uses during daylight
hours. If the home is net-metered, the electricity meter will run backwards to provide a credit
against what electricity is consumed at night or other periods where the home's electricity
use exceeds the system's output. Customers are only billed for their "net" energy use. On
average, only 20-40 percent of a solar energy systems output ever goes into the grid.
Exported solar electricity serves nearby customers loads.
Comparison:

There is considerable confusion between the terms "net metering" and "feed-in tariff." In
general there are three types of compensation for local, distributed generation:
Feed-in tariff (FIT):
Which is generally above retail, and reduces to retail as the percentage of adopters
increases.
Net metering:
Which is always at retail, and which is not technically compensation, although it may
become compensation if there is excess generation and payments are allowed by the utility.
Power purchase agreement:
Compensation which is generally below retail, also known as a "Standard Offer Program,"
and can be above retail, particularly in the case of solar, which tends to be generated close to peak
demand.Net metering only requires one meter. A feed-in tariff requires two.

Distributed Generation Systems:

DG systems are small-scale, on-site power sources located at or near customers homes or
businesses. Some common examples include rooftop solar panels, energy storage devices, fuel
cells, micro turbines, small wind, and combined heat and power systems. Customers with these
types of generation systems connect to the local electric grid and use the grid both to buy power
from their local electric utility during times when their DG systems are not producing enough to
meet their needs and to sell power to their utility when their systems are producing more electricity
than is needed. To be clear, the utilitys grid infrastructure is the mechanism by which all buying
and selling is actually accomplished.

Customers with DG Systems Still Use the Power Grid:

Yes. Unlike other energy sources, electricity has unique properties that do not allow it to
be easily or economically storedit must be generated and delivered at the precise moment it is
needed. Rooftop solar, like all solar, relies on the availability of the sun to generate electricity. The
sun does not shine around the clock, and solar power can appear or disappear rapidly over the
course of a day. Because the majority of residential DG customers do not have storage on their
systems, they require a connection to the grid. The grid connection enables residential rooftop solar
users to buy power when their system does not produce enough electricity to meet their needs and
to sell electricity onto the grid if their system generates more than they need. Customers with DG
systems also rely on the grid to ensure that their own power supply provides reliable, high-quality
service at all times.

The benefits of net metering

Net metering makes residential solar energy system ownership even more attractive and
affordable for many families. It can save homeowners hundreds more dollars per year on
their utility bills, and it makes the process of accounting for the energy flowing to and from
the utility simpler and easier to administer.
Forty-four states have adopted net metering policies and several others have adopted
voluntary utility programs to encourage the practice (with varying levels of cooperation and
success). However, some investor-owned traditional utilities are resistant to net metering.
They see it as contributing to a loss of revenue from having customers produce their own
electricity. The benefits come mostly from generating electricity near the point of use, which
in turn reduces strain on the grids distribution infrastructure and minimizes energy loss from
sending voltage over long distances.
While some electricity providers claim that net metering only benefits a few solar users at
the expense of the majority of ratepayers, several states including Missouri, Vermont,
New York, Texas and Nevada have conducted cost-benefit studies demonstrating a net
benefit for all customers, not just those with solar power systems.
Net Metering Impact Customer Bills:
Customer electric bills are based on the electric utilitys cost of providing electric service.
This includes the cost of the fuels used to generate electricity and the cost to transport and
deliver the electricity to the customer. Costs also include the maintenance of the grid, as well as
utility programs for low-income assistance, energy efficiency, environmental improvements, and
other public benefits. In general, every electric customer has an electric meter that records the
amount of power delivered by their electric utility. As electricity is used, the meter spins
forward, much like a cars odometer records miles traveled. In the case of an electric meter, the
meter records energy use in kilowatt-hours (kWh). Net-metered customers generally are credited
for the electricity they sell to the grid, with their electric meter essentially spinning backwards to
provide a credit against the electricity that these customers must buy from their electric utility at
night or during other periods when their electricity use exceeds their systems output. Customers
are only billed for their net energy use. That means that when rooftop solar or other DG
customers generate electricity, they avoid paying for the utilitys power, which is fair because
they did not use it. But, they also avoid paying for all of the fixed costs of the grid that delivers
power when they need it and/or takes the excess power they sell back to the utilityAs a result,
these grid costs are shifted to those customers without rooftop solar or other DG systems through
higher utility bills, which is not fair.

Difference Between Retail and Wholesale Electricity Rates:

Retail electricity rates are the final rates charged to customers by an electric utility, based
on all of the costs involved in generating, transporting, and delivering power. Wholesale electricity
rates include the cost of the fuel used to generate electricity and the cost of buying the power in
the competitive wholesale market from any number of electricity providers. They do not include
the cost of transporting and delivering the electricity through the electric grid to reach a customer.
Wholesale prices usually change on an hourly basis throughout the day. Because of the way that
net metering policies originally were designed, net-metered customers are credited for the power
they sell to electric utilities, usually at the full retail electricity rate, even though it would cost less
for utilities to produce the electricity themselves or to buy the power on the wholesale market from
other electricity providers. Many energy experts agree that net-metered customers should be
compensated at the wholesale price for the electricity they produce, similar to other electricity
providers. This reflects the fact that electric utilities buying this power still must incur the costs of
delivering the power to their customers, including the costs of maintaining the poles, wires, meters,
and other infrastructure required to deliver a reliable supply of electricity.

Distributed Generation Affect On Grid:

As the use of rooftop solar and other DG systems increases, so, too, does the two-way flow
of power on the electric distribution system. To ensure the safe and reliable delivery of electricity,
an electric utilitys distribution system must be able to safely manage and control the flow of two-
way power. At the same time, electric utilities face integration challenges associated with the
fluctuating levels of power created by variable wind and solar DG systems. Electric utilities must
invest in their distribution systems to avoid overloading circuits, causing voltage regulation or
power quality problems, or jeopardizing the safety of the public or utility employees. However, if
net-metered customers do not contribute to the fixed costs of maintaining the grid and keeping it
operating reliably, a utilitys remaining customers will face higher rates to pay for these costs.

Current Net Metering Policies Be Updated:

Yes. For one thing, the costs of producing solar power have declined substantially since
the net metering concept was first introduced, but the financial benefits of net metering have not
been adjusted to reflect this. Net metering was deliberately limited to a small number of utility
customers or electricity production levels, as a way to incentivize the market. With that
accomplished, many states are now meeting or exceeding their caps on net metering customers,
even with some states granting extensions to the caps. Throughout the country, state legislatures
and utility regulatory commissions are taking steps to update outdated net metering policies to
enforce their caps and to eliminate the shift in costs from customers with rooftop solar systems to
customers without the systems. Until this is addressed, non-DG customers will continue to carry
ever-increasing costs.

States Dealing With The Cost Shift Created By Net Metering? Almost every state is
looking at different solutions to reform net metering to address the high costs and cost shift caused
by outdated net metering policies. These solutions range from legislative action to policy changes
directed by or at state utility regulatory commissions. In December 2015, the Nevada Public
Utilities Commission found that net metering resulted in a $623 cost shift per rooftop solar
customer in southern Nevada. The commission took action and updated the states net metering
policy to change the rate paid for net-metered power to the same rate the utility paid for other
sources of power. The commission also added a small energy charge and created a separate
customer class for residential rooftop solar producers because their impact on the system is
different from that of other residential customers. The Nevada PUC Chairman Paul Thomsen said,
"The new rate is intended to ensure that the 98 percent of residential utility ratepayers who are
non-solar customers do not subsidize those with solar systems." In Hawaii, the Hawaii Utilities
Commission recently reformed the states net metering policies to pay residential solar producers
the same price as paid to larger, competitive solar producers. These policies now assure that all
solar producers receive comparable prices, have incentives to promote efficiency, and avoid
imposing additional excessive costs on utility customers who do not or cannot install rooftop solar
systems.

Others Saying About The Need To Update Current Net Metering

Policies:
When this rate structure is combined with net metering, which compensates residential
[solar PV] generators at the retail rate for the electricity they generate, the result is a subsidy to
residential and other distributed solar generators that is paid by other customers on the network.
The Massachusetts Institute of Technology, The Future of Solar Energy, May 5, 2015

In short, net metering is regressive political income redistribution in support of a

putatively progressive cause. Several states including Hawaii, Arizona, and California have
recently proposed changing their net metering policies to reduce the cost shift. In October, the
Hawaii Public Utilities Commission cut by roughly half the rate paid to new solar customers after
finding that the subsidy was unnecessary to encourage solar adoption. Nevadas regulators went
even further by slashing payments to existing solar customers from retail to the wholesale rate and
raising their fixed charge for using the grid. Solar can strain the grid because the sun doesnt shine
all the time. The Wall Street Journal Editorial, December 28, 2015
 The PUC rightly decided that allowing panel owners to collect retail rates for their surplus
power unfairly burdened the rest of the state's power customers. Going forward, solar customers
will have to pay more for their connection to the grid and get by with wholesale rates on their
surplus electricity. The Las Vegas Review-Journal Editorial, January 2, 2016

The Council of State Governments passed a resolution in December 2015 that encourages
state policymakers to recognize the value the electric grid delivers to all and to: (citation for
resolution) 1.Evaluate the system-wide benefits and costs of DG (including costs and benefits
relating to the investment in and operation of generation and the transmission and distribution grid)
so that those costs and benefits relating to DG can be appropriately allocated and made transparent
to regulators, legislators and consumers; and

2.Facilitate the continued provision of safe, reliable, resilient, secure, cost-effective, and
environmentally sound energy services at fair and affordable electric rates as new and innovative
technologies are added to the energy mix; and

3. Update policies and regulations to ensure that everyone who benefits from the electric
power grid helps pay to maintain it and to keep it operating reliably at all times.

The intent of the original net metering policy was to incentivize early adopters, not create
huge subsidies from one group of customers to another. Now that the cost of solar systems has
come down significantly, there is no need for continued large subsidies. And, states that have seen
rapid growth in rooftop solar have had to develop new policies to reform net metering to subsidies
and provide certainty for the marketplace. Solar power is an important part of our energy future,
and the electric grid is the essential infrastructure that helps to deliver solar energy to customers.
It is important that policymakers and regulators consider all possible approaches when looking to
reform outdated net metering policies to end the cost shift and to enact policies that ensure a bright
and sustainable future for solar that benefits all electricity customers.

Time of Use Metering Can Often Multiply Savings

(Applications)
Time of use net metering employs a special reversible smart (electric) meter that is programmed to
determine electricity usage any time during the day. Time-of-use allows utility rates and charges to
be assessed based on when the electricity was used (i.e., day/night and seasonal rates). Typically
the generation cost of electricity is highest during the daytime peak usage period, and lowest at
night. Time of use metering is a significant issue for renewable-energy sources, since, for
example, solar power systems tend to produce energy during the daytime peak-price period, and
produce little or no power during the night period, when price is low. Italy has installed so many
photovoltaic cells that peak prices no longer are during the day, but are instead in the evening.TOU
net metering affects the apparent cost of net metering to a utility.

Given utility companies in California must credit net metering customers at retail rates for power

returned to the grid and that solar-generating customers can reconcile these credit and debits

annually, many solar-generating customers can take advantage of their utility company's "Time-

of-Use" rate schedules to increase the value of the power sold during peak generating times.

For example, Pacific Gas & Electric has a commercial rate schedule that charges as much as 0.32

dollar per kilowatt-hour from noon to 6 PM weekdays from May through October and rates as low

as 0.09 dollar/kWh at other times. This rate schedule would normally only appeal to businesses

that either use little power at the peak rate times or could be flexible to "demand shift" their

usage away from the higher rate exposure.

But for solar-generating customers, this rate is very appealing, because the peak rate period

coincides quite well with the period of peak solar power generation. In this case, customers

"sell" power at higher rates which increase the value of their PV systems, and can enable them

to buy less PV equipment and improve their return on investment.

As the determination of the "net" needs to be done on a hour-by-hour basis, with 8,760 data

points per year, the analysis of usage patterns and comparison to PV output must be done

carefully to avoid under-sizing PV systems which will leave customers exposed to high peak

rates.

Sunlight Electric uses a proprietary software model (with all 8,760 data records it's a 6.3 MB

Excel file) to compare hour-by-hour usage with hour-by-hour production so we can truly assess

the benefits of Time-of-Use metering for each customer. In cases where complete data are not

available on the usage side, we use our growing database of usage patterns as a proxy and

carefully review our assumptions in the proposal so everyone's clear on how we arrived at our

recommendations.

Protecting the Electric Grid

Unfortunately, some utilities perceive net metering policies as lost revenue

opportunities. In fact, net metering policies create a smoother demand curve for electricity
and allow utilities to better manage their peak electricity loads. By encouraging generation
near the point of consumption, net metering also reduces the strain on distribution systems
and prevents losses in long-distance electricity transmission and distribution.

Creating Jobs & Encouraging Private Investment

Net metering provides substantial statewide economic benefits in terms of jobs,

income and investment. Net metering increases demand for solar energy systems, which in
turn creates jobs for the installers, electricians, and manufacturers who work in the solar
supply chain. Today, the solar industry employs nearly 174,000 American workers in large
part due to strong state net metering policies which have allowed the solar industry to thrive.

Giving Customers Control Over Their Electricity Bills

Net metering allows utility customers to generate their own electricity cleanly and
efficiently. During the day, most solar customers produce more electricity than they
consume; net metering allows them to export that power to the grid and reduce their future
electric bills. California public agencies and schools will save 2.5 billion in electricity costs
over the next 30 years using net metering.
Future scope:
Bill Gallip, Engineering Manager
There are three issues that need to be addressed: 1) the original intent of net-
metering, 2) net-metering at wholesale vs. retail rates, 3) paying to support the grid. I
believe that the solar industry is mature enough to survive without net-metering at
elevated rates, so if the tariff were reduced to wholesale levels it would be workable.
This still leaves the issue of paying for grid support. There is an argument within the
electric vehicle community that they shouldnt be taxed extra (they are not paying the
road tax built into the cost of gas at the pump) because they are saving the
environment, but they still want the same access to well-maintained roads as
conventional vehicles. The same applies to DG and access to the grid. For users
without DG capability grid support is levied as a percentage of power used. I believe it is
right for power distributers to collect a nominal fee from DG generators for the privilege
of pushing power over the same lines that they expect to be there when the DG is not
available.

John Massey, Energy Analyst & Trainer

It depends how far into the future you want to look, but Id say eventually:
If home-owners (or other grid-edge users) want to keep connected to the grid, which
has to be paid for, there will be a connection fee to pay.
If distributed energy is put into storage and then used when you get home, the financial
benefit is that it offsets buying energy at retail prices from the grid. So the meter just
doesnt turn, since youre not importing energy from outside (though itll be a smart
meter anyway, so it wont mechanically turn anyway...).
If distributed energy is fed into the grid while youre out, it is effectively part of the
wholesale power supply, so youll be paid wholesale market rate if its used which will
depend on a smart system determining whether its an economic source to use at a
particular time, just like any other power plant. Itll be up to your own smart system to
decide whether best to store or to feed in (based on price signals from the grid).

Chris Hoffa, Energy Manager

I believe the answer to this dilemma is not related to the fate of net-metering
regulatory laws, but is rooted in the need for a utility business model change. Distributed
generation should become part of the utility business model via the utility being
engaged in designing, installing, and maintaining systems for residential, commercial,
industrial, and community level projects. The old 100 percent central generation and
distribution utility model is under pressure and will become a dinosaur soon. Successful
utilities must make PV and other distributed generation sources part of their business
model. This would seem to relieve the utility and regulatory business pressures caused
by the current surge in distributed generation and still allow it to develop.

Riccardo Battisti, Renewable Energy Project Manager

In Italy, exactly for the reasons you explained, there is a clear trend towards high
self-consumption rates before choosing photovoltaic. In the residential sector, this can
be reached either through home automation or storage. For larger users (commercial or
industrial), usually a self-consumption of at least 80 percent can be obtained.

Michael Dim, Renewable Energy Marketing Executive

There are three main drivers behind the prosumer market and net-metering
growth, which is expected in the next years. First is the drastic reduction of feed-in
tariffs in many countries. Therefore feed-in tariffs started to lose their power as driver of
renewable energy growth since 2011 and this process will continue. The second driver
is grid parity, which is progressing and by 2025 not only sun-belt countries, but also a lot
of countries with less solar irradiation will have grid parity. The third driver is growth of
the smart grid concept, market and services, which make it easier to integrate
renewable energy systems for net-metering.

Alex Peykov, Reliability and Engineering Manager

California utilities are trying to change the rules regarding net metering as well.
They are very unhappy that some of their customers are using the grid during the night
but make enough energy during the day to completely offset their electricity bills and
want them to pay more for the luxury. I guess the benefits of decentralized grids and
more power during peak demand are muted when its affecting your ability to generate
income from your customers. Net-metering agreements will disappear and home and
business owners will soon be on their own. One way to combat this change could be
battery banks. I wonder if utilities will attack those next.

Eric Barz, Town Planner

The industry needs to reinvent itself. Maybe it should be our UPS instead of our
energy source. I dont want banks of huge Edison NiFe or deep-cycle AGM batteries in
my house that need to be managed and replaced down the road in order to have solar
on my roof. The utilities have the wherewithal to build massive batteries and pumped
storage using technologies that may not scale down due to hazardous materials, energy
density, complex maintenance requirements, permitting, etc. Plus, there will always be
customers that cannot adopt distributed energy due to lack of ownership, urban
densities, or sheer demand (e.g. smelters, automation, computing power). Its not
always as one-sided as the utilities might have us believe. There are companies out
there making a niche living off helping utilities shed peak demand and/or avoid new
generation facilities, so I know that solar can be a boon to utilities whose peak
summertime demand corresponds with peak solar production.
Ankur Kumar Jha, Solar Start-up Manager
In India net-metering can have a great future. But since the mechanism is new,
we are hitting and identifying the hurdles that are operational, financial and regulatory
related.
While some countries have provisions of monetary payment for energy fed into
the grid, the same cannot be implemented across India. The reason being electricity is a
concurrent subject between central and state governments and so we have variation in
policies from state to state. But the most important reason is that the financial condition
of distribution companies of India is very fragile. A few states are exceptions where
these companies are doing really well. Some of them pay for energy fed at Average
Power Purchase Cost (APPC) rather than the retail tariff.
This makes sense as rooftop net-meter systems are connected with distribution
systems, which eliminates transmission costs and losses. Distribution losses are also
reduced and so does the APPC of DISCOMS.
While utility-scale solar projects are competing really well against utilities, the
rooftop segment has been lagging. What becomes of the latter depends on what actions
are taken to address the issues in the present.

James Kempf, Research Engineer

Clearly, a reorganization in the electric utilities market to reflect the new reality of
distributed energy is needed. Unfortunately, the attempt in the early 2000s to
disaggregate production and transport failed due to a faulty market design in California,
which Enron used to game the system. This market design has been very successful in
Germany for fostering renewable energy deployment, together with a preferential feed-
in tariff for renewable energy. If utilities became like Internet service providers, where
they were just responsible for transport, and generation was required to be in a
separate business with a feed-in tariff that reflected the full value of renewables
(including services such as VAR stabilization, etc.) net metering could be done away
with. But given the failure in the early 2000s, net metering is really the only way for
distributed generation funded by property owners to succeed.
Given that, there should be an accounting of the many services, beside just generating
electrons, that distributed generation can provide to net. These may require the
deployment of advanced inverter technology, but until they are brought into the
equation, utilities will view net metering as a loss for them and will continue to fight it.

Russell Higgins, Architect

Net metering is great PR - run it in reverse, zero out your bill! It got peoples
attention. Most utilities limit PV production to average building use. This keeps us from
making best use of resources embedded in the inverters, cables, labor. This LIMITS our
PV power production. As Hawaii shows, the future is paying ALL producers a fair
wholesale price (50 percent retail in Hawaii) that represent not just the power, but the
synergies of distributed peak energy production (as documented in FERC reports to all
our utilities).

Conclusion
As the power produced by solar energy using PV systems is difficult and costly to store, this
net metering provides opportunity to supply the excess power produced to grid and when solar
power is not sufficient or unavailable, power can be drawn from grid, thus creating an opportunity of
two way supply and making solar energy more reliable

Net metering allows consumers who generate some or all of their own electricity to use
that electricity anytime, instead of when it is generated. This is particularly important with wind
and solar, which are non-dispatchable. Monthly net metering allows consumers to
use solar power generated during. The findings concluded that the customers were indeed
overpaying.