The Net Metering Debate: Replacing Rooftop Solar’s Outdated Foundation

Author:  Joshua Harmon | Alison Patch | Matthew Nitkoski
Organization:  The George Washington University Elliott School of International Affairs
Report Date: 
2016
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Summary: 

This paper begins with the history of net metering in the United States and its evolution over time. It then analyzes the net metering debates in California and Nevada, outlining the political players, relevant arguments, and policy outcomes. It concludes by outlining various possible solutions to the question of how to compensate residential rooftop solar, recommending a transition away from current net metering policy and a reformation of the utility business model. 

Key Take-Aways: 
  • In a majority of cases, retail rate compensation for residential rooftop solar is likely too generous. However, in certain places its electricity may be worth more than the retail rate. 
  • Utilities in most places have not been financially harmed by rooftop solar yet
  • Germany's experience with rooftop solar offers important lessons to the US since their market is more mature
  • A self-consumption model for rooftop solar with compensation pegged to the true value of a system's electricity at different locations and times is the best option
  • The utility business model should be radically reformed to incentivize optimal system operation with the least electricity possible
  • Residential solar should not be subsidized at a greater rate than utility-scale solar. If residential solar electrons are worth more than those from utility-scale systems, they must be priced appropriately.