Utility customers benefit from rooftop solar — studies

Source: Christa Marshall, E&E reporter • Posted: Thursday, May 26, 2016

Two new studies make the case that rooftop solar can be a net benefit to ratepayers, despite concerns from some utilities that say it hurts their business model.

The first paper, from SolarCity Corp. — the nation’s largest solar installer — and the Natural Resources Defense Council, concludes rooftop solar and other distributed resources like storage provide up to 3.4 cents in “benefits” for Nevada customers per kilowatt-hour of generated energy.

Nevada is a focal point in the debate over the benefits of rooftop solar, after the state Public Utilities Commission last year slashed the amount residents with solar panels could be compensated for surplus power (Greenwire, Feb. 15). As a result, installers like SolarCity abandoned the state market and new solar permits plunged more than 90 percent in the first part of the year.

The other study, from the liberal-leaning Brookings Institution, looks broadly at net metering nationally and finds that it “is more often than not a benefit to the grid and all ratepayers.” Net metering is a policy that credits solar system owners with excess power sent back to the grid.

The papers are the latest volleys in a raging fight about the economic impacts of rooftop solar and other distributed resources like energy efficiency.

Some utilities and opponents of net metering contend that paying homeowners for excess solar power generated on their rooftops unfairly transfers costs to utilities and non-solar customers. The argument is that every kilowatt sold by a homeowner with rooftop solar takes away from utility sales.

“Ninety-nine percent of our consumers were being asked to subsidize the 1 percent that had solar units,” Berkshire Hathaway CEO Warren Buffett said this month at a stockholder meeting about the Nevada policy, according to newsreview.com. Berkshire Hathaway acquired Nevada utility NV Energy in 2013.

Groups opposed to rooftop solar subsidies are circulating their own set of numbers. Citizens for Solar and Energy Fairness, backed by NV Energy, claims in its advertising that non-solar customers in Nevada were paying millions of dollars more on electricity bills because of generous state support for solar.

The SolarCity paper used a model developed for the Public Utilities Commission of Nevada, as well as cost and benefit categories established — but not fully considered — by the PUC. For example, the paper considered variables such as rooftop solar’s potential to reduce the need for new power lines and lower fossil fuel power plant emissions.

When all the costs and benefits were quantified, the paper concluded, rooftop solar generation could provide between $7 million and $14 million in annual benefits for all Nevada utility customers.

“As Nevada policymakers are planning the energy grid of the future, we encourage them to consider the potential of distributed energy resources,” said Jon Wellinghoff, chief policy officer at SolarCity, in a statement. The Rocky Mountain Institute, NextGen Climate America and Stanford University professor Mark Jacobson reviewed the analysis.

The Brookings paper looks broadly at national studies on net metering, including analyses from state PUCs around the country and the national labs. It concludes net metering “frequently benefits all ratepayers when all costs and benefits are accounted for.”

For example, Brookings cites a Lawrence Berkeley National Laboratory study that found net metering can have a “relatively modest” impact on ratepayers, despite decreasing utility shareholder earnings.

Brookings urged regulators and utilities to engage in a “broader and more honest conversation” about how to integrate distributed generation into the grid. It outlined a series of potential reforms, including adopting a more standard methodology on measuring the costs and benefits of distributed generation like rooftop solar.

It also calls for broader changes, such as implementing “decoupling” policies. Such policies aim to sever the link between utility profits and the amount of power sold and instead tie them to factors such as the number of served customers.

“Typically decoupling has been used as a mechanism to encourage regulated utilities to promote energy efficiency for their customers. However, it can also be used as a tool to incentivize net metering,” the paper says.