Net Metering Up Against the Ropes

Net Metering Up Against the Ropes

Over the past five years, sales of grid-connected solar-photovoltaic systems -- small semiconductors that transform sunlight into electricity -- have increased by more than 50% each year. If the customer market grows by less than half that rate over the next several decades, the entire U.S. could be powered by solar energy by midcentury.

What many people don’t know, however, is that the future of large-scale solar power may be hanging in the balance, as California deliberates extending indefinitely what began as an emergency measure to battle last year’s energy crunch: net metering for large-scale solar-PV projects.

Large-scale solar PV projects are not only more cost-effective than the typical small-scale projects installed at homes, they also allow businesses to play a larger role in increasing sustainability. Major companies such as Johnson & Johnson, Neutrogena, Fetzer Winery, and Cypress Semiconductors are now working on building a more sustainable power market through solar PV.

Net metering allows a utility customer to send solar power it cannot use back to the grid for the benefit of other consumers. In response to California’s severe peak-power shortage in 2001, Governor Gray Davis signed into law a solar tax credit that extended net metering to systems larger than 10 kilowatts. The move paid off: Since the expanded program went into effect, the number of proposed large-scale solar-PV projects -- many of them by businesses -- has increased tenfold.

California passed the nation's original net metering law in 1995, and some 36 states have followed suit. But California remains the only state that offers net metering for large-scale projects. Based on the sunshine state’s success, the New York legislature is currently debating the expansion of net metering to solar-PV systems as large as one megawatt.

At the same time, ironically, a new debate in the California legislature has the issue of expanded net metering up against the ropes. Recent utility-sponsored amendments to a new net-metering bill could doom several large projects now on the drawing board. In its altered form, the bill would reduce credits for large solar producers by 30% and require customers to install an additional meter at their own expense. These changes could have a chilling effect on large-scale solar power in California, the country’s flagship market.

Net metering is a successfully road-tested policy that, if offered for large-scale systems throughout the country, will likely produce big returns for businesses, consumers, and the environment. Allowing the private sector to take part in the clean-energy revolution fosters long-term sustainability -- and just makes good business sense.

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Tom Dinwoodie is CEO of PowerLight Corporation, located in San Francisco's East Bay.