Thoughts on Net Metering — Part 2

I like California’s approach with Net Energy Metering (NEM) 2.0. It’s clear that full retail credit for all distributed solar production won’t be tenable at scale. But it’s not clear what’s best long-term. Intermittent distributed energy is more valuable in a grid that’s designed accordingly. U.S. grids are generally relics of the 20th century, designed for one-way transfer of energy from central locations to destinations with relatively consistent load patterns. This is a setup that utility engineers understand and can optimize for. In this context, intermittent distributed energy isn’t optimally leveraged and isn’t preventing transmission/distribution infrastructure investment. Which makes it very difficult to reach a long-term agreement re: valuing solar.

With NEM 2.0, the Public Utilities Commission (PUC) is ensuring that every kWh provided by an invested-owned utility will earn revenue earmarked for special purposes (e.g. low-income assistance). This “nonbypassable charge” (NBC) varies by utility and rate structure and is currently as high as 2.6¢ per kWh. By making this a 3-year interim solution, the PUC is essentially buying more time to gather information and clarify the new energy vision for California.

Michael Bishop, 8/18/16