Net Metering Under Fire: Connecticut’s Senate Bill 9 and its Implications for Solar
Rooftop solar is heating up across the United States. Over the past few years, over a million solar photovoltaic (PV) systems have been installed in the US. This is good news for the climate and for the increasing number of government bodies with renewable energy mandates to meet, but this is also good news for the wallets of many homeowners. The cost to install solar has fallen by over 70% since 2010, and thanks to policies like net-metering, solar customers can save on their annual electricity bills due to the energy they generate on their roofs. However, for homeowners in Connecticut this may change. Earlier this month the Connecticut Senate voted to approve changes to Bill 9, the primary piece of legislation that concerns the state’s renewable energy policies, such as Connecticut’s renewable energy mandate and their policies concerning rooftop solar. One of these policies is net metering.
So what exactly is net metering and how does it work? Net metering is a system that enables utility customers that are generating power independently (through solar, for example) to use the excess energy that they produce but do not consume as a credit against their monthly electricity bill. Often, homeowners with rooftop solar systems find themselves generating more energy than they actually need, especially during sunny afternoons in the summer months. This excess energy is sent back to the grid where it can be distributed to other households. What net metering does is track the amount of energy a household produces versus the amount that it consumes. Households are then able to be charged for the net amount of energy that they consume each month – in other words, they only pay for the difference between the energy they are producing and the energy they are consuming. If a solar homeowner is sending more energy back to the grid than they are consuming, they can receive a credit from their utility. These credits can then offset future energy bill costs.
For example, if it’s the peak of summer and the days are long and full of sunshine, and you are not using much power around the home during the evenings, you may find that your new rooftop solar system is generating much more energy than you need. This energy is sent back to the electric grid and distributed amongst your neighbours. If you live in a state that offers net metering, you can track how much energy you are producing and consuming, and therefore can measure whether you are sending more energy back to the grid than what you are consuming and by how much. This excess energy gets translated into credits by your utility, and your next monthly electricity bill will be reduced by the credits you have earned.
The Case for your Wallet and for your Community
For homeowners with installed solar, the benefits of net metering are clear. Net metering can save homeowners that have installed solar panels hundreds of dollars in electricity charges each year. By tracking energy usage, homeowners only pay the utility for the energy they consume from them. Homeowners also see the energy they produce reflected in their electricity bills through the credits they receive. For this reason, net metering has been a fundamental policy supporting customer-sited solar throughout the United States.
However, there are other benefits of net metering that extend beyond the individual economic advantages. Many states are conducting their own cost-benefit analyses for solar power in their jurisdiction, and the majority are finding solar to be an overall benefit, including analyses by Vermont, Nevada, Mississippi, Minnesota, and Maine. While it is not unanimous (a study from the Louisiana Public Commission Utility found that costs from net metering were being unfairly borne by non-solar utility customers), it is clear that solar is becoming an increasingly important component of the energy portfolio. These studies also find that benefits from net metering extend to all utility customers, whether they have solar or not. When a homeowner with solar sends energy back to the grid to be distributed amongst their neighbours, the energy their neighbours receive has travelled a short distance in comparison to the energy they might typically receive from the community’s power plant. With a reduced travel distance, less strain is put on the electric grid’s distribution and transmission infrastructure which helps to preserve it and keep maintenance costs down for the utility, and therefore for customers. The displacement of energy sources that results from increases in rooftop solar also reduces the need to build more power plants and increases community energy security. Ultimately, net metering is a significant incentive for homeowners to go solar. By supporting the adoption of solar, governments also support the benefits that follow a renewable energy transition. The reduction in air pollution and the mitigation of climate change that follows the uptake of solar are benefits that extend far beyond a single household.
Senate Bill 9, “An Act Concerning Connecticut’s Energy Future”, has several components, two of which seem to contradict each other. One is Connecticut’s renewable energy mandate, known as the Connecticut Renewable Portfolio Standard, which was original set to 20% of all electricity in the state to be renewable by 2020. Bill 9 adjusts the mandate relatively ambitiously, requiring 40% of all electricity to be renewable by 2030. This would seemingly encourage solar adoption.
The second key component of Bill 9 is the decision to expire Connecticut’s Residential Solar Investment Program. The Residential Solar Investment Program is Connecticut’s net metering policy. It states that utilities must give credits for any renewable electricity that is generated by a customer and (at the customer’s request) must install meters that measure the electricity consumed versus the electricity the customer generated but did not consume (i.e., excess energy that was generated and sent back to the grid). According to this program, if a customer generates and supplies more electricity to the utility than they consume from them, the utility must credit the customer by reducing their next bill (the following monthly payment) to compensate for the excess energy they produced. The rate of compensation is set at one kilowatt-hour per one kilowatt-hour produced. If unused, credits can carry over from bill to bill, and at the end of the annual payment period if there are any excess credits still remaining the utility must compensate the customer at a wholesale rate.
Bill 9 sets the Residential Solar Investment Program to expire by December 30, 2018. After which, homeowners that do not yet have solar installed but were interested in pursuing it will face a new policy with two options. One option is to accept a tariff for the purchase of all energy credits from the utility. This is known as a “buy all/credit all” system, where homeowners must sell all the energy they generate back to the utility and buy back what they consume at the regular retail rate. The rate at which homeowners sell the energy they generate has not been determined yet but will be set by the Public Utilities Regulatory Authority. The second option is to accept a pricing structure that includes (1) credits for energy that homeowners produce and immediately consume on a real-time basis and (2) a tariff for utilities to purchase energy that homeowners produce and do not consume (i.e. excess energy). This is essentially net metering, but the rate at which homeowners can receive credits for their excess energy (called a tariff within the Bill) is set to be determined by the Public Utilities Regulatory Authority instead of regulated at the wholesale rate as it is under the Residential Solar Investment Program.
According to Bill 9, Connecticut homeowners that already have installed solar and are enjoying the benefits of not metering under the Residential Solar Investment Program will not see any changes to their electricity bills until after December 30, 2039. Afterwards, the Public Utilities Regulatory Authority will set the rate for utilities to purchase the energy these homeowners generate.
A Wrench in Connecticut’s Solar-Powered Future?
The impacts of dismantling Connecticut’s net metering system would reach beyond homeowners. Net metering is a key incentive for homeowners to go solar and states that have already replaced net metering policies with alternative legislation have seen a reduction of new solar installations result. When Nevada eliminated net metering in 2016, new residential solar installation permits fell by 92%. This is bad news for solar companies, and therefore bad news for American jobs in the solar industry. In 2017, almost 250,000 Americans were employed by the solar industry which has more than doubled since 2012. 2,168 of those jobs are in Connecticut. Dismantling net metering puts some of these jobs at risk.
While Connecticut homeowners that already have solar will see their net metering benefits maintained until the end of 2039, new solar hopefuls will face new rates and a new system that will reduce the direct economic benefits that net metering can provide. Essentially, Bill 9’s proposed new system results in less money saved on electricity for Connecticut homeowners with solar, and therefore less of an ability for those homeowners to realize the full economic benefit of the energy they are producing.
Connecticut’s ability to achieve its Renewable Portfolio Standard may also be jeopardized by the elimination of net metering. Connecticut has seen one of the fastest rates of solar uptake amongst the smaller states, and was ranked as the 20th state in solar installation in 2017. 1.24%of the state’s electricity is from solar. Connecticut has a strong potential to continue along this path and have solar play an increasingly significant role in the state’s efforts to reach 40% renewable energy by 2030. By scrapping net metering, this bright future may be dimmed.
The Future of Connecticut’s Solar
Connecticut has already seen resistance to Bill 9. 14 solar companies and four advocacy organizations have sent a letter to the Senate House requesting them to amend or not pass Bill 9. Vote Solar, a national advocacy organization, has been active in organizing resistance, as has the Alliance for Solar Choice. The bill passed in the Connecticut Senate with an overwhelming majority of 29-3, and is currently awaiting the signature of Connecticut’s Governor, Daniel Mallory (D). As the bill originated from the Governor’s office and is likely to receive his support, the best chance to stop this bill from becoming law is through the Connecticut House. If you are a homeowner and you are hoping to go solar, or if you have already gone solar and want to ensure that you can continue to see the economic benefits well past 2039, the most significant action you can take is to call your local representative and state your support for net metering, and for the actions currently being taken by the solar industry and advocates.
Connecticut is not the only state to have discussed replacing net metering. Maine and Michigan have also recently ended their net metering programs, as has Nevada. However, these changes have not always been smooth. In fact, Nevada’s move to dismantle net metering was met with so much resistance that the state reinstated net metering in 2017. It is clear that voicing your support for pro-solar polices can make a significant impact.
Net metering is an important tool to encourage solar adoption amongst homeowners and support the transition away from fossil fuels and towards a more diversified renewable energy portfolio. When homeowners evaluate the decision whether or not to go solar, it is important to consider the full suite of benefits that are incorporated with solar installation. Economic savings are one benefit, as are benefits from increased air quality, increased energy security, and climate change mitigation.