by Bob Shively, Enerdynamics President and Lead Instructor

Suppose you decide to install a solar photovoltaic (PV) system on your home. Unless you decide to also put in a big battery system and maybe a backup generator, you will want to remain connected to your utility so that the utility provides power during the night hours, on cloudy days, and other times when your home usage exceeds the output of your PV system. And, during hours when your PV system output exceeds your usage, you will also want to sell power back into the utility distribution system. 

The key question for you and the utility is what price you should be paid for solar output. How utilities compensate customers for solar power is becoming one of the most contentious energy issues around the nation. So what are the options? 

1. Net metering: Your solar output over the year is netted against your usage, in essence paying you the retail rate for solar power even if you generate the power at noon and use it at 6 p.m. or in the middle of the night.
2. Avoided cost: You are charged the retail rate for all power you use and paid the wholesale avoided cost rate for all the power you generate. 
3. Feed-in-tariff: You are charged the retail rate for all power you use and are paid a price based on some determined value of your solar output for all the power you generate.

In 43 states plus the District of Columbia, net metering is the current policy. But numerous utilities have asked their regulators to look at the issue, and many have suggested either eliminating net metering or continuing it with a significant monthly fixed charge added to solar customers’ bills. 

The State of Maine recently did a net value of solar (VOS) study that came up with a rate as high as $0.33/kWh, much higher than the retail rate of $0.13. A group of Maine legislators proposed an alternative to net metering that would create a centralized standard buyer agency, which would contract to buy the output of roof-top solar. Solar from commercial and industrial customers would be paid an amount set in a competitive reverse auction where customers proposing solar projects would bid against each other, while residential projects would be paid through a declining block methodology.[1]

The standard buyer would then resell the solar power in the competitive wholesale marketplace (selling all products including capacity, energy, renewable credits, etc.) and, by tracking the revenues received, will over time discover the true value of the solar power.  

Whether Maine’s proposition or some other idea will prove acceptable to the various stakeholders around the U.S. remains to be seen. But, if nothing else, Maine is providing an innovative idea to try to break the deadlock.

Footnotes:

[1] For more details, see Maine lawmakers proposed groundbreaking way out of net metering wars, available at:http://www.utilitydive.com/news/maine-lawmakers-propose-groundbreaking-way-out-of-net-metering-wars/400074/