When residential rooftop solar and other distributed generation (DG) technologies began making headway, it was seen as a win-win situation. Residents would win by generating their own power more reliably and less expensively than their local utilities. Utilities would win because they would be under less pressure to build large new generation units.
However, utilities started feeling they were getting the short end of the stick. They were being required to buy back power from net-metering customers at full retail rates, which were higher than the costs of their own generation and paying wholesale rates.
Furthermore, non-DG customers were also getting the short end of the stick. That is, each customer’s utility bill reflects not only the direct cost of the energy consumed but additional charges to “keep the utility running”—overhead costs and repair, maintenance, upgrade costs for the grid, etc. With increasing numbers of DG customers paying zero on their bills, these overhead costs have been shifting to non-DG customers—those who do pay the full rate on their utility bills.
As pressure mounts from utilities to reduce these inequities, it could spell a challenge for solar installers. That is, if and when DG customers are no longer able to take full advantage of the cost savings associated with net metering, fewer customers in general may find solar as appealing.
One of the first utilities to fire a salvo in this direction is Hawaiian Electric. In January, the utility petitioned the state’s public utility commission (PUC) for permission to eliminate its current net-metering program and replace it with a program designed to be fairer in cost to the utility and its non-DG customers.
“At the end of 2013, the annualized cost shift from customers who have rooftop solar to those who don’t totaled about $38 million,” said Jim Alberts, senior vice president at Hawaiian Electric, in a press release. “As of the end of 2014, the annualized cost shift had grown to $53 million. And that number keeps growing. Change is needed to ensure a program that’s fair and sustainable for all customers.”
The PUC is likely not unfriendly to the concept. In an April 2014 statement, several months before Hawaiian Electric’s petition, the PUC itself noted that, “It is unrealistic to expect that the high growth in distributed solar PV capacity additions experienced in the 2010 to 2013 time period can be sustained in the same technical, economic and policy manner in which it occurred, particularly when electric energy usage is declining, distribution circuit penetration levels are increasing, system level challenges are emerging, and grid fixed costs are increasingly being shifted to nonsolar PV customers.”