Thread by @hausfath

Theres a big debate over reforming net metering for residential solar in California happening right now. Its a complex issue, but there are real equity concerns with the current system and – at least in principal – we could find a more effective way to subsidize solar.

A thread:

Its pretty clear the current system has some major problems – its subsidizes higher-income households at the expense of poorer renters and those who cannot afford solar. energyathaas.wordpress.com/2018/03/26/why…

Specifically, the way net metering works is that as a residential solar producer I get to effectively run my meter backwards, getting paid for any generation at my average electricity price (say, at 18 cents per kWh).

This was not an issue a decade ago when solar was a small part of our grid, and the value of solar was similar to all other energy sources. Today, however, solar is close to a quarter of total California generation, and closer to 60% at times during the middle of the day.

This results in frequent near-zero or even negative electricity prices during the day. The value of solar in California – relative to other generation sources – has fallen by around 40% since 2014: thebreakthrough.org/articles/quant…

But with residential solar this solar value deflation does not really affect me, due to net metering. While a utility scale solar plant down the road might get 1 cent per kWh during the middle of the day, any solar I sell back to the grid from my home panels earns me 18 cents.

So where does that 18 cents I'm paid come from? Ultimately, it comes from all other ratepayers. Everyone's electricity bill goes up to support net metering payment, which no longer reflect anywhere close to the actual real-time value of solar to the grid.

This is a problem because utility rates are, fundamentally, quite regressive. Low income households pay a much larger portion of their income for energy, and are disproportionately impacted by higher rates. And most folks receiving subsidies for solar are higher income.

Residential solar is a good thing, and we should incentivize its deployment. But we need better incentives than net metering. Higher upfront subsidies for installing panels – paid for via progressive taxation rather than regressive utility rates – are much better solution.

Households should still be able to sell electricity back to the grid, but they should be paid at the locational marginal price – the actual, real-time cost of electricity – rather than being allowed to net-meter.

Households should also get greater incentives for installing storage, so that they can bank extra solar generation during daytime hours when its worth less, and use it to offset costly evening demand (which, today, is primarily met by burning planet-warming fossil gas).

The way we design rates matters. We need to subsidize low-carbon tech (and, when possible, penalize high-carbon tech). But we need to do it in a way that is just and equitable. The current system that subsidizes richer households with higher rates for poorer ones is clearly not.