Net Metering to Shine on in New York, California

Rooftop solar companies are breathing a sigh of relief – and are getting ready to install more projects in New York and California. That’s because legislatures in the two states have passed new rules that boost net metering, an arrangement that allows customers with small-scale solar and wind installations to get credit for the electricity they deliver back to the grid.

With net metering, as the arrangement is called, customers pay only for their net electricity usage. Their meters run forward when they are using more electricity than they are producing and run backward when they are producing more electricity than they are using. The absence of net metering could cut out much of the economic benefit of building solar systems, at least in places without other financial incentives, such as a feed-in tariff.

In California, the solar installation industry faced the possibility of suffering from a lack of effective net metering rules up until last week. Utilities in the state were limited to accepting only up to 2.5 percent of their electricity from net-metering customers, and one utility, Pacific Gas and Electric (s PCG), is expected to reach that amount this year. Last year, Adam Browning, the executive director of Vote Solar, said installations would “grind to a halt” in PG&E territory if the net-metering cap wasn’t raised. And Assemblywoman Nancy Skinner, D-Berkeley, who wrote the bill to raise the cap, called net metering “absolutely fundamental” to the success of solar in the state.

The California Assembly last Thursday approved a plan to double the cap to 5 percent, a move which the Senate had already passed the previous week. Gov. Arnold Schwarzenegger is expected to sign the bill into law this week. The extension “sends a clear signal to the growing solar industry that California intends to be open for business tomorrow and for years to come,” said Sara Birmingham, western policy director for the Solar Alliance, in a press release.

Meanwhile, net metering advocates in New York are cheering after the state legislature on Tuesday passed an amendment that will allow non-residential customers to participate in the the state’s net metering program. When the state extended its net metering program in 2008, it turned out that the wording of the law inadvertently restricted the program to residential customers.

New York’s new amendment will allow schools, businesses and other energy consumers with systems of 2 MW or less to be able to get credit for feeding solar power into the grid. “The amendment passed today means the expanded net metering law will finally function as it was meant to and that millions of dollars in green energy systems can be installed,” said Carol E. Murphy, executive director of the Alliance for Clean Energy New York.

Vote Solar didn’t immediately have estimates on the expected size of the non-residential market for these small systems. But Rosalind Jackson, director of communications at the advocacy group, said that even if the implications of the amendment are modest in today’s market, it could help support significant growth in the years to come.

Overall, the two net metering wins are part of a trend toward net metering around the country. According to a Vote Solar report released in November, 27 states have solid net-metering standards (which received A or B grades from the group), up from 13 in 2007.

That’s not to say the policy hasn’t had its share of opposition. Opponents, including some electrical and utility workers, have expressed concern that more net metering could reduce the stability of the grid and raise costs for other customers. Other solar advocates favor other policies, such as German-style feed-in tariffs, in which solar customers sell power directly to utilities, instead of net metering, while still others want both.

Image courtesy of SolarCity.