Roughly 40 states have mandated net energy metering (NEM) programs or other methods to compensate consumers for the excess solar energy they generate. And while the benefits of net energy metering are almost too vast to count, they include: encouraging investment in solar, stimulating the economy, and paying solar owners for the energy they generate.
Yet, even though the benefits of distributed solar and NEM programs benefit everyone (not just solar owners), investor-owned utilities (IOUs) across the U.S. have been working to dismantle NEM and to stifle competition.
What’s happening with NEM was the topic of one of Empower 2021’s most gripping panels, Straight Talk: State Net Energy Metering Programs. It was truly a must-see, and you can check out the replay here.
In this lively session, panelists discussed why NEM has become so contentious, what’s happening right now in a few states fighting to save rooftop solar, why dismantling net metering runs counter to public interest and various state-led efforts like clean energy targets and energy assistance programs, and ways we can help save rooftop solar’s growth and jobs.
To start to answer these questions, we’re producing a blog series based on the NEM panel from Empower 2021. This first post will set the stage, defining a few key terminologies and diving into the conflict between IOUs and NEM. We’ve included timestamps after each question, so you can follow along and learn more from the session replay.
Defining the terms: NEM, investor-owned utilities (IOUs), public interest (4:20)
Aurora Solar’s own Sunny Wang explains net energy metering (NEM) and investor owned utilities (IOUs).
Sunny Wang, Director, Government and Non-Profit Relations, Aurora Solar
NEM is a mechanism that allows consumers to get credited for the extra energy they produce and give to the utility. It’s not a subsidy or incentive like the ITC.
Investor owned utilities are private, for profit, government sanctioned monopolies that generate and distribute power to all of us. IOUs are owned by, and accountable to, their shareholders, and they make a profit off of their investments, like transmission and distribution lines — so the powerlines that you see everywhere on the street — and not from the energy that they generate.
Jean Su of the Center for Biological Diversity helps us define public interest, what it traditionally has meant, how it relates to NEM, and why it needs to be rethought and expanded.
Jean Su, Energy Justice Program and Staff Attorney, Center for Biological Diversity
What public interest means, on the books and what it should mean, are two different issues. I’m sure many people here are very aware of the mechanism that we planted ourselves in, that started in the 1900s, for monopoly utilities. But, essentially all of our IOUs are regulated by state utility commissions. And a lot of the considerations that state utility commissions do in terms of regulating IOUs is to consider whether IOU proposals are within the public’s interest or not.
And, for a very long time — from the early 1900s until now — there has been a traditional narrow view of public interest: that it is solely an economic issue, a cost issue. It completely ignores the greater issues that we are dealing with today, which include the climate emergency, which include severe racial inequalities in terms of the types of energy that is put out there and available to people, and of course, public interest as it relates to NEM and what types of considerations need to be really valued in evaluating the proper NEM policies.
Where does the conflict between NEM and IOUs lie? (24:25)
After getting a clear idea of what these terms mean, the potential conflicts become pretty clear. Meghan Nutting of Sunnova Energy puts it into perspective.
Meghan Nutting, Executive Vice President, Policy and Communications, Sunnova Energy
This is where the conflict lies right now: We have these monopoly utilities that are used to having complete control over energy provision for all of their customers and not having to deal with competition. That’s why they’re regulated, and that’s why we have regulators that oversee them.
But, there are more technologies being offered right now, there are more opportunities for people to self-generate at their homes, and there are competitive suppliers that are able to offer consumers alternatives. So we have this huge tension between this competitive market and what consumers want, and then what monopolies are used to and the status quo.
And so that’s where a lot of these fights come from … you see the monopolies wanting to try to stifle rooftop solar and the growth of batteries because they see that as an existential threat to their existence and to the entire system that they’ve built their profits on over the past century.
But, the fact is, thanks to a lot of the work that organizations like Jean’s do, that the system is being blown apart. And this is also thanks to consumer demand and what consumers are asking for.
So, it’s a fascinating time to be in energy, as we are all working to break apart this system that hasn’t worked great for people to implement a new system that works better. But we’re up against these hugely powerful and well-funded entities that have a lot of power and control even over their own regulators.
Now that we’ve defined the terms and set the stage, the next posts in this series will highlight:
- Other ways IOUs are trying to put up barriers to solar
- How NEM ties into energy justice, equality, and inclusion
- Some thoughtful changes states have made to NEM policies to actually improve the program
- What we each can do to help save rooftop solar and NEM