Net-metering: Economically and Environmentally Sound

The United States’s energy sector has undergone a significant transformation in the 21st century, with once predominate sources such as coal and petroleum being gradually replaced by natural gas and a mixture of renewables. This emergence of alternatives is largely a result of technological innovation and declining production costs. As renewables have become increasingly accessible and affordable, more and more actors – from ordinary individuals to well-known tech giants – have joined efforts to prioritize clean energy. None of these positive trends would be possible without policies like net-metering, which has facilitated expansions in rooftop solar by compensating owners for excess power sent from their residential panels to the central grid.

Adopted in 38 states – ranging from ultra-liberal Vermont to staunchly conservative Oklahoma – net-metering has attracted broad, bipartisan support because of its economic and environmental effectiveness. By allowing rooftop solar owners to sell their excess energy to utility companies at market rates, net-metering increases return on investment, thereby making the thousands in initial installation costs less discouraging. These amplified consumer incentives help to expand private solar markets and further reduce energy prices.

Arguably the greatest benefit of net-metering is its contribution to reducing the pressure on central power grids. Net-metering, through its encouragement of rooftop solar, provides central utilities with locally sourced power and reduces their generation and transmission needs. During periods of high demand, central grids are often forced to transmit energy from distant areas, which only drives up costs for consumers. This increased supply of local power also lessens the need for industrial-scale operations, such as massive solar farms, to fulfill energy demands. These large projects require substantial investments in infrastructure and often acquire the land needed through infringing processes such as eminent domain. Thus, a close examination of net-metering reveals that it is incredibly effective at providing consumers with more control over their energy sources and costs.

Beyond the advantages it provides to rooftop solar owners and central utility grids, net-metering fosters broad economic and environmental benefits available to the masses. Surges in the private solar market help to create thousands of clean energy jobs and reduce carbon emissions. These trends diversify and expand economies while also improving environmental quality and mitigating future threats posed by climate change – benefits everyone can rally behind.

Despite its many benefits, net-metering has been criticized in some circles, with critics arguing that rooftop solar owners fail to pay their fair share in central grid maintenance costs. By receiving full retail price for the solar they provide and having very low electricity bills, opponents of net-metering claim that owners of rooftop solar panels are transferring the burden of grid maintenance costs entirely to those that do not own them. While policies should ensure that the credits solar-producing customers receive are always in line with current market prices, studies have failed to show that net-metering leads to the cost shift that critics allege. Even if this line of critique was valid, net-metering’s benefits still far outweigh these minor costs.         

The bottom line is that net-metering is an overwhelming net-benefit to society. The policy has proven instrumental in expanding private solar markets, reducing energy prices, and providing a wide range of economic and environmental benefits. South Carolina could become the latest state to approve net-metering and join efforts in improving and modernizing the United States’ energy sector. The American Conservation Coalition strongly supports this proposed legislation and urges all states to adopt net-metering policies in pursuance of a brighter economic and environmental future.