State net metering policies allow customers that have distributed energy systems to connect their system to the grid and spin their meter backwards when they produce more energy than they use. When the meter spins backward, the customer (turned electricity generator) earns energy credits that they can apply to future utility bills. For example if a customer generator produced 50 kWhs more than they use during a billing period (typically a month) then 50 kWhs can be deducted from the next bill. Along with net metering policies, many states also have ‘interconnection procedures’ that outline the rules on how to connect distributed energy system to the grid.
As the number of customer-sited renewable energy installations continues to surge nationwide, state policymakers have supported net metering for solar and other distributed clean technologies for a variety of reasons:
•To encourage economic development and the creation of green jobs
•To enhance the security and reliability of the electric grid
•To reduce air pollution and greenhouse gas emissions
•To increase energy independence
•To accelerate the adoption of water-free energy sources
A dozen states go beyond merely enabling customer-sited distributed generation by actively encouraging these clean energy systems. Since the premier 2007 edition of the report, Freeing the Grid, which grades state net metering and interconnection policies, many states have embraced the ‘best practices’ for promoting distributed generation. The federal Energy Policy Act of 2005 (EPAct 2005 ) kickstarted these improvements by requiring state public utility commissions to “consider” standards for net metering and interconnection. The legislation required that states determine a net-metering standard by August 8, 2008 and an interconnection standard by August 8, 2007. Some states took this as an opportunity to implement or upgrade net metering and interconnection procedures, while other states determined that the status quo was adequate.
Since the sunset of the EPAct 2005 provisions, many states have continued to expand their programs. Net metering and Interconnection grade improvements continue and states are enhancing the meaning of what constitutes ‘best practices.’ Across the board, the most successful states share certain policy provisions, and others seeking to duplicate that success have adopted similar policies. The result is a clear, emerging consensus on best practices in many states, and a patchwork of ineffective and varied rules in others.
One significant lesson from the wide variety of existing standards is that inconsistency is the enemy of clean energy development. It creates customer confusion, undermines the ability of renewable energy developers to operate across utility service territories or state lines and increases costs to all program participants–utilities, potential customer-generators, renewable energy developers and public utility commission staff. Inconsistency forces these stakeholders to master the idiosyncrasies of each individual state’s program.
To truly have a chance at meeting the goals listed above, successful interconnection and net metering policies must support the development of hundreds of small generators. It is entirely possible to stymie the development of renewable generation in a state by allowing even one counterproductive provision to be inserted into the policies during development.
In general, commonly accepted technical standards serve an extremely important purpose in the US economy. By meeting a uniform set of procedures and electrical specifications, a wide variety of products and technologies can be developed at a low cost by unleashing innovation and customer choice in the marketplace. Additionally, the use of one consistent engineering standard ensures safe and practical application. Standards for net metering and interconnection produce similar results for the renewables industry.
Several states—as well as the Federal Energy Regulatory Commission (FERC)—are approaching a consensus on just this type of standard for interconnection. The vast majority of state and federal interconnection standards are based on consensus safety and engineering standards from the IEEE and Underwriters Laboratories (UL). It is important to note that utility interests have had strong, expert representation throughout state and federal proceedings. The best practices have already been negotiated with strong utility representation; there is no need to renegotiate these provisions in dozens of regulatory arenas.
See freeingthegrid.org for more information about state programs and best practices.