Many owners of solar homes were surprised this spring to get letters in the mail from their utilities, informing them of pending changes in Virginia’s net metering rules. Virginia’s State Corporation Commission will be writing regulations to implement a law passed this year that was applauded for increasing the commercial net metering cap to 1 megawatt, from 500 kilowatts. (The SCC case is PUE-2015-00057.)
Unbeknownst to anyone not working on the bill, a late addition to the text restricts the capacity of net-metered projects to just what is needed to meet the customer’s “expected annual energy consumption based on the previous twelve months of billing history or an annualized calculation of billing history if twelve months of billing history is not available.” And while the bill is otherwise directed at commercial installations, the added language contains no such limitation—hence the unexpected letters to homeowners.
Although customers with existing systems aren’t affected by the changes, the letters have prompted concern among consumers and renewable energy advocates, especially those who are working on the various “solarize” programs around the state that use bulk purchasing to bring down costs and draw in new customers.
According to many installers, limiting a solar array to the size that just meets a customer’s electricity needs won’t matter to most homeowners, because their roofs generally won’t accommodate more solar panels than that anyway. In addition, over-producing isn’t financially rational because the utility doesn’t have to pay you the full retail value of any extra electricity you produce.
But a problem arises when it comes to new construction, or when solar is added as part of an addition or renovation that will increase electricity demand, making past use an inaccurate predictor of future demand. The same problem would arise if a homeowner decided to buy an electric car and wanted to power it with solar. The law makes no provision for these situations, so the State Corporation Commission will either have to decide how these should be handled, or leave it to the utilities.
Leaving it to the utilities seems like a bad idea to people who have witnessed the tendency of Dominion Virginia Power and Appalachian Power to interpret ambiguity in ways that further constrain the solar market. Environmental groups and MDV-SEIA, the solar industry trade association, are filing comments urging the SCC to include language in the implementing regulations to ensure that customers have the right to install a solar array big enough to cover their needs when past use alone isn’t an adequate measure.
But let’s take a step back to look at the broader policy implications of the legislation. This effort to control the size of net-metered facilities is not just a pain in the neck for potential new customers, but it also runs counter to Virginia’s stated goal of increasing the share of electricity from renewable energy. If customers aren’t going to be paid more than a few cents per kilowatt-hour for their excess electricity anyway, surely it would be in everyone’s interest to let them build surplus solar to their hearts’ content (assuming their infusions of electricity don’t create grid issues, a problem that is best addressed directly). The same holds true whether we are talking about residential or commercial, solar or wind. People who are willing to take on the cost of building clean, renewable energy should be encouraged to do so, period.
In addition to restricting the size of solar installations, the new law makes other changes. Customers now must notify their utility 30 days prior to installation of the solar facility, rather than 30 days prior to interconnection, a change some installers say may benefit customers by alerting them to problems before an installation goes forward. Additionally, the utility must approve the facility before installation; however, language in the existing law provides only a few narrow grounds for withholding approval.
Finally, the new law authorizes utilities to charge customers “all reasonable costs of equipment required for the interconnection to the supplier’s electric distribution system, including costs, if any, to (a) install additional controls, (b) perform or pay for additional tests, and (c) purchase additional liability insurance.” It also states that the reason for this is “to ensure public safety, power quality, and reliability of the supplier’s electric distribution system.” The existing law had required customers to “bear the reasonable cost, if any, as determined by the Commission, to (a) install additional controls, (b) perform or pay for additional tests, (c) purchase additional liability insurance.”
A lot of people have asked how this bill passed without any public discussion of the restrictive language and its effect on homeowners. A fair question, and one I asked, too, because when it was introduced back in January, the legislation merely provided for an increase in the commercial net metering limit. However, a look at the bill history shows that, as often happens, the added language first appeared in a committee substitute distributed to legislators at the same meeting where it was to be voted on.
It wasn’t a nefarious deal; an environmental lobbyist helped negotiate the bill, and the solar industry signed off on the changes, all under pressure to get a deal done that would improve the prospects for solar in the state. But they were also distracted. The first week of February is crunch time at the General Assembly, with dozens of other important bills in play simultaneously, many of them going through rapid-fire changes likely to either help or hurt (mostly hurt) Virginia’s energy future and its environment.
The General Assembly cannot be called a deliberative body. With thousands of bills to deal with in a 45-day session, only a few people know what is going on, and those are usually the paid lobbyists. In this contest, the person with the most paid lobbyists wins. And no one has more paid lobbyists than Dominion Power. So when pro-renewable energy bills get amended, the results favor the utility.
Progress on renewable energy in Virginia tends to run more sideways than forward, and this is no exception. Over the long run, though, the utilities face a losing battle to control and minimize their customers’ access to solar. In the next few years, battery technology will upend the top-down structure of the utility markets, and utilities will plead for access to their customers’ batteries to help meet the need for peak power and grid services.
Until then, we renewable energy advocates, customers and industry members have to keep on educating legislators about what good policy looks like. Wind and solar afford us huge opportunities in decarbonizing the electric grid, reducing pollution, and increasing business opportunities in the nation’s fastest-growing energy sector. If we open up the market instead of constraining it, everyone will benefit.