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Solar is from Mars, Utilities are from Venus – Finding a Common Language for Net Energy Metering

Have you noticed increasing attention being paid to potential impacts from higher levels of solar distributed generation (DG)? Does the conversation sound like productive dialogue or an excerpt for a daytime drama? What is that sausage making they call ratemaking? What should be considered when valuing the costs and benefits of DG? What costs are fixed for the electrical system? And what, exactly, is net-energy metering (NEM)?

Unfortunately, it seems as though the only discussions receiving attention these days are the “battle cries” or an “us versus them” mentality. Those discussions are carefully drawing lines in the sand – aiming for popular opinion and policymakers to help cement those positions. Whether it’s a new study on costs and benefits, an article on a utility or solar industry point-of-view, or a coalition being formed to protect NEM, fingers are being pointed.

Maybe it shouldn’t be surprising that those lines have been drawn. Almost overnight, solar has gone from a novelty into a fast-growing energy source, with increasing penetration levels of distributed solar in a number of places. Utilities are rightly drawing attention to potential rate equity challenges and the impact that solar DG customers are having or could have on grid operations.

Likewise, solar stakeholders are rightly concerned that certain utility proposals will damage the young market as it seeks to mature from infancy to puberty; that those proposals will slow or stop the growth of solar in certain important markets today and emerging markets in the future.

Who is framing these conversations and how do we navigate the industry’s jargon so the conversation can become more constructive?

At the Solar Electric Power Association (SEPA), it’s our mission to drive collaboration between utilities and the solar industry and, to that end, to create greater opportunities for the deployment of solar. SEPA has been examining the basis for tension in today’s debate over NEM and the impacts from solar DG customers.

We came to the following conclusion: valid points are being made by utilities and solar industry stakeholders alike, but there’s a lack of common language. As basic as that sounds, understanding terms, their application to the issues, and concepts being pressed is necessary to identify points of agreement and then begin to work towards consensus.

In other words, we’re talking past each other.

To address this, SEPA published a paper, Ratemaking, Solar Value and Solar Net Energy Metering—A Primer, to help provide a balanced and unbiased look at key terms and concepts that serve as the basis for many NEM discussions going on around the country in regulatory and legislative arenas.

As is demanded by our mission and diverse membership, the paper is the result of a collaboration, using the input and perspective of diverse stakeholders – including utilities, solar developers, industry associations, regulatory experts, and others. We narrowed in on the most relevant underpinnings – rate-setting and solar value research – to provide a common playbook that interested parties can work from.

Key themes addressed within the report include:

  • Participants discussing policies related to solar DG and NEM bring varying experiences and perspectives to the table;
  • Stakeholders often use the same terms and concepts but do not always mean the same thing;
  • Rate-setting processes and determinations of costs/benefits for DG are where many discussions are taking place but come with limitations and challenges that greatly impact how interested stakeholders react;
  • Constructive dialogue about the appropriateness of mechanisms like NEM or alternative policies can only begin when parties are “speaking the same language;” and,
  • Solar advocates, utilities, regulators, and other interested parties all benefit from being better informed about key terms, issues, and their application within this context.

I encourage you to read the Primer – it’s an important place to start the conversation. There are also many other passionate and highly competent people contributing to this important subject. Rocky Mountain Institute recently published a paper through its Energy Innovation Lab (eLab) titled A Review of Solar PV Benefit & Cost Studies. The paper investigates in detail the wide range of approaches used in evaluating the costs and benefits of DG resources, and provides another building block within this conversation.

Disagreement does not have to be the starting point for this important discussion. Rather, by starting with agreement on the lexicon being used, productive discussions and problem-solving exercises will benefit from “starting on the same page.”

All parties, regardless of perspective, can begin by finding those core points of agreement. They do exist, and we at SEPA firmly believe they are greater in number than the points of disagreement. And if we succeed at finding those points of agreement, we stand a fighting chance of creating a sustainable, growing distributed solar market that benefits everyone.

The Primer is not SEPA’s last contribution to this conversation. We are building a NEM roadmap; though it won’t have concrete answers, it will lead us toward solutions as the next part in a multi-stage process. We can’t get there alone – only through collaboration and firm commitments by others. If solar DG is to move from daytime drama to primetime we must make this commitment.