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Is the End of Net Metering in Sight?

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Apr. 5 2016, Published 12:24 p.m. ET

Net metering regulations

While many states and territories have given a green signal to net metering, their policies differ according to the capacity limits or renewable energy targets. Capacity limits control the size of net-metered installations in many ways. Capacity limits can be established by a kilowatt-based limit or a percentage limit. For example, California regulators limit net metering credit to 5% of the utilities’ aggregate peak demand. However, experts argue that overregulation on net metering and other operational policies might limit the growth of distributed generation and ultimately the solar market as well.

In 2015, there were regulatory actions in 27 states regarding net metering. Many utilities (FXU) reached their net metering aggregate capacity limits.

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Regulatory uncertainty

At the end of 2015, regulators ended one-for-one net metering in Hawaii and Nevada. California, Colorado, and Iowa upheld net metering without any policy changes. On the other hand, Maine, Louisiana, and a number of other states are thinking about policy changes to replace net metering.

XCEL Energy (XEL) in Minnesota is developing an ambitious community solar garden of nearly 1,400 megawatts. Financing for third-party ownership of solar PV (photovoltaic) or third-party power purchase agreements supported solar growth in almost all of North America. Recently, Georgia passed the same legislation while Florida postponed the third-party ownership mandate to 2018. Southern Company operates in Georgia. NextEra Energy (NEE) and Duke Energy (DUK) operate in Florida.

Boost for solar

There’s a 30% federal investment tax credit for solar for two years. Recently, Congress announced that it will continue the subsidy through 2021. This was an additional boost for the solar industry. Greentech Media expects that this will increase residential solar PV installations by 35% and non-residential installations by 51% in the next five years compared to a scenario without the extension.

Net metering is another serious challenge for utilities (XLU) considering the growing number of customers opting for solar PV. Regulators will play a key role in net metering. The policies will provide clarity. They will eventually drive the growth of on-site generation.

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