Obama No Brainer: A National Net Metering Law

The new Obama administration has a lot on its plate, but here's one item, on the energy front, that's a no-brainer: a national net-metering law.

Net-metering laws require electric utiltities to allow individual homeowners and businesses to tie their own electric generation systems (usually solar or wind) into the existing grid and credit them for the electricity they generate.

Most states--more than 40--now have net-metering laws, but the particulars of them vary considerably, and a few backwards states still don't have any net-metering provisions.

What we need is a national net-metering law based on the most progressive state laws, which have been most successful in encouraging additional investment by individuals and businesses into clean electricity generation.

A progressive net-metering law would include provisions that:

--Prohibit a utility from imposing expensive, unnecessary or punitive conditions on interconnection,

--Standardize forms for applying for interconnection

--Allow power generators to be compensated if they generate more electricity than they use (some states only allow a credit up to the amount used)

--Require, under certain circumstances, premium payments to generators who help a utility meet "green-power" benchmarks and/or when the generator is offsetting peak power loads

By encouraging individuals to invest in alternative energy, especially wind and solar, net metering laws increase our national ability to reduce greenhouse emissions and reduce our reliance on imported oil and natural gas.

In addition, net metering helps utilities offset the demand for new transmission lines by adding distributed on-site electricity generation in the middle of high demand areas. Utilities are planning to invest billions of dollars in new transmission lines, when instead that money could be invested in alternative energy generation (primarily solar) in the middle of dense urban areas. By generating additional electricity in the middle of the grid, utilities can forego wasteful construction of long transmission lines to new, remotely sited, central power plants.

For more information on net metering and variations in state policies, go to the Department of Energy's net metering information page, HERE.

Mark Sanford: SC's Faux Green Governor

Perusing today's Washington Post, the Curmudgeon was surprised to see an op-ed piece on global climate change from none other than South Carolina's very red Republican governor Mark Sanford.

The headline, "Why the Right Needs to Get Invested in the Search for Climate Change Solutions" was certainly provocative. Could it be, we wondered, that even someone as far right as Mark Sanford was finally seeing the light on global warming?

Nope, not really. Sanford makes the logical point that conservatives need to join the debate on global climate change or simply be left out. He describes himself as a "conservationist," which means that, like many Republicans, he supports state tax subsidies to wealthy landowners to create "conservation easements" that restrict future development.

(We're not against conservation easements so long as the tax subsidies are not unreasonably generous and the restrictions on future development are real, which they often aren't. We are against conservatives like Sanford who "oppose" regulation and "raising" taxes, but don't think that subsidies in the form of tax breaks are also a form of regulation and state expenditure. If Sanford really meant what he says, he'd simply "encourage" wealthy landowners to set aside their land from development out of the goodness of their conservative Christian hearts.)

Apart, however, from saying that if conservatives don't act, they'll cede ground to "far-left interest groups", Sanford offers no prescription for action.

(When Sanford speaks of "far-left interest groups," he means anyone to the left of his far right agenda. And when he speaks of people "losing their rights and freedoms" he excludes Taliban-like Christian activists in his party who would love to tell the rest of us how to live our lives, especially in the bedroom.)

The plain fact is that South Carolina is far behind the curve when it comes to policies that will combat global warming. For example, South Carolina has no net metering law, which would require local utilities to allow businesses and homeowners to tie distributed renewable electricity sources, such as wind and solar, into the local power grid. SC is one of less than 10 states that don't have a net metering provision; its neighbors in Georgia and NC both have such laws.

The absence of a net metering law is a real hindrance to those who want to fight global warming. We recently suggested to a very good friend, who tries to lead a green lifestyle in South Carolina, that he put up a wind microturbine and a few solar panels on his Sullivans Island home. (Sanford also has a home on Sullivans Island, a thin barrier island, rising just a few feet above rising sea levels, to the north of Charleston harbor. The wealthy enclave is pictured above.) Our friend said it was not practical since SC has no interconnection option.

Nor can our friend opt, as he could in many other states (including NC, but alas, not Virginia), to purchase "green power" from his local utility, at a premium charge, to encourage the utility to finance development of alternative sources of energy.

South Carolina is blessed with abundant sunshine, and along it's coast and some parts of the state's mountains it also has ample wind resources. SC also has the finest coastline on the Eastern Seaboard, with beautiful wide beaches and the most tidal marshlands of any state. All of which is greatly imperilled by rising sea levels and the threat of more frequent and more intense hurricanes.

If Sanford was serious, he'd try to put together a package of "incentives" (not regulations) and "tax breaks" (not state spending) that would enhance the "rights and freedoms" of South Carolinians by encouraging them to develop the state's largely untapped renewable energy resources. He'd try to make the state a leader--not a laggard--in that arena, which, by the way, holds the promise of new jobs and technologies.

He'd also promote conservation--not land conservation, but energy conservation. To do so, however, he'll need to embrace at least some moderate levels of "regulation," such as requiring that new homes be built to certain green standards. Is that such a big deal? Not really--the state already has numerous regulations and building code provisions applying to construction. Adjusting them to promote conservation is not really "new" regulation unless Sanford simply wants to do away with all the existing requirements.

Sanford is probably correct that if conservatives don't act, the rest of the country and the world will. And he might not like what comes of that.

So, Mark Sanford, if you're serious, try leading by example and action, instead of empty words. You can start by putting a wind turbine and some solar panels on your beachfront farm, and making sure that other South Carolinians can do likewise without interference from the local utility.

Net Metering Update--Need For A National Law

Yesterday, the Curmudgeon highlighted a report from the Network for New Energy Choices grading various states' net metering laws and giving Virginia a "D".

We've since done some more research and concluded that the NNEC report, while useful in some respects, was misleading and confusing in others. So we want to correct the record and pull together some additional information here.

One of the things we learned is that the NNEC, which issued the report last November ('06) had some out of date information, including with respect to the states that don't allow net metering. It turns out that only 10 states (not 16 as NNEC reported) don't have net metering laws. For example, North Carolina, listed in the NNEC report as not having such a provision, in fact allowed net metering starting in 2005 (via an order from the Public Utilities Commission). We're sorry to say that our native state of South Carolina--whose couple hundred miles of beautiful coastline and whose historic city of Charleston are potential victims of global warming and superstorms--hasn't bothered to allow net metering yet.

We also looked at the methodology of the NNEC's report and concluded that it was not very sound. In grading states' net metering laws, the NNEC gave considerable weight to the number of customers who had signed up for the net metering programs. The problem with this is that those numbers are heavily confounded by other state laws, mainly those that in some states provide direct subsidies and tax breaks to individuals and businesses who install green energy generation.

For example, both California and New Jersey, which earned an "A" grade from NNEC, heavily subsidize solar, wind and other renewable energy in their states. It is those subsidies--not the net metering law per se--that have put those states far ahead of everyone else.

The NNEC also penalized some states for their limits on the size of alternative energy generators that could be plugged into the net, and provisions such as requiring liability insurance. In Virginia, the net metering law limits homeowners to no more than a 10 kw system, which we yesterday said was too small. At the time, however, we misunderstood what this means. It turns out a 10 kw system for a homeowner is pretty big. The Curmudgeon's solar photovoltaic array, which has 14 panels, is rated at 2.3 kw. Few homeowners could fit anything four times that size on their homes (and it would cost $75,00-100,000). Still, the limit should be raised since some farm owners could install very economical wind generators well in excess of 10 kw.

In contrast, Virginia's limit for commercial enterprises is 500 kw, which is a pretty large system. (We'd like to see it raised to 2 MW to encourage large businesses--such as AOL--to go for bigger systems.)

Virginia also requires generators in the net metering program to have liability insurance, but it turns out that a standard homeowners policy will suffice as long as it does not have specific exclusion against loss arising out of the use of a renewable fuel generator. So this is really not much of a disincentive.

Virginia requires a utility to carry forward any net generation for a year (this is important, because some generators create more electricity than they need in some months and use more than they generate in others--the carryforward smooths out the peaks and valleys). And Dominion Virginia Power will consider entering a purchase power contract with someone who's generating a lot of excess electricity.

The one real problem with Virginia's law is that it limits participation in the net metering program to 0.1 percent of a utility's total peak demand for electricity. In other words, if the number of participants exceeds 0.1 percent of Dominion's peak demand, Dominion can turn down additional participants. This is a silly limitation--Virginia should hope that participation will grow as large as possible. If a limit is kept, it should be set at 5 percent. Utilities benefit from net metering because it reduces overall demand and thus staves off the building of expensive new plants and controversial high voltage transmission lines. Also, solar generators tend to produce the most energy during periods of peak demand, thus decreasing the need for a utility to purchase very expensive peak power. Accordingly, any claim that expanded participation in net metering will hurt the utility or its ratepayers is hogwash.

While we think the NNEC's grading of the states was misleading--we'd give Virginia a "B"--maybe a "B-"--the report does have some utility. It notes "best practices" among the states, which in turn can be used to model much needed federal legislation.

Here's what we'd like to see from Congress. A national net metering law based largely on that in New Jersey, which would require all utilities to allow net metering. The stated goal of such legislation should be to encourage 5% of all electricity generated in the U.S. to be from net metered installations by 2017. (That's a lot of electricity--about 200 billion kilowatt hours.) There should be few limits on the size of net metered generators and paperwork should be kept to a minimum (Dominion's form is pretty easy to use). The law should also preempt localities from discouraging net metered home installations--we recently saw a report from Scarsdale, NY where the village council prohibited a couple from putting solar panels on their roof because neighbors complained about possible glare.

Net metering alone, however, will not get us where we need to be. Congress also needs to pass a package of generous tax incentives for individuals and businesses to install renewable net-metered electric generation. At present, federal law allows a tax credit for an individual of up to 50% of the cost of certain renewable energy sources, but the credit is limited to $2000. That means on a solar panel array costing $20,000, the credit is actually only 10%. Congress should remove, or greatly increase, the limit on the tax credit, and use elimination of tax subsidies for oil to fund the increased cost of the credit. A true 50% tax credit on renewable net-metered generation would make solar economical and would spur creation of a huge industry to meet demand for these types of installations.

We believe this is an area where bipartisan action can and should be taken--almost everyone has something to gain: utilities put off expensive new plants and purchases of peak power; every state gains new jobs and businesses installing net metered generation; we reduce the need for foreign oil imports and we reduce carbon emissions. What's not to like?