Just in time for the new year, Arizona regulators completely revised pricing structures for NEM customers in December of 2016, in a new effort to move away from retail rate prices paid for solar customers’ excess energy. The regulators called their vote to replace retail NEM a “landmark” decision that will “determine a fair export rate for the future,” while solar proponents warned that the change could damage the state’s solar market. Some of Arizona’s neighbors also went through similar fights last year. For example, Utah solar advocates have denounced a proposal from Salt Lake City-based Rocky Mountain Power to revise its NEM program.
As proven in Nevada, dismantling NEM incentives can come with a price for both solar installers and the economy. After state utility regulators slashed NEM rates in December 2015, several solar companies ceased their local operations and installations in Nevada nearly halted.
The proliferation of NEM debates indicates that the face of energy is rapidly changing – and that it may be time to rethink energy pricing overall and the role of utilities.
A 2015 study conducted by MIT economists claims that NEM incentives aren’t the way forward for solar power. The report overwhelming supports the construction of utility-scale solar projects, citing the high cost of maintaining residential incentives and tax credits. Furthermore, it argues that because some key parties perceive NEM payment structures as unfairly slanted in solar customers’ favor, it would be more beneficial to the energy industry in the long run to invest in alternative reward systems – instead of engaging in conflicts over NEM.
Also included in the recommendations is a suggestion to revise customer pricing, moving from outdated flat rates to time-of-use models that give utilities the flexibility to charge end-users different rates depending on where their energy comes from and when it’s used. Of course, that may mean a shift in focus, as well. If the findings are to be believed, then utilities would be wise to ramp up development on smart grids and larger renewable installations, instead of painting themselves as solar boogeymen.
Meanwhile, this also may be something for lawmakers and residents to consider: Some research indicates that the cost of NEM incentives may eventually be passed on to non-renewable customers – although this belief is highly controversial. At any rate, it offers a pretty clear indicator that we must give up black-and-white “for” or “against” thinking.
On the other hand, it could be time for utilities to completely renegotiate their relationship with consumers. Green Mountain Power (GMP) in Vermont is essentially doing just that. The utility’s off-grid package, introduced at the end of last year, offers GMP customers a solar array, battery storage, home automation controls and a backup generator. GMP’s hope is that this move will preempt a potential off-grid shift, once battery technology becomes more efficient and affordable – while allowing the utility to cut back on maintenance for rural transmission lines. “Off-grid” doesn’t mean “bill-free” for GMP customers, however. The utility will charge off-grid customers a monthly fee that covers the cost of equipment and maintenance expenses.
Of course, adopting that model would alter the role of utilities significantly – and might potentially interfere with revenues for privately owned solar installation companies, as well. In that instance, one imagines PV installations becoming much like a home’s electricity meter or distribution lines – utility-owned and -maintained equipment that is simply housed on a private resident’s property.