Forbes – Net Energy Metering — Are We Capitalists Or What? Net metering, or net energy metering (NEM), is a billing system that credits small customers at the full retail electric price for any excess electricity they generate and sell to their local electric company via the grid from on-site small sources such as residential rooftop solar arrays.
Currently in place in 43 states and the District of Columbia, net metering is becoming another unnecessarily controversial issue.
Under most net metering policies, utilities are required to buy a DG customer’s excess power at full retail price even though it costs those utilities much less to produce that electricity themselves, or buy it on the wholesale market.
When roof top solar customers expand to a significant number, say 5% or 10% of total capacity in the next ten years, the utilities will lose significant power sales. But the utilities are still required to maintain the electric grid from which everyone, including DG customers, must obtain their electricity. So the burden of maintaining the grid, and providing these services, falls on fewer and fewer non-DG customers, and their cost grows.
This graph shows the typical energy production and consumption for a small source owner, or distributed generation (DG) customer with a rooftop PV solar array. When the customer produces more power than is being consumed, during peak sunlight hours, they can sell it back to the utility company at the full retail price. This is called net energy metering (NEM) or net metering. In 43 States and the District of Columbia, the utilities are forced to pay the full retail price even though it usually costs those utilities much less to produce that electricity themselves, or even to buy it on the wholesale market, and the utilities pay over half of that price in infrastructure support. These small users are still connected to the grid, a requirement for net metering, and also to power their homes at night or when their solar systems don’t produce enough power. Source: Edison Foundation Institute for Electric Innovation.
The California Public Utilities Commission found that non-solar customers in the state face over $1 billion annually in higher costs because of net metering. In a state with a GDP of over a trillion dollars, that may not seem like a lot, and the pain is quite distributed over the other 30 million people.