End of net metering will not stop new energy economy

This month the Public Utilities Commission put an end to net metering for new solar installations. In the short term this could be the biggest hit to the solar industry since Hawaii Electric Co. began to constrain permits toward the end of 2013. Initially, the residential and commercial adoption of new solar systems will slow substantially, but after a brief lull it will accelerate in ways that might surprise. The inexorable evolution toward a shared economy has caused consumers to become more accustomed to controlling their own resources, electrons included. The recent PUC decision will serve to turn more people away from the grid, onto battery storage and eventually toward shared micro-grid systems.

For those already grandfathered in, net metering enables the owner of a photovoltaic system to use the grid as though it were a big battery. During the day, while the sun is out and most people are at work or school, rooftop systems produce lots of energy, but residential utilization is low. Under these conditions, systems push the meter backward and feed excess electrons into the grid. When the sun goes down and everyone comes home, energy production is low but utilization is up, causing the meter to spin back the other way. Under net metering, at the end of the month, the customer pays Hawaii Electric Co. for any net use beyond what was fed into the system during daylight hours.

Until the recent PUC decision, the same value was placed on energy whether it was put into the grid by the consumer or by HECO. Regulatory changes now place only half the value on the electrons made by consumers compared with those made by the utility. Every kilowatt-hour put into the grid by the consumer is now valued at 15.07 cents, but the price is 25.30 cents per kilowatt-hour when it is drawn back from the grid.

Until now, permit approvals for 2015 were up 37 percent compared with the same time last year. In fact, at present, net metering capacity runs from one-third to one-half of system peak load, with nearly 20 percent of all customers on Oahu and Maui on board.

The demise of new net metering permits will undoubtedly cause a transient dip in adoption. Companies that develop PV systems for the commercial and residential sectors are reviewing their pricing and product lines with the awareness that it will now take longer for clients to recoup the costs of their new systems. Even considering the improving cost, efficiency and anticipated life of PV panels today, the time it takes to recoup your investment is expected to grow by somewhere between one-third and one-half.

In response to the elimination of net metering, the Alliance for Solar Choice LLP has filed a lawsuit claiming that the PUC exceeded its statutory authority and violated state and federal law as well as constitutional due process requirements.

The combination of high utility costs and price reductions in PV panels has led to the rapid adoption of solar in Hawaii. This is built on the foundation of generous state and federal tax credits. The concomitant dropping costs and enhanced efficiency of battery storage systems offer a way to continue this rapid adoption notwithstanding the new reduced rate HECO will pay for energy that consumers feed into the grid moving forward.

Why not make an investment in battery storage and keep enough energy on hand 24/7 and, after the capital investment, enjoy the full value of electrons generated?

Another crucial element of the PUC’s recent decisions is that the utilities have been ordered to file a new time-of-use (TOU) rate proposal. This means that you might pay more when drawing energy from the utility during peak periods and less when demand is low. Likewise, the utility might pay you more for contributing to the grid when it is struggling to meet demand during peak use periods. TOU generates all the more motivation for consumers to obtain low-cost, efficient battery storage.

Finally, why limit one’s distribution of excess energy to the utility? What about sharing electrons among neighbors? The technology already exists to maintain, manage and distribute energy for micro-grids ranging in size from several buildings to whole neighborhoods. Additional regulatory changes would need to occur to support neighborhood micro-grids, but this is the wave of the future. What Uber has done for transportation and Airbnb has done for accommodation, micro-grids will do for our energy needs. Welcome to the peer-to-peer reality.

This is not just an environmental issue or an economic issue. The more we use solar and avoid burning fossil fuels, the healthier our planet will be, and the healthier we will be.

Ira Zunin, M.D., M.P.H., M.B.A., is medical director of Manakai o Malama Integrated Healthcare Group and Rehabilitation Center and CEO of Global Advisory Services Inc. Submit your questions to info@manakaiomalama.com.