Net metering and the death of US rooftop solar

April 22, 2016 by Roger Andrews at

“Net metering” allows anyone with a solar installation to sell surplus solar power to the grid when the sun is shining and to purchase power back from the grid when it isn’t. Net metering has been described as the lifeblood of solar in America, and it’s probably true to state that without it there would be few, if any domestic rooftop solar installations anywhere in the country. However, the program is now coming under attack, with Hawaii and Nevada recently rolling back net metering benefits and with a number of other states also considering changes. What happens if enough states impose similar rollbacks, or maybe do away with net metering altogether? This post reviews this question and concludes that domestic solar in the US will slowly wither and die.

The Nevada decision

On December 23, 2015, the Nevada State Legislature passed Senate Bill 374, following which the state Public Utilities Commission cut the rate payable to owners of domestic solar installations who sell surplus power to Nevada Energy. The rationale was that intermittent solar power sold to the NV Energy grid “differs from” the dispatchable power the grid sells back and that domestic solar owners were getting paid too much for the former and not paying enough for the latter:

The order separates the prices of energy and related services provided by NV Energy, and the intermittent renewable energy provided to NV Energy by net metering customers. This approach is fair because it recognizes that the energy and suite of energy services provided by NV Energy to net metering customers differs from the intermittent excess energy delivered to NV Energy’s system.

This decision will be welcomed by all who recognize that solar is incapable of providing more than a small fraction of total electricity supply because of prohibitive storage requirements and that it’s presently getting a free ride on the back of grid generation that substitutes for storage. Certainly my rooftop solar panels would be totally uneconomic if I couldn’t use grid power at night and had to use storage batteries instead.

The Nevada solar industry, however, was not amused. Three solar companies – SolarCity, Sunrun and Vivint – announced they would have to cease operations in the state and local installers have been forced to cut staff. Also not amused were Nevada’s 18,000 existing rooftop solar array owners, who thought they were “grandfathered” but found that they weren’t. Their response was to launch a class action lawsuit against NV Energy alleging the utility “conspired to unlawfully reduce incentives” and NV Energy caved in, announcing that it would file a proposal to keep existing customers on the old rates, recognizing the desire for a “stable and predictable cost environment.”

“A potentially worrisome precedent”

But still the outcome in Nevada sets a potentially worrisome precedent for the US solar industry, with roughly half of all U.S. states currently studying or changing their net metering policies. States are taking action now because domestic solar in the US has grown so fast that several of them are now approaching or have already reached their net-metering caps. (A net metering cap is a target set by state authorities and it’s usually related to some fraction of peak demand or to capacity. But each state uses different criteria and some of them are extremely complicated. Details for anyone who might want more information are available here and here).

Two states other than Nevada have already revisited the question of how much intermittent solar power is really worth and how much of it their state can really use. The first was Hawaii, where some of Hawaii Electric Company’s grids were getting swamped by rooftop solar to the point where solar generation exceeded total demand at daytime solar peak. An example is given in Figure 1, which shows “backfeed” conditions between 10.30am and 2pm on August 8, 2013:

Figure 1: Average transformer load showing “backfeed” conditions, Hawaii utilities

Because of growing problems of this type the Hawaii Public Utilities Commission shut the net metering program down for new participants in October last year. As was the case in Nevada this shutdown was also accompanied by weeping, wailing and lawsuits from the local solar industry and rooftop solar owners, but the situation was obviously unsustainable. And it arose with less than 1% overall annual solar penetration in the state, not the 10% commonly assumed. More about this later.

Another state on a collision course with net metering is California, the home of the “Duck Curve”: (The Hawaii curve is known as the “Nessie Curve”, although the resemblance is less obvious.)

Figure 2: The California “Duck Curve”

At expected rates of solar growth California will also have a potential overgeneration problem by 2020, and the ramp rates needed to cover the period between about 5pm and peak load at 9pm reach potentially alarming levels. California’s solution has been to mandate the installation of 1.3GW of storage capacity (again no “h” given) by 2020, but this is just a drop in the bucket by California standards.

Current Status of the US solar industry:

One of the remarkable things about the US solar industry is how insignificant it is. Figure 3 plots percent solar penetration in the 36 states for which solar data are available (estimated as total solar generation divided by total generation using 2015 data from the EIA detailed state generation data base). The average level of penetration in 2015 was only 0.6%, and many states generated effectively no solar at all:

Figure 3: Solar generation by state as a percentage of total generation.

Only California is anywhere close to 10% solar penetration. Solar penetration in Nevada is less than 5% and in Hawaii less than 1%. (I checked this number and found that according to Hawaii Electric Company it’s correct). The implication is that solar may begin to stress grids at levels of penetration much lower than 10%, particularly at the local level.


What we are seeing here is a conflict between on the one hand the utilities and grid operators, who view solar as a threat to their bottom line and to grid stability, and on the other the green lobby plus the residential owners, installers and PV panel salesmen who are now benefiting from the proceeds of subsidized solar and the existence of net metering. The surprising thing, however, is that this conflict has broken out even though solar still contributes a negligible percentage of the US generation mix. Why should this be? I think partly because the hundreds of thousands of homeowners who have installed solar arrays are dependent on a continuation of net metering to recoup their investment, partly because 200,000 people are now employed in the US solar industry, partly because solar can in some cases destabilize grids even at low levels of penetration (viz. Hawaii) and partly because of the claims made by some scientific organizations as to the percentage of US electricity generation solar could ultimately fill, such as:

  • US National Renewable Energy Laboratory: 39% with rooftop solar PV alone
  • Stanford University: 38% by 2050
  • US Department of Energy: 27% by 2050
  • International Energy Agency: 36% by 2050 (with solar thermal)

Numbers like this, which assume an approximate sixty-fold expansion of US solar capacity over present levels, can only be described as wishful thinking. Yet in the minds of many they are realistic targets.

But what happens if net metering benefits are rolled back? I picked an example which should be fairly close to reality – a household in Southern Nevada that consumes 11,000 kWh/year, the US average, with a 5kW solar array on the roof. I constructed a crude daily demand curve to show a peak around the breakfast hour and a larger one in the evening when everyone is at home watching large-screen TV or playing computer games and all the lights have been left on. Figure 4A shows hourly consumption and solar generation for the household during an average day (which assumes 12 hours of sunshine and a capacity factor of 19%, which is about right for Southern Nevada.) When the sun isn’t shining the household gets all its power from the grid, but for about 7 hours it gets all its power from the 3kW solar array. And over this period the array generates a healthy surplus that gets fed back to the grid, sending the electricity meter into reverse and causing it to wind rapidly backwards:

Figure 4: Demand, solar generation and consumption for a “typical” Southern Nevada household with net metering in place

Figure 4B shows the cumulative impacts. At the end of the day the household has consumed 30.3kWh, but because of the surplus solar power sent to the grid it gets charged for only 6.7kWh of grid power, which at current Nevada retail rates of $0.11/kWh works out to the princely sum of 74 cents, or an annual bill of about $270. Compared to what the bill would have been without solar (about $1,200) this gives the owner something like a ten-year payback on his or her solar investment after federal and state tax credits, which is not too bad when one considers that the solar array adds value to the house and that the PV panels will, one assumes, continue to generate electricity after payback is reached.

Nevada’s net metering rollback will, however, ultimately reduce the payment homeowners receive for solar electricity sent to the grid by 75% . How much difference will this make? Instead of saving almost $1,000/year on electricity bills the homeowner will now save only about $250/year. Even allowing for federal and state tax credits this will make domestic solar totally uneconomic in Nevada. And if other states follow Nevada’s lead it will eventually become uneconomic in those states as well.

And the problem doesn’t stop there. US utilities, with some justification, are also angling for increased charges to cover the costs of integrating growing amounts of solar power with their grids. (Nevada’s “grid connection charge” is scheduled to triple over the next five years). The end of the net metering road will of course be reached when the grids can’t physically accept any more solar, or no one will be able to afford the grid connection charge, whereupon Figure 4A will look like this:

Figure 5: Demand, solar generation and consumption for a “typical” Southern Nevada household with no net metering in place. The household is capable of powering itself for only about 8 hours.

Yet some believe that net metering rollbacks will provide a new opportunity for US solar. This article (which describes net metering as solar’s “junk food”) proposes a “value-of-solar tariff” where “solar customers are paid for the value of the electricity they produce at the specific time and place they put it on the grid.” This seems fair, but it too would probably kill rooftop solar. The California duck curve shown in Figure 2 shows how. The solar power produced in the middle of the day exceeds grid requirements and would therefore have to be sold at a low price if not wasted altogether, and at the nine o’clock peak, when power is in greatest demand, the sun has set or in in the process of setting. Another article views net metering rollbacks as an opportunity for domestic solar producers to go off-grid entirely and fill demand from energy storage, either in a utility-owned or domestic storage facility. But “to make the storage option appealing to customers … it would need to be offered using a low capital expenditures (CAPEX) business model.” “Energy storage” and “low CAPEX” are, however, mutually-exclusive terms, so that won’t work either.

It therefore appears that the future of domestic US solar depends on how far the states that are currently considering or reconsidering their positions roll back net metering benefits. And they probably wouldn’t have to roll them back very far before rooftop solar becomes uneconomic – unless of course the government jumps in with yet more subsidies. But hope springs eternal, particularly in the breast of the US solar industry.


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9 Responses to Net metering and the death of US rooftop solar

  1. Mary Wildfire says:

    I’m amazed this author admits to having solar panels himself since he puts forth here the assertion that net metering customers are parasitic freeloaders. He doesn’t mention the intense push by the Koch brothers and other interested parties, including ALEC, in the efforts to roll back net metering rules, pretending that it’s because solar input creates problems for the grid at a level a small fraction of what works well in Europe. Meanwhile, in many places utility-scale solar is coming in at prices lower than any fossil fuels.
    The author asserts that solar just isn’t practical. What is the solution then? Nuclear? But it’s much MORE expensive, aside from its myriad safety issues. Maybe just continued fossil fuels? But their energy return on investment is plummeting while their environmental risks rapidly rise. According to the science on climate change, we need to cut back sharply on the burning of fossil fuels, yesterday. If we refuse–if we go along with the sociopathic fossil fuel lobby and continue business as usual until it’s impossible to extract and produce any more–then the least we can do for later generations is not have them. Terminating all childbearing will certainly save us a lot of money.
    But what do I know? According to this author, I probably don’t even exist, since my household is powered by an off-grid, no net metering, solar array.

    • energyskeptic says:

      The purpose of my website is to show that there is no replacement for fossil fuels and that therefore, the “solution” has to be to prepare for going back to the age of wood. If a miracle happens — and it would take a miracle — great! But scientists have to work within the laws of physics and thermodynamics, unlike Wall Street, where new financial instruments are continually created to fleece the middle class.

      Read the posts under the Energy category if you are curious about energy resources and where I stand. It wouldn’t take you long to see that I am not pro-nuclear (Peak Uranium, Nuclear waste, and for those who deny those limits, that it is financially impossible: And it’s way too dangerous: the public is for the most part unaware of the dangers of spent nuclear fuel pools Read the electric grid and energy storage categories to understand why there are issues with the grid, and wind, solar, Waves & Tidal to understand why these alternative energy resources are unlikely to be able to power the grid after fossils dwindle. I try to only use peer-reviewed scientific evidence. Politicizing energy, as climate change has been, is a way for anyone to believe their point of view is correct. One of the reasons it is even possible to politicize science is that there are close to zero politicians with degrees in science, they’re practically all lawyers. And the public for the most part isn’t scientifically literate either.

      You can avoid opinions by looking at the evidence yourself. It will cost you nothing. There is a lot of free material from the National Academy of Sciences, which only the very top scientists at the top of their fields are invited to join. And the Department of Energy, the Government Accountability Office, and often peer-reviewed papers are available free on the internet as well.

      • Joe Clarkson says:

        The purpose of my website is to show that there is no replacement for fossil fuels and that therefore, the “solution” has to be to prepare for going back to the age of wood.

        I generally agree, but there are scientists who still have hope for renewables. Have you checked out this paper?

        Jacobson thinks 100% renewables can be done for about $15 trillion, including energy for transportation. I doubt that his costs include getting the energy to the heavy transport vehicles though. $15 trillion is still a hefty cost, even if spread out over 30 years or so.

        • energyskeptic says:

          I have a rebuttal of Jacobson and Delucchi at energyskeptic.


          Here is what Vaclav Smil has to say:
          Jacobson and Delucchi propose to convert all of the world’s energy supply to sustainable energy in just two decades by following the WWs (wind, water, and sunlight) path. Given the fact that most of the contemplated capacity in large hydrostations is already in place, their grandiose plan rests on installing 3.8 million large (each with 5 MW capacity) wind turbines and 89,000 photovoltaic and concentrated solar power plants (averaging 300 MW). They estimate the cost of all this (not including new transmission lines) as about $100 trillion dollars.

          This lightning-fast extravaganza would require abandoning (except for hydro dams and HV lines) all of the world’s existing energy infrastructure and erecting a new one by 2030. The average annual cost of this enterprise-taking into account its authors’ estimate and adding the cost of extensive new transmission grids, lost capital value of the suddenly abandoned fossil-energy industries, and forgone revenue from their terminated operations—would be easily equal to the total value of the U.S. gross domestic product (GDP) or close to a quarter of global GDP.

          My verdict concerning this project’s feasibility has been shared by many other life-long students of energy and could not be expressed better than by quitting just two of many scathing comments submitted to the editors of Scientific American, in which the Jacobson and Delucchi proposal appeared.

          Michael Briggs wrote: “as a physicist focused on energy research, I find this paper so absurdly poorly done that it is borderline irresponsible. There are so many mistakes, it would take hours of typing to point out all of the problems. the fact that Scientific American publishes something so poorly done does not speak well of the journal.

          Seth Dayal added “This paper is an irresponsible piece of nonsense that would generally be found for order in the back pages of some pulp fiction magazine. The sad part is the editors for some reason chose to not only publish the claptrap but to endorse it”.

          It is one thing when a former politician endorses an unrealistic project to boost his media presence or when an astute businessman pushes a scheme that would eventually benefit his investments—but it is an entirely different matter when one of the world’s oldest science magazines lends its pages to fairy tales that any seasoned engineer and any responsible student of energy systems find grotesquely immature.

          Roman playwright Terence wrote 2100 years ago “Men believe what they want to”. It may be true, but it is hardly the best foundation for rational energy or any other policies.

          More critiques:
          Critique of the 100 Percent Renewable Energy for New York Plan by Edward Dodge

          A Critique of Jacobson and Delucchi’s Proposals for a World Renewable Energy Supply by Ted Trainer

          Not enough wind, solar, geothermal to replace fossil and nuclear power in the 11 western states of the WECC. California, Oregon, Utah, and Washington have already developed most (if not all) of their prime-quality in-state resources by Alice Friedemann

          U.S. Renewable Energy Technical Potentials: A GIS-Based Analysis by Anthony Lopez, National Renewable Energy Laboratory.

          Comments on Jacobson et al.’s proposal for a wind, water, and solar energy future for New York State by Nathaniel Gilbraith et al.

          A Reality Check on a Plan for a Swift Post-Fossil Path for New York By Andrew C. Revkin, New York Times

  2. Michael Vickerman says:

    Actually, while net metering definitely helps make PV more economically attractive to residential customers, it is not crucial to larger commercial and industrial customers. This author assumes that the residential drives the rooftop PV industry in this country. That is becoming less true by the day. Larger customers (e.g., big box stores, data centers, defense department installations, Native American casinos) are finding that rooftop solar is economically attractive for them, even though their PV arrays are often too large to qualify for net metering and they pay demand charges on top of the volumetric energy rates.

    The author’s complaint regarding net metering is grounded in economics. Thermodynamics has nothing to do with the positives or negatives of net metering.

    • energyskeptic says:

      I don’t like using money when discussing energy, EROI should be the standard measurement. Charles Hall and others have gotten zero funding to do EROI research, so there’s no choice but to use money as a proxy most of the time. Since Hall and Prieto showed that the EROI of solar PV is only 2.45 in their book “Spain’s Photovoltaic Revolution. The Energy Return on Investment”, 2013. Springer (see my review at I don’t know why anyone takes solar PV seriously anymore.

      But the main issue brought up in this article is GRID INSTABILITY. Since at least 80% of electricity will have to come from wind and solar post-fossil-fuels, problems need to be anticipated now. As scientists at Stanford point out, we could hit the “Solar Wall”: On the path to deep decarbonization: Avoiding the solar wall Op-Ed by Sally Benson and Arun Majumdar July 12, 2016.

      • Joe Clarkson says:

        The main issue is not grid instability (see my comment below) it’s cost. 100% renewable powered grids are perfectly feasible with existing technology, but the cost of installing the generation, storage, and transmission is more than we can afford.

        Then off course there is the NIMBY problem. Almost all renewables except for big hydro and geothermal take a lot of space, as do storage systems like pumped hydro reservoirs. One of the best ways to go is CSP with sensible heat storage (molten salt or hot pebble beds), but trying to get thousands of projects sited would daunt even Sisyphus.

        In sum, the problem with renewables is not technology, it’s the political and financial cost of getting them installed in massive amounts.

  3. Joe Clarkson says:

    Andrews completely misinterprets Hawaii solar grid penetration. The 1% he mentions includes only solar IPP projects and excludes residential and commercial rooftop solar. What he missed can be found at this site -( Quoting the site, Solar power provides a significant boost to Hawaii’s efforts to build a clean energy future. By the end of 2015, Oahu residents had nearly 41,600 rooftop solar systems with a capacity of 343 MW, significantly more than the largest conventional generator on the island. Hawaii Island residents had installed 9,700 systems with a 70 MW capacity and Maui County residents had installed over 9,300 systems with a 74 MW capacity. Note that the 70 MW PV capacity on Hawaii Island is about 36% of maximum load for the island.

    It is also interesting that when the Hawaii PUC stopped net metering in Hawaii after complaints by HEI utilities about grid instability and after HELCO (the Hawaii Island unit) had argued that all circuits were at maximum PV penetration, the PUC mandated that the price for residential PV energy flowing into the grid from new systems be cut in half. Once the PUC order for a big price reduction was final, HELCO announced that they were glad to take more PV at the lower price.

    While net metering can cause financial problems for utilities, Andrews is very premature in claiming that PV is causing grid instability problems. We still don’t know what the limit for PV is, but Hawaii will probably be the first state to reach it. In any event, it’s more than a third of generation peak capacity, not 1-10%.

    • energyskeptic says:

      One of the main reasons Hawaii has struggled with integrating all of its solar energy is that the state is electrically isolated from the mainland. With no power lines linking Hawaii’s small grid with the rest of the United States, the utility has nowhere to dump extra solar power and no access to backup electricity generation from outside the state.

      Unless trucks can be electrified, there is no point to building more wind and solar. You won’t be able to have a supply chain to deliver the 8,000 parts of a wind turbine or bring the turbine to the final destination. The same for solar. Plus energy storage and transmission lines. My book “When trucks stop running” covers this and dozens of other issues I can’t cram into a comment, including why the grid us unlikely to be nationalized, which makes EC, WECC, and Texas islands as well that will hit limits as well.

      How are you going to balance wind and solar? Natural gas is finite, biomass and hydropower don’t scale up, the only utilitiy-scale energy storage battery with enough material to build is Sodium-sulfur. Using data from the Department of Energy (DOE/EPRI 2013) energy storage handbook, I calculated that the cost of NaS batteries capable of storing 24 hours of electricity generation in the United States came to $40.77 trillion dollars, covered 923 square miles, and weighed in at a husky 450 million tons.