If you have solar panels on your house that are generating more electricity than you need, and you are selling the excess back to the grid, you are saving money on power costs, reducing maintenance costs for your utility, and contributing to societal improvements like cleaner air.
Those are the conclusions of a new report that seeks for the first time to quantify the benefits of so-called net-metering, which allows electric meters to reverse direction when power generated from solar panels on a home or business flows back to the grid rather than away from it in the traditional pattern.
It found that the total benefits of net-metered solar are almost four times greater than its costs, and that for every dollar spent on net-metering, solar generates $1.28 in direct benefits – meaning cost-savings to the customer and to grid operators who have to spend less on maintenance and transmission because power is generated by individual homes and business rather than distant power plants.
If net-metering for distributed solar was sharply expanded across the state, it would save money for hard-pressed consumers who are being hit with higher utility prices, according to report, Delaware Value of Solar, produced for the nonprofit Energize Delaware by Gabel Associates, a New Jersey-based public utility consultant. Energize Delaware helps consumers reduce energy costs, improve environmental outcomes, and promote energy independence.
Increasing solar net metering would also ease pressure on utilities and power generators that are forecasting big increases in demand as power-hungry data centers proliferate, and electrification gathers pace in response to the need to curb carbon emissions and offset the worst effects of climate change.
“A large expansion of access to net-metering could absolutely help lower everybody’s utility bill,” said Dustyn Thompson, director of the Delaware Sierra Club, and an advocate for increased solar deployment. “That’s what the study shows. If we have more people installing solar on their homes and businesses, that reduces the need to import energy. The more we can produce on the peninsula, the better off we are.”
Thompson argued that the capital cost of a homeowner or business installing solar would be initially reduced by obtaining a low-interest loan from Energize Delaware, and then eliminated after five or six years by the absence of utility costs or even their reversal if the owner sells excess power to the grid.
“Payback on net metering is pretty good,” he said. “After five to six years, which is the average for the loan, it’s all money in the bank.”
The report, released at the end of April, is the first in Delaware to calculate the costs of net metering which is currently limited to 8 percent of utilities’ total peak demand. Critics argue that customers who cut their bills through net metering still rely on the grid but pay less towards its maintenance and infrastructure investment, resulting in a so-called cost shift to non-solar customers.
But the report concludes there is no subsidy from solar to non-solar customers. “Quite the reverse. Delaware’s net-metering policy realizes greater financial benefits than cost for all customers by reducing the overall cost of energy, improving grid resilience, and creating additional economic and societal benefits,” it said.
An increase in solar net-metering would advance Delaware’s energy, economic and sustainability goals while appealing to consumers who can easily understand the individual financial benefits of installing their own solar arrays, the report said.
“Net-metering’s simplicity and transparency helps reduce barriers to solar adoption by minimizing customer confusion during the sales process, reducing the perceived risk of investment, and making it easier for solar installers to communicate value to potential customers,” the report said.
Each megawatt of net-metered solar supports 22 local jobs and creates $2.1 million in benefits to the local economy, in addition to overall benefits of more than $1 billion, it said.
Delaware could increase its use of net-metering by the deployment of advanced inverters, co-located battery storage, and creation of microgrids to maximize the value of solar that is generated “behind the meter,” the report said.
It concluded that Delaware’s net metering policy “should be expanded beyond the current cap of 8 percent as the benefits of this policy clearly outweigh the costs.”
Drew Slater, executive director of Energize Delaware, urged lawmakers to increase the 8 percent statewide limit on the amount of net-metered solar that can be added to each utility’s demand, or ”load”. But he declined to specify a level to which the cap should be raised, a change that would require a new law to be passed.
“We really needed to understand and quantify what is the true value of solar versus the cost of solar,” Slater said in an interview. “Now that we’ve done that, we’re equipped with data points to make informed decisions. In this case, it would support further acceleration of net metering.”
The study increased the theoretical cap to 18 percent to determine whether the much higher limit would result in the cost-shifting that critics have claimed. It concluded that costs would not exceed overall benefits even under an 18 percent scenario.
“If you increased it to 18 percent, are there new costs?” Slater said. “The answer is no, there are even more benefits. The report is pretty clear that you could increase the cap and you would still have direct benefits to customers.”
"The recently released value of solar study offers important insights, and we encourage policymakers to continue to approach any expansion of the cap thoughtfully, ensuring that solar programs are equitable, financially sustainable, and maintain grid reliability."Delmarva Power supports the expansion of clean energy.
Delmarva Power, which has about 340,000 electric customers in Delaware, said it supports expansion of clean energy, including “customer-sited solar”, and it welcomed the new report as valuable contribution to the public discussion.
“We believe that any changes to net metering policy—such as expanding or adjusting the existing cap—should be based on a comprehensive and transparent understanding of the impacts on all customers,” the company said in a statement. “The recently released value of solar study offers important insights, and we encourage policymakers to continue to approach any expansion of the cap thoughtfully, ensuring that solar programs are equitable, financially sustainable, and maintain grid reliability.”
The report originated from the Energy Stakeholders, a group of utility executives, regulators, consumer advocates, and environmentalists, who meet twice a month to discuss energy policy, headed by State Sen. Stephanie Hansen (D. Middletown), who chairs the Senate Environment and Energy Committee.
The net-metering cap had already been increased to 8 percent from 5 percent, and now advocates for another rise are looking at how that might be achieved, said Thompson of the Sierra Club, a member of the panel.
“We all knew that that was net-metering 1.5 but that had to get to 2.0,” he said. “So we tried to figure out what the 2.0 looked like, and we got bogged down in debates with utilities. Eventually, Senator Hansen said, ‘If you guys can’t come to an agreement then we’re just going to do a Value of Solar study.’”
