A Tale of Two States (with apologies to Charles Dickens)

It was the best of times, it was the worst of times, it was the age of net metering, it was the age of trying to get rid of net metering, it was the epoch of belief in the value of distributed resources, it was the epoch of incredulity that rooftop solar was really worth the retail rate, it was the season of Light, it was the season of Darkness... 

How can one help but to be struck by the headlines generated by New York and Arizona in the last week? Here you have a Northeastern state that will, next week, get about 2 hours of real sunlight a day, but that understands generating a kwh of electricity at someone's house not only means that they get a kwh of electricity, it also means that their utility doesn't have to pay to bring that kwh to their house. And then you have a Southwestern state, which has a sunburst on its state flag and a sunset on its license plate, which is trying to pay so little for rooftop solar that folks won't bother with it, which is exactly the goal.  

To summarize the action in Arizona and New York  this week, I will leave the facts to the excellent people at Greentech media (click on the State names for the links).

The oversimplified summary is this: New York is grinding incredibly hard to come up with the true answer to how to value distributed solar, and this very, very hard work has presumably resulted in their finding 1. determining a fair value of distributed solar based on its exact location is extremely hard work, 2. determining the fair value of solar based on the exact location is going to take more time, 3. we have to start somewhere. So the NYS DPS, who I can testify are among the smartest assemblage of people you'll ever meet anywhere, propose that the little systems on your house or small business should just keep on with the net metering for now, while the big systems, like on your university or factory, should start the transition to a pricing system that actually calculates what the power they're making is worth where it's made at the time it's made. So, if wholesale power near you is selling for 10 cents at noon on Tuesday (LMP), and getting that wholesale power to you at noon on Tuesday would cost another 10 cents (D), then your LMP+D is 20 cents.

Meanwhile, out in Arizona, State regulatory folks seem to be missing the D concept. The oversimplified summary is: the process has already taken two years, and it's supposed to be wrapped up by a Commission vote in December, but the latest comments deadline has been extended again. Apparently staff seems to be circling around the proposal that electrons produced on your roof at noon on Tuesday should earn you the same amount as the average price electrons produced at a grid-scale, transmission-connected solar power plant in your state and solar under a pre-negotiated long-term contract. So the fact that your power is already out on the grid and doesn't need expensive transmission or distribution is not taken into consideration. And the fact that commercial solar developers negotiate power-purchase agreements for very large (like, Arizona large) solar farms with lots of sunshine and economy of scale is exactly the same as you putting panels on your roof. 

Certainly, deciding what comes after residential net metering is mind-numbingly difficult, and hats off to both NY and AZ for not rushing into anything. What I hope Arizona will realize is that, like the New York folks seem to have found, the only thing worse than residential net metering is a rushed, imperfect, assumption-driven replacement for net metering.