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As rooftop solar grows, what should the future of net metering look like?

An example of rooftop solar.

Using more renewable energy is one way to help bring down greenhouse-gas emissions. Here: rooftop solar panels at Copper & Kings. | Photo by Caitlin Bowling

By Dan Gearino | InsideClimate News

Like solar installers across much of America, Mark Hagerty is adapting to drastic changes in the economics of his business. His state, Michigan, is one of many that are cutting the rates rooftop solar owners receive for selling excess power to the grid.

“We’re going to do fewer jobs, and each job is going to be a smaller size,” said Hagerty, president of Michigan Solar Solutions, an installer based northwest of Detroit. His comments echo concerns now being voiced by installers in many states as new rules take effect.

The changes are part of a flurry of activity across the country as regulators and legislatures in almost every state referee a showdown between powerful utilities and a rooftop solar industry offering options that are more affordable and popular than ever. The results run the gamut, from a solar-friendly bill that became law in Maine to one that will sharply reduce the financial benefits of solar in Kentucky.

Amid the noise of competing proposals, a pattern is emerging: States are moving away from “net metering” policies that require utilities to pay owners the full retail rate for excess electricity sent to the grid.

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The shift is happening in part because of an aggressive push by utilities to reduce what many of them see as a form of competition that could harm their bottom line. And yet, even proponents say these changes are likely inevitable as the electricity system adapts to the rapid rise in rooftop solar.

The question for all sides: What does a successor to net metering look like?

One possibility being explored in several states is to develop rates based on the value of rooftop solar power to the grid, including environmental benefits. Others are siding with the utilities in their push for rates for owners that are much lower.

As solar makes inroads, utilities push back

More than 1.8 million U.S. households have their own solar power systems, up from just over 137,600 households in 2010, according to the Energy Information Administration. On average, a rooftop system on a house will pay for itself through utility bill savings in fewer than eight years, according to a recent Energy Sage report.

Small-scale solar is still a tiny share of the country’s electricity output, just 0.7 percent last year, but utilities and regulators are looking ahead to when it may be much more.

Rooftop solar has been making inroads outside of the sunny states that were early adopters, helped by state incentive programs, falling costs and the momentum of new businesses that sell and install solar. This growth is part of the country’s transition toward a cleaner and less centralized grid, and it depends on many elements that affect the costs of systems.

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