The solar/utility conflict is far from intractable.
Utilities deride net metering as a subsidy from customers who can’t install solar to those who can, while the Solar Energy Industries Association publishes principles stating that customers should always have net metering as an option.
A solution already exists. This is the 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.
Under a value-of-solar tariff, non-solar customers cannot subsidize solar customers (a common utility claim about net metering). By definition, under a value-of-solar tariff, solar customers are paid only for the value they bring squandered under net metering.
Not only can a value-of-solar tariff resolve the conflict between solar and non-solar customers, but it can also untuck opportunities for solar which are currently being squandered under net metering.
Under net metering, the incentive is to install solar so that it produces the maximum possible amount of electricity. This means pointing the panels south, at latitude tilt. Under a value-of-solar tariff, the incentive is to produce as much value for the grid as possible, which often means pointing panels west or southwest, in order to help service peak air-conditioning loads on hot days, which usually occur in the afternoon.
Such decisions depend on both the local climate and on the local loads on the grid. They also depend on getting the value of solar right. This is where we need creativity from all parties working together.
The Paradox of Doing Good
Few people expect much creativity from utilities, although there are notable expectations, especially when it is the regulator driving change.
The solar industry is another matter. Almost all solar companies portray themselves as working for the good of the planet, and most of those genuinely believe that is what they are doing.
More solar companies need to stop substituting doing good for being good, and start living up to their true ideals. Solar has the potential to help all users of electricity, not just those who can install it themselves. A value-of-solar tariff can unlock that potential, as long as we have the creativity and courage to take everyone’s interests into account.
Getting a value-of-tariff will be tricky, but creativity in the pursuit of a greater good is precisely what stakeholder companies excel at.
If all parties work toward a well-calibrated tariff, everyone will have the incentives they need to get the most out of future solar installations. Solar companies will get more business deploying solar where it does the most good. Regulators will see that all ratepayers are treated fairly.
This kind of dynamic tariff is also likely to catalyze demand management, energy storage, and other industries we have not even thought of, which will add jobs, create value, and help unlock the potential of solar.