The Impending Solar Energy Bubble and What can be Done to Stop it

The compensation people receive for their excess electricity should not be allowed to cause other people's rates to go up.  If it does the situation will be inequitable and will in essence be a tax on the poor to the benefit of the better off.  In order to insure this doesn’t happen the amount people receive for excess electricity must not exceed the reduction in the total electric system costs that their excess electricity results in. 

The system needed to deliver us power 24 hours a day 365 day a year is composed of a number of different parts. All of those parts have costs that need to be paid in order to keep the lights on.   So logically if solar electricity is lowering the cost of power for other people then it must reduce the need for some of those parts or reduce maintenance costs.  The real question is how much does it really do this.  Solar panels can only really be counted on for the amount of power they produced on a cloudy day on the winter solstice.  Some places have snow so even less than that.   Basically in many parts of the world solar panels don’t reduce the need for other equipment at all (it depends a lot on how close the the equator you are).   

Some people argue that solar reduces wear on equipment other argue it damages and increases wear on equipment because of its sporadic nature, and it requires costly upgrades to the grid.  Who know weather overall it decreases or increases the system costs from wear.  It probably varies by circumstance.  A lot more work needs to be done studying this.  

Basically the way I see it in places like Germany (i.e. places that get almost no energy from solar for part of the year) solar only reduces the need for coal and natural gas so people should only be compensated for the amount of coal and natural gas not burned because of the electricity they produced, but I imagine that few people would take the word of a random person on the internet for this.  That is why there is the need for a competent impartial independent third party to look at all the evidence and reach a decision they feel is in the best interest of all electric customers.

If this isn’t done right there is the potential for a huge bubble.  People doing all kinds of creative things financially in regards to solar and net metering.   If I am correct and people are just shuffling the costs around then things will become strained as more and more people are forced to get solar because of the increasing electric rate.  Obviously this is unsustainable.  Everyone cannot pass the costs off onto someone else and the poor can’t shoulder the entire burden themselves.  Something has to give eventually. 

The Problem with Net Metering

In the better off parts of the world most people enjoy the benefits of electricity on demand 24 hour a day 365 days a year.  If you are reading this you most likely do as well.  Pretty much all of us (us being the lucky ones) are customers, but not all of us are producers.  In the past producing your own electricity was rarely practical.  Now day thing are different.    Now solar systems exists at prices in many people's reach.   This has created a new issue that needs to be addressed.   That issue is what compensation should people receive for putting their excess electric production on the grid.

In the Us right now a policy (or rather a series of similar policies) called net metering determines what they get.   Net metering basically means they can sell electricity back to the grid for the same price they would buy it for.   Currently it exists in 42 states although there are policy differences.  Here is a map from www.freeingthegrid.org which lists the states that have it along with a grade for how good they think the net metering laws are in that state.

With net metering it's possible for people to bring their electric bill down to zero with only a small grid connection fee needing to be paid each year.

It's pretty easy to see what the problem is here.  Imagine what would happen if everyone did it.    If everyone brought their electric bill down to zero who would pay for the electric service they would all still be using during the night time, when it cloudy or a times during winter.  They would all essentially be using service without paying for it which obviously wouldn't work.  Now imagine if half the people did it.   Half the people aren't paying for the electric service leading the other half to foot the bill.   This is inequitable and it gets worse if you think about little more.  The half of the people able to afford the solar system and having to space to install them will be the better off people.  The poor people living in apartments would end up footing a larger part of the bill.  This is simply not right.

People putting solar on their roof is a choice and the amount of money they receive for their excess electricity should not increase or decrease other people electric bill.  In order to make this happen I propose that their needs to be an impartial independent regulatory body that examines all the evidence and determines what the proper compensation should be.