Portland General Electric (PGE) recently released their future plans to change the net metering policies in Oregon. Their draft proposal could have a major impact on all current and future solar owners in Oregon by slashing net metering credits for users who can’t afford battery storage.
WHAT IS NET METERING?
Net metering is a billing arrangement and incentive program between electric companies and owners of solar panels. It allows individuals and businesses that generate their own electricity from renewable sources, such as solar panels, to receive credit for the excess electricity they produce and feed back into the grid. Net-metering policies differ, but in most cases there is a one for one exchange. This means that for every kilowatt-hour (kWh) of excess electricity generated and fed back into the grid, the consumer receives a credit equal to the retail price they would have paid for that kWh if they had consumed it from the grid.
The one-for-one net metering exchange provides an economic incentive for individuals and businesses to invest in renewable energy systems by allowing them to offset their electricity costs and, in some cases, even earn credits or payments from the utility company. With the current net-metering system, in Oregon it takes approximately 10-15 years of energy savings to pay back the initial investment in a solar system. The net metering policy was designed to make rooftop solar more approachable and to promote the adoption of clean energy technologies contributing to the overall reduction of greenhouse gas emissions. Net metering is especially important as a means for clean energy because it allows solar owners to provide excess power to their neighbors without the transmission loss, which can run as high as 66%.
The specifics of net metering programs can vary by region and utility company. You can learn more about net metering with an article by the Solar United Neighbors here.
PGE’S PROPOSED NET METERING POLICY
In 2023 California adopted NEM 3.0, reducing the net metering export rates for solar owners by 75%. This means that for every kilowatt-hour (kWh) of excess electricity generated and fed back into the grid, the consumer receives credit of only 25-30%. California argued that this system would incentivize customers to install batteries, which ultimately helps the utilities to flatten the ups and downs of energy demand. The localized battery storage would help reduce peak loads as these users would not need to draw power from the grid. This reduces the operating costs by reducing the need to add and maintain their more centralized power production facilities.
The second argument for the net metering adjustments was for equitable reasons. The cost of solar has become much more approachable, leading to more installs and net zero households that pay only the base fees. As the cost of doing business goes up, so do the rates. But these higher electricity rates are spread over a lower number of rate paying customers. A high percentage of these customers are of lower means and unable to afford a rooftop system. So, the argument is that low income folks are having to carry an unfair portion of the costs to maintain the system.
On the surface, these arguments seem to make sense. However, reality is shaking out a little differently. In the year since the new policy was adopted there has been an 85% reduction in the solar installations across the state, and there is a significant squeeze on California’s already struggling community solar industry. Before NEM 3.0, in a sunny place like California solar customers were able to pay back their initial solar installation investment in just 5 years, now that payback period could be anywhere from 10-15 years. Until battery storage can become more approachable either with incentives and/or lower installation costs, NEM 3.0 has nearly halted development of rooftop solar systems in the state. This appears to fly in the face of their own clean energy goals.
Other western states have taken notice of California’s new rules, and are projecting similar solar infiltration numbers. PGE has released a draft proposal that would similarly eliminate the one-for-one net metering their customers currently enjoy. If the current proposal is approved, it would reduce the energy exchange somewhere between 20% and 70% according to Angela Crowley-Koch with Oregon Solar and Storage Industries Association. Under this draft, solar customers are able to keep the current one-for-one net metering exchange if they install battery storage. They would also likely need to enroll in a program that would allow PGE to store and draw energy from the batteries when needed. We can likely expect to see requirements similar to PGE’s Smart Battery Pilot program.
Currently the only exemption for the proposed changes would be for those on Oregon’s Income-Qualified Bill Discount Program. However, the impact will be minor as less than one percent of these ratepayers have solar.
POTENTIAL IMPACTS ON CURRENT AND FUTURE SOLAR OWNERS
PGE has included a 10-year grace period in the draft proposal that would allow current solar owners to keep their current one-for-one net-metering credit exchange before either moving to the proposed reduced credit rate or installing battery storage. Because most rooftop systems in our part of the state typically have a 10-15 year payback period, the proposed 10 year grace period would allow those who already have solar to at least break even on their investment.
Depending on the rate reduction PGE decides on in their final proposal, it could have major impacts on future solar investments. If the rate reduction is closer to 20%, it would make it more difficult to be net-zero energy and mean longer payback times for solar owners. However if the rate reduction is closer to California’s reduction rate, it would be nearly impossible for Oregon solar owners to see any real savings from solar systems. This would especially be true for the coastal areas, as they have fewer sunny days.
With battery storage still out of reach for the majority of solar owners and even fewer incentives to help bridge that gap, a reduction in net metering rates would have major impacts on the solar industry here in Oregon. Oregon just received a 5-year Solar for All federal grant for low-income households. The cost of solar production, in conjunction with monetary incentives, rooftop solar is currently more affordable than ever. This has made rooftop installations more approachable for low and moderate-income customers in Oregon. PGE’s net metering proposal is likely to have a major impact on the Solar for All grant recipients, both for single-family homes and low-income, multi-family housing developments, as well as community solar programs. Although this has resulted in an increase in installations, still only 5% of Oregon electricity customers have a system. If Oregon is serious about becoming carbon neutral by 2030, and they need to be, we need to do more to incentivize solar installations, not add barriers.
If you would like to take action, you can sign a petition to let PGE know their proposal will take Oregon in the wrong direction.