Jul 22 2015

Solar Energy and the Issues with Net Metering

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Though the environmental cost of fossil fuels should be enough to influence the switch to renewable energy sources such as solar, most consumers seek some financial benefit to offset the initial cost. Many states and communities offer net metering as an incentive for installing solar panels. This process credits solar panel owners (usually the retail price of electricity) for feeding excess power back into the grid. Problems arise when one compares the cost of retail electricity to the value of solar power.

According to The Environment North Carolina Research & Policy Center, solar power median value is around 17 cents per unit while the U.S. average retail electricity rate is 12 cents per unit. The value of solar energy included net benefits to the environment and the grid. This takes into account things like increased grid resiliency, job creation, and air pollution reduction. This evaluation is admittedly quite biased as it is difficult to put a monetary price on environmental concerns. Therefore, the monetary value of solar power is not exact. This considered, it is pretty well understood that solar energy should be considered as having a higher value due to its superiority in many aspects over fossil fuel based energy.

Retail electricity rates compared to the value of solar energy in 11 different cost/benefit analyses

Retail electricity rates compared to the value of solar energy in 11 different cost/benefit analyses

If these figures are correct and reasonable, utility companies are underpaying solar panel owners. This isn’t surprising given that solar powered homes mean less revenue generated by electric companies. This presents an issue for the adoption of renewable energy because net metering has been pivotal in the expansion of solar power in the United States. Though net metering is still financially beneficial to solar panel owners even with the deficit, if consumers feel that they will not be paid a fair rate, they will be less likely to invest in or install solar panels.

It is easy to place responsibility on consumers to choose renewable energy sources but for many people, it is not yet economically feasible. Perhaps with increased benefits and fair net metering rates from utility companies, more Americans would see solar energy for the positive investment that it is and would be willing to try it.


Hallock, Lindsey, and Rob Sargent. “Shining Rewards: The Value of Rooftop Solar for Consumers and Society.” Environment North Carolina. Frontier Group, 2015. Web. 22 July 2015. <http://environmentnorthcarolina.org/sites/environment/files/reports/NC_shiningrewards_scrn.pdf>.

Rogers, Dave. “Solar Energy Benefits Vastly Outweigh Costs.” Environment North Carolina. June 2015. Web. <http://www.environmentnorthcarolina.org/news/nce/report-solar-energy-benefits-vastly-outweigh-costs>

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