Freeing Energy tackles the most contentious and complex issue in local energy: Net Metering (NEM)

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Net Metering is at the center of families’ rights to build their own renewable energy systems and enjoy the resilience and savings they offer.

Freeing Energy offers history, context, and digestible explanations for this growing battle between utilities and homeowners.

What is Net Metering?

Net Metering (also called Net Energy Metering, or NEM) is the most important policy driving the expansion of Freeing Energy’s core topic: small-scale, customer-owned solar and battery systems. Net Metering directly impacts the costs and availability of rooftop solar on homes and small-businesses in most states in the US. 

Freeing Energy devotes several sections to Net Metering, its history, and why it has become so contentious. These include a Local Energy Bill of Rights (page 254) and a section called: Net metering: getting fair value for your solar kilowatt hour (page 237).

California and NEM 3.0

In late 2021, shortly after Freeing Energy was published, California proposed the most contentious Net Metering policy in US history, referred to as NEM 3.0.

Historically, California had been the leader in local energy. Freeing Energy highlights many examples:

  • Requiring all new homes be built with rooftop solar (page 245).
  • Specific rate plans and rapid deployment requirements for microgrids (page 318).
  • Being home to one of the most advanced microgrids in the world (a case study of this opens Chapter 3: The Rise of Local Energy)

But critics claim the newly proposed fees and low prices paid for excess solar will undermine the state’s leadership and risk collapsing the most vibrant local energy market in the US.

Freeing Energy is an ideal starting point and reference guide for anyone looking to understand the issues around Net Metering and why it is dividing groups that have otherwise been allies for decades. The book covers a wide set of issues, several of which are summarized below.

Cost shifting: pitting environmentalists against advocates for the poor

Cost shifting is “one of the most effective arguments utilities are making to slow local energy and net metering. It invokes the morality of social justice by suggesting that wealthy homeowners installing solar will shift the costs of maintaining the grid to low-income families in the form of higher electricity rates.“ (page 233). 

Is this really a factor? Freeing Energy offers several new perspectives that are largely overlooked by experts and the media.

The role of utilities in a decentralized, local energy future

From the book, “I believe the best role for local energy champions like us is to do everything we can to help the electric monopolies find their way to a future where everyone wins.

The section Reinventing Electric Monopolies lays out a high level set of approaches that can better align utility interests with local energy owners, paving the way for utilities to remain a vibrant and successful part of a more decentralized future grid (page 255).

How Net Metering was born: a brief history of regulated electric monopolies

A century ago, the one-time assistant to Thomas Edison, a man named Samuel Insull, paved the way for a grand bargain—a “social compact”—that gave electric utilities one of the best deals in business: they were granted exclusive monopolies and protected from competition in exchange for oversight from government regulators. This unique business model has been so successful that it lasts to this day, largely unchanged (page 18, 61, 227, and 238). 

Freeing Energy includes:

  • The surprising parallels with the largest regulated monopoly in history, AT&T, including quotes from their CEO, John deButts, in a 1976 speech about the very same perils that cost-shifting presented to telephony customers (page 311). Teaser: AT&T was  later broken up which then paved the way for the internet and mobile phones.
  • A section about public utility commissions called, Meet the 201 people that control 72% of the US electricity industry (page 252).
  • A humorous parable about what happens to the hamburger industry when it becomes a regulated monopoly for food (page 249).

Local energy is becoming irresistible

Freeing Energy lists 18 reasons why local energy is becoming irresistible, including:

  • It creates 11-times more jobs per megawatt installed than utility-scale projects (page76).
  • It can be 10-times faster to design and deploy.

But the declining costs are the biggest reason local energy is unstoppable: small-scale solar systems are dropping to a fraction of the projected price of electricity from the grid (see the following graph).

In the meantime, Net Metering remains an essential bridge that ensures customers get the lowest cost energy and that utilities have a chance at becoming essential parts of our future electricity system.

Freeing Energy is filled with data and graphs, all supported by almost 400 endnotes

FIGURE 3.4 The cost of residential solar has declined sharply over time, reaching parity with the average price of grid electricity in 2020. It is projected to reach one-quarter the cost by 2050. Source: NREL ATB 2020 (page 87)
FIGURE 7.1 A visualization of the electric utilities’ death spiral (page 233)

Grid defection and the “death spiral”

Freeing Energy explains how electric utilities see local energy as an existential threat that leads to their demise, including quotes from a now-buried 2013 electricity industry white paper:

“The electric utility sector has not previously experienced a viable disruptive threat to its service offering. . . . However, a combination of technological innovation, public/regulatory policy, and changes in consumer objectives and preferences has resulted in distributed generation [“local energy”] and other DER being on a path to becoming a viable alternative to the electric utility model.” (page 231)

Hear from experts

Bill Nussey pulls together research and insights from top experts on clean energy policy including:

  • Peter Fox-Penner, the Author of Power After Carbon and Smart Power, as well as the Chief Strategy Officer of Energy Impact Partners, the largest power-tech venture firm.
  • Amory Lovins, the Co-Founder and Chairman Emeritus of RMI (formally called the Rocky Mountain Institute)
  • Bubba McDonald, the widely regarded Public Service Commission from Georgia
  • Researchers from the Lawrence Berkeley National Laboratory (LBNL)

Net Metering is at the heart of one of the most epic disruptions in business history

From Freeing Energy:

A war is brewing. It is big versus small. Control versus choice. Powerful corporations and entrenched government bureaucracies versus individuals and communities. The old business model is a dinosaur— slow, cold-blooded, seemingly invincible but vulnerable to rapid change. Local energy is the age of mammals. Smaller. Faster. Self-regulating and adaptable to different conditions.

In nearly all ways, the future of electric monopolies is in their own hands. They can embrace the coming changes and play an essential role in our clean local energy future. Or they can resist change, foist unfair fees on local energy owners, hire more lobbyists, and when all the dust settles, still find themselves on the wrong side of history—sidelined and irrelevant.

The Freeing Energy book

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