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Health & Fitness

Wasted Energy

Who better to ask about how to expand solar access in the U.S. than an industry veteran who hails from Germany, a country known for high solar adoption? What’s notable is that this market analyst, Dirk Morbitzer of Renewable Analytics, believes that the Feed-in-Tariff (FIT) policy mechanism used in Germany is not suitable for the U.S. He advocates for net metering (NEM). In his words: “For the U.S., net metering is the best approach.” 

To offer a bit of quick background, a feed-in-tariff essentially eliminates the energy efficiency component of installing solar because the consumer is incentivized to build as large a system as possible instead of matching system size to their consumption behavior. Customers get compensated for the solar power they produce at a rate that’s determined annually and is quite unpredictable. While it may start out as high, the next year it could be cut in half if the utility and regulators decide they’d rather utilize existing fossil fuels instead of integrate more solar.

With net metering, solar customers actually use the electricity produced by their solar systems on site. If the system is producing when they aren’t home or don’t need electricity, then it feeds onto the grid for the utility to sell to other consumers. The solar customer gets full retail credit for this extra electricity that they provide to the utility. A recent study from CrossborderEnergy found that net metering delivers a financial benefit of about $92 million per year to non-solar Californians. In other words, it subsidizes the utility. 

Now for a bit more from Morbitzer on the matter. Currently based in San Francisco with deep insight into the U.S. market, Morbitzer is a Managing Director of energy market intelligence firm Renewable Analytics. He is also Treasurer of the German Energy Storage Association. As you may know, FITs have been the go-to policy in Germany, yet Morbitzer’s comments reinforce that NEM is best for the US, and for California in particular.

“FITs can work in places where the cost of retail electricity is low and the cost of electricity from solar systems is high, but in the U.S. that’s not the case,” he says. He explains that here, a FIT “is no longer necessary because system costs are dropping and electricity rates are rising.”

On California specifically, he notes, “any discussion about a FIT in California is counter-productive because it takes away necessary focus from what is already working and what’s needed for further growth – net metering.”

He also explained that in FIT regions, solar customers try to maximize the size of the system in order to receive the maximum amount of payments. “As we’ve seen in countries like Germany, this approach is unsustainable, especially in high-growth solar markets where solar costs continue to drop,” he said. “Net metering ensures that customers match their system size to their electricity usage. They feed all un-used electricity to the grid for the utility to sell to other ratepayers, and they receive full retail credit for that energy. In most cases, their credits cannot exceed the value of their electric bills in any given year, ensuring fairness to the utility.”

Morbitzer goes on to say that in the largest solar markets in the U.S., the majority of the electricity a system produces is consumed on site. “The excess electricity provides a financial benefit to the utility and non-solar ratepayers alike because it reduces costs like transmission, distribution, and peak power purchases.”

Morbitzer’s perspective comes at the same time that the California-based Clean Coalition – originally called the FIT Coalition – also came out in support of net metering. Clean Coalition Founder Craig Lewis highlighted the importance of NEM here. If NEM is a financial benefit to all ratepayers and the utility, as well as clean, successful, and fair, seems like all this debating is wasted energy (pun intended).

This blog originally appeared on the California Majority Report.

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