Minnesota follows Austin with Value of Solar Tariff: better than net metering, or not?

Yes, it’s better than the unequal “net metering” Georgia has now, where your one-and-only utility pays you a rate they determine, typically their “avoided” rate of not generating energy by some other means, which is usually a lot less than what you pay your utility. Is it better than real one-to-one net metering? That’s a harder question, because even if it pays more now, it’s less predictable. In any case VOST has spread from Austin to Minnesota.

Herman K. Trabish, GreenTechMedia, 10 April 2014, A Rising Tension: ‘Value-of-Solar’ Tariff Versus Net Metering,

Source: Institute for Local Self Reliance

The Alliance for Solar Choice, a group made up of leading solar service providers, is a staunch defender of net energy metering. And that has brought it into conflict with solar advocates calling for a more precise “value of solar” calculation.

TASC’s defense of net metering divided stakeholders in Minnesota who eventually pushed through the nation’s first legislatively mandated and PUC-approved state value-of-solar tariff. In South Carolina, TASC’s intervention could halt compromise net metering legislation crafted by a coalition of advocates and local utilities looking to create a value-of-solar formula.

TASC wants to protect net metering, which credits rooftop solar owners at the retail rate for electricity delivered to the grid. “This is a stable and highly successful policy,” TASC Executive Director Anne Smart has written. “We need to maintain net metering, not ‘fix’ it.”

Net metering is key to the third-party ownership (TPO) business model leveraged by TASC founding members SolarCity, Sungevity, Sunrun and Verengo. By effectively making use of federal tax credits, net metering and investment funds, TPO companies have driven unprecedented U.S. solar growth over the last two years.

The article notes utilities make excuses for why they don’t like net metering, and VOST addresses those through a detailed examination of:

  • Avoiding the purchase of energy from other, polluting sources
  • Avoiding the need to build additional power plant capacity to meet peak energy needs
  • Providing energy for decades at a fixed price
  • Reducing wear and tear on the electric grid, including power lines, substations, and power plants

The result of that examination is that utilities should pay the same or more to local solar energy producers as they charge.

Because it is a rigorously determined, transparent, and regulator-approved value, a VOST should eliminate utilities’ arguments about cross-subsidies, according to Karl Rabago, a former Texas regulator and utility executive who created the first U.S. VOST in Austin, Texas.

The catch is that utilities can recalculate VOST periodically, making long-term solar financing difficult, plus this:

A VOST requires good-faith engagement and oversight on the part of electric utilities, Rabago said. “Utility regulators must do their job.” This means transparent ratemaking. “Well-run, open stakeholder processes, like those used in Austin and Minnesota, were vital to generating results.”

Meanwhile in Georgia, even after Georgia Power admitted it can’t get a schedule from its own contractors and hasn’t had one for two years, the Public Service Commission still did nothing to halt cost overruns at nuclear plant Vogtle.

So for Georgia I’d settle for simple one-to-one net metering.

Oh, and let’s get HB 57 passed for solar financing.