Fortunately, the Solar America Board of Codes and Standards has already developed a set of best practices that may significantly reduce the cost of permitting for solar projects. Their exhaustive list of strategies (such as expedited review based on a checklist, email rather than in-person permit submission, etc) can reduce permitting costs by 75%, giving a very different picture.
Another potential barrier to fulfilling the potential of solar grid parity are limits on and limitations of net metering. Net metering laws in 43 states allow for on-site solar power producers to rollback their electricity consumption. For every kilowatt-hour (kWh) offset by on-site solar, the customer saves the retail charge for electricity, e.g. $0.10 per kWh. The following chart provides a simplified example, where the customer uses 100 kWh in a month, but because their solar array produces 60 kWh, they only pay for the “net” consumption, 40 kWh.
In general, customers using net metering get paid the retail rate for solar electricity so long as production does not exceed on-site consumption (by very much). The advantage of net metering is that people generally find a combination of energy efficiency and solar power that minimizes their electric bill, and the accounting is all handled by the utility using a single meter.
Net metering has political advantages as well. Since it doesn’t require any public money (but instead requires the utility to provide the accounting measure), it feels free.
One drawback of net metering is that a person must own a suitable, sunny rooftop or open space to install solar. Since only two-thirds of residential properties are owner occupied, and scarcely 25% of residential rooftop space is suitable for solar,5 that significantly shrinks the potential universe for solar power. Additionally, net metering can encourage sub-optimal economies of scale for distributed solar. Since people who regularly produce more solar electricity than they use on-site get paid a very low rate for that power (rather than the retail electricity rate), it discourages people from maximizing the size of their solar project. And with steep economies of scale at small project sizes, this means the social cost of solar power is higher with policies that cap project sizes (net metering) than with those that do not.
One policy solution to this net metering limitation is generically called community solar. At its simplest, community solar policy means “community net metering.” This policy, adopted by seven states and a number of individual utilities as of 2010, allows customers to build a common solar panel array and share the output via net metering on their individual bill. For example, the electricity from a 30 kW solar array on a nearby church could be shared among ten local owners, each receiving a share of the electricity output in proportion to their ownership share. The accounting is identical to net metering, minus the on-site solar. Customers still cannot get credit for significantly more solar electricity than they consume, but they do not need to have a sunny rooftop.
Community net metering is simply an accounting measure, but it can provide a way for many people to share the electricity output from a single solar array in their community, and make centrally located community solar projects possible. In addition to opening the door to solar for folks without suitable rooftops, by allowing people to share larger solar arrays it can also modestly reduce the cost of going solar. The following chart illustrates the economies of scale of solar power installed in the U.S. To use the example of a church roof-top array, it’s possible to see the cost savings from sharing a 30 kW array with a typical cost of $6.50 per Watt compared to 10 individual 3 kW arrays at $7.30 per Watt.6
In one state, Colorado, a new state law has established a legal framework for community solar projects called community solar gardens. These gardens are solar projects 2 MW or smaller with 10 or more “subscribers” sharing the solar output. Utilities must buy the output from up to 6 MW worth of community solar projects by 2013.7
Another drawback of net metering is that it is often limited on a system-wide basis in many states, to a certain percentage of a utility’s load or peak load. California, for example, requires utilities to accept up to 5% of their peak demand from net metering, but no more.8 Most states limit net metering to 1% of a utility’s peak demand or less. The following map shows states with an aggregate net metering limit.9 States in dark red have limits 1% or less and states in light red have limits that are higher. States with no color have no statutory limit on net metered systems.
Fortunately, states can change their aggregate limits, as California did in 2006 (to 2.5%) and 2010 (to 5%).10 However, there’s no guarantee of a sufficiently favorable political environment in other states.
Lead image: Human hand open red velvet rope, via Shutterstock
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