SEPA Paper on Net Energy Metering Terms & Concepts

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Abstract: Utilities and solar stakeholders have seen increased attention being paid to net energy metering policies as the penetration of distributed solar generation increases. The appropriateness for stimulating customer-sited solar installations has also become a prominent topic of discussion.  In our examination of related discussions occurring throughout the United States, SEPA’s paper provides a common understanding of the underlying terms and concepts being used as part of the debate in order to give readers the necessary grounding to “talk from the same page.”  Often times when terms are used, the meaning gets colored by the perspective of the particular stakeholder.

This paper uses feedback received from a diverse stakeholder group to provide an introduction to state utility regulation (particularly rate-setting), and solar value research that is key to facilitating discussions moving forward.

Key Points about SEPA’s “Collaboration” Paper:

  • Having a common understanding of underlying terms and concepts being used in NEM discussions is critical to ensure stakeholders are “talking off of the same page.”
  • This foundation provides common ground and builds trust that’s beneficial for current discussions and initiatives as well as those to come in the future.
  • SEPA engaged a diverse group of stakeholder (approximately 25) that represent utilities, solar industry stakeholders, industry associations, and other organizations working on net metering and distributed solar issues.
  • Feedback received from stakeholders was used to identify, highlight, and define an unbiased narrative on important terms and concepts.
  • The focus was narrowed to provide an introductory understanding of two critical areas: state utility regulation (particularly rate-setting) and solar value research.
  • SEPA will use this foundational primer to further engage stakeholders in the future with initiatives that will build consensus between stakeholders.

The SEPA Position on Net Energy Metering

On August 13, 2013, the SEPA Board of Directors agreed upon the organization’s first policy position, affirming SEPA’s support for the following principles on Net Energy Metering:

  1. Customer-sited solar generation will play an increasingly important role in the energy mix for utilities and consumers.
  2. Net energy metering (NEM) policies promote the deployment of customer-sited distributed solar generation in many markets.
  3. However, NEM and rate design, inherently linked, need to evolve to transparently allocate costs and benefits, compensating all parties for their value contribution.
  4. This transition will only be effective when utilities, the solar industry and customers collaborate to create a sustainable solar distributed generation marketplace.