Solar can be used to generate electricity exactly when and where it’s being used. For homes, businesses and public organizations, this means meeting their own electricity needs with clean, predictable power from the sun. For utilities, this means adding more power to the grid without needing to build expensive new transmission infrastructure. There are four key policy buttons that need to be pushed to allow this kind of distributed solar market to grow.
- Financial support. Solar is currently expensive. The key to bringing down costs is in building economies of scale — the price history of solar shows that for every doubling of demand, costs have come down about 20%. The more investment now, the sooner solar will reach price parity with other electricity sources. For the short term, temporary support is necessary, which can come in the form of rebate programs, tax credits, or renewable portfolio standards (RPS) with a solar carve-out.
- Standardized interconnection procedures. Most buildings with solar systems also remain connected to the grid, for electricity when the sun is not shining. Without rules to make the process of interconnecting to the grid transparent and non-arbitrary, utilities can and do kill projects before they get off the ground.
- Net metering. This is a policy that allows solar systems to get credit for electricity fed into the grid. During the day, your meter rolls backwards, and at night, forward again as you use the banked credit. This makes solar installations more economical, and reduces costs for all other ratepayers by maximizing production during peak demand periods when electricity is the most expensive.
- Fair rate design. When utilities devise rate structures with large fixed charges and smaller kWh energy charges, it discourages investments in solar and energy efficiency by making it harder for these investments to pay for themselves (more fixed costs mean less savings can accrue from the customer’s generation). Time-of-use tariffs without demand charges allow system owners to recoup their investment, but also fairly compensate solar systems for their contribution as a peak shaving resource.
Visit our resource page for additional information about designing and implementing these four key policies.