Michigan’s Cap on Net Metering

Net metering is the cheapest way for anyone to install solar panels on their house. Net metering means that, whenever the solar panels are producing more power than the house is using, the excess electricity is fed into the local energy distribution grid, and the meter on that house runs in reverse during that time.

It’s great for the individual owner, because the owner not only uses electricity produced without paying the electric company for it but also gets credit for any surplus electricity produced. The owner does not need to provide batteries or any sort of storage for electricity proc=duced during the daytime in order to have electricity at night. At night, the house simply uses electricity off of the grid, exactly like houses without solar panels.

As the meter runs sometimes forward and sometimes backwards, the owner pays only for the amount of electricity that’s more than last month’s reading. A house with solar panels might have net electrical consumption of zero during the summer, with the highest consumption coming in the winter months.

what is net metering

It’s also great in some ways for the electric company and possibly for the society. Because the output of solar panels peaks during the day, the time when panels produce power matches pretty well with the time of peak power demand on the electrical grid. Generating companies sometimes have to buy very expensive power from nearby regions or fire up expensive “peaking” plants to cover electrical demand during peak times. Sometimes they have to do both, and pay more for electricity than they are charging, just to keep the grid from crashing. When rooftop solar panels provide peak power, the regional purchasing and ‘peaking” plants are not needed.

It’s potentially good for the society because, while it’s possible to shut off power to a huge area when a couple of critical transmission points fail, there will be some panels distributed throughout the area, and power could be available for critical uses.

This is only potential for now, because power line safety management requires that solar panels be cut off from the grid whenever grid voltage fails. This means that power will only be available for the houses that have panels installed, and only then if a more complex and expensive wiring plan has been installed. With standard simple wiring for net metering, power from the panels is not available to the house when the grid power is down.

The Michigan Public Service Commission’s handout on net metering says, in part:

“Net metering is for customers with renewable electric generators such as wind turbines, solar photovoltaic, and other types of renewable electric generators located at a Michigan residence or business that is served by an electric provider. As of June 30, 2009, Michigan had over 120 customers participating in net metering.

Utilities and cooperatives with rates that are regulated by the Michigan Public Service
Commission are required by law to make this net metering program available to their customers until the size of the program meets the limit specified in 2008 PA 295.”

The portion of 2008 PA 295 that sets the cap on net metering is 460.1173 .

Statewide net metering program; establishment; order; rules; 1 percent requirement; selection of participating customers; provisions; maintenance of records.

Sec. 173.

The relevant portion reads

(2) An electric utility or alternative electric supplier is not required to allow for net metering that is greater than 1% of its in-state peak load for the preceding calendar year. The utility or supplier shall notify the commission if its net metering program reaches the 1% requirement under this subsection. The 1% limit under this subsection shall be allocated as follows:

(a) No more than 0.5% for customers with a system capable of generating 20 kilowatts or less.

(b) No more than 0.25% for customers with a system capable of generating more than 20 kilowatts but not more than 150 kilowatts.

(c) No more than 0.25% for customers with a system capable of generating more than 150 kilowatts.

While this section of the law was later amended, the portion quoted above did not change.

Family residences with solar panels are typically rated in the 2-5 kilowatt range. This means that, when the cap of 0.5% of peak load is reached, no more residences will be able to install net metering.

The 2008 law was signed by Governor Granholm. At the time, a 0.5% cap on residential net metering seemed perfectly reasonable, because nobody knew how many people would want it. By the middle of 2009, there were only 120 cousomers with net metering installed.

Now, the situation is very different. Solar panel efficiencies have improved substantially, and prices have dropped even more substantially. Business selling and installing solar panels have doubled and doubled again since 2008. Unfortunately, it looks like residential solar installations will hit the net metering cap in the summer of 2019. When that happens, the number of new installations will instantly drop to nearly zero. The only people who will continue will be those putting up an entirely off-grid system for their vacation cottages.

There’s no technical reason that this cap needs to exist. Renewable power from wind turbines and solar panels could go up to 30% without creating an unstable or unreliable grid. In Germany, planning and good techniques of grid management mean there were no issues during a recent weekend when 85% of electrical power came from distributed renewable generation. hawaii does seem to be having some issues at the level of 50% or so renewable power, but that’s an odd case. On islands, Hawaii’s small grids are isolated. In Michigan, we are part of a much greater region for both generation and distribution.

Michigan’s cap on net metering should be removed entirely. The only reason to have it would be to preserve a little while longer the obsolete business models of DTE Energy, Consumer’s Power and other electrical utilities. In this case, their interests are pitted squarely against homeowners who want to install solar panels and the installation companies who are providing some of the fastest-growing employment in an otherwise bleak employment picture.

We can’t do a transition to renewable energy as long as we allow corporations who profit from the old ways of providing power to block the path.


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