What is net metering? Net metering is a primary mechanism for compensating residential and small-scale solar projects. Under net metering, customers with renewable electric generators can reduce their electric bill by generating some or all of their power and receive a credit from their electric provider for any excess generation.
Currently, only the state’s two investor-owned utilities practice net metering. Municipalities and rural cooperatives are not required to provide net metering to their customers, leaving about 30% of Iowa’s population without access to this incentive. Net metering is also capped at a relatively low system size, reducing the number of facilities that could qualify for the incentive. Last, there is no aggregate or virtual net metering authorized in the state. Iowa’s legislature could help increase the adoption of solar in the sat by removing these barriers to solar freedom.
First, legislation could be enacted to apply net metering provisions to municipalities and rural cooperatives. Second, policymakers could increase the net metering cap or switch to a capacity limit. Currently, net metering is capped for systems sized greater than 500 KW. Many other states have net metering caps much higher, ranging from 1,000 MW to no limit. A capacity limit refers to phasing out net metering at a percentage of the customer’s total load. For example, Arizona’s cap for net metering is set at 125% of a customer’s total load. This provides a great financial incentive for owners or managers of large properties, such as schools, manufacturers or agricultural facilities. Iowa could also look into capacity limits based on customer demographics, similar to West Virginia, which has variable limits for residential, commercial, and industrial customers. Raising the net metering cap or transitioning to a capacity limit would make Iowa more competitive with other states.
Last, the net metering legislation could include aggregate and virtual net metering. Aggregate net metering relates to properties with multiple meters on the same property or adjacent properties. Virtual net metering relates to property owners with multiple meters to distribute credits to multiple accounts. Virtual and aggregate net metering policies enable renters, multi-property owners and customer in multi-unit residences, commercial spaces and government-owned facilities to take advantage of net metering incentives that are currently only available to single-property owners. Neighboring Minnesota is one of several states that allow both aggregate and virtual net metering.
Establishing consistent statewide net metering rules and policies send a positive market signal to investors and solar developers. By extending the net metering policy to all energy providers, raising the system cap or replacing it with a capacity limit, and expressly authorizing aggregated and virtual net metering, Iowa can ensure more equitable access to this important policy mechanism.
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