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The Role of Net Metering in the Evolving Electricity System

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Net metering is a billing mechanism reshaping the relationship between electricity customers and utilities. This Congressionally-mandated study for the Department of Energy will examine the medium-to-long term impacts of net metering on the electricity grid and consumers. The study will include a discussion of net metering planning and operating techniques, business models, and architectures, as well as electric service rate designs and new technology developments. The committee will assess net metering in the context of alternative transactional mechanisms and incentives, and evaluate its potential to contribute to a decarbonizing, equitable, and resilient electricity system.

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Description

In its 2020 appropriations for the Department of Energy, the U.S. Congress directed the National Academies of Science, Engineering, and Medicine to appoint an ad hoc committee of experts to study the issues associated with net metering, including the medium-to-long term impacts of net metering on the electricity grid and consumers. This study will begin with a definition of net metering and a discussion of the history and implementation of net metering. The study will include a discussion of net metering planning and operating techniques, business models, and architectures, as well as electric service rate designs and new technology developments. Current net metering and alternative policies will be discussed as distinct topics because each may have different underlying enabling technologies. The committee will provide an analysis of the opportunities and challenges relevant to net metering, including broad stakeholder acceptance and adoption of distributed renewable energy resources. The committee will assess net metering in the context of alternative transactional mechanisms and incentives, and evaluate its potential to contribute to a decarbonizing, equitable, and resilient electricity system. The study will give recommendations on key principles for policymakers when considering net metering and alternative policies.

In developing its report, this committee will consider the following key topics.

· Performance and Effects of Net Metering and its Alternatives on Business Models, Consumers, Technology Suppliers, Electricity Markets, and Grid Operations at High Penetrations of Distributed Renewables. The committee will examine the capability of net metering and successor policies to provide accurate valuations of electricity, ensure sufficient financial support for investment and operations necessary for the system, and support equitable, well-functioning, and economically efficient markets as the quantities of renewable resources and other assets connected to the distribution side of the grid greatly increases. Metering alternatives should be described and assessed on their potential to provide improvements in transactions, measurements, and incentives for the use of distributed renewable generation. As new metering technologies allow for more complexity in valuation and billing, the ability of consumers to understand this complexity will be considered by the committee.

· Emergence of New Technologies, and Effects on Consumer and Industry Transactions and Incentives. The committee will consider how new technologies and their attendant new capabilities alter the roles of the participants in the system, the requirements of each participant to fulfill those roles, and the challenges and opportunities present. Consumers in particular will need the information and context necessary to participate fully. Customer-owned distributed energy resources are capable of providing grid services to both distribution and transmission entities in addition to any purpose a customer may choose, and therefore, issues of consent, compensation and privacy should be studied by the committee.

· Alternative Metering Systems that Promote Equitable Distribution of System Resources and Costs. Net metering and supporting technologies should be considered both from the perspectives of participants and non-participants, and key principles for assessing fairness should be discussed. Fair and equitable electric service, which is an ultimate system objective, is not addressable solely by net metering or any successor policies. As such, the discussion should be within the broader context of electric utility regulatory policies that impact equity, including access to distributed energy resources and designing successor tariffs to increase the adoption of distributed energy resources by customers from lower-income and marginalized communities.

· How Net Metering and Alternatives May Affect the Evolution of the Electricity System.This study will assess the extent to which net metering and alternative policies may adapt to or enable different electricity system structures, such as one with increased distributed elements for advanced reliability and resilience, equity, and the adoption of different technologies, such as behind-the-meter storage systems and rooftop and community solar.

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Conflict of Interest Disclosure

The conflict of interest policy of the National Academies of Sciences, Engineering, and Medicine (http://www.nationalacademies.org/coi) prohibits the appointment of an individual to a committee authoring a Consensus Study Report if the individual has a conflict of interest that is relevant to the task to be performed. An exception to this prohibition is permitted if the National Academies determines that the conflict is unavoidable and the conflict is publicly disclosed. A determination of a conflict of interest for an individual is not an assessment of that individual's actual behavior or character or ability to act objectively despite the conflicting interest.

Melicia Charles has a conflict of interest in relation to her service on the Role of Net Metering in the Evolving Electricity System committee because she is currently employed by Mainspring Energy, a linear accelerator manufacturer interested in net energy metering for generators, and she was employed by Silicon Valley Clean Energy (SVCE) a public community choice aggregator through February 2022. The National Academies has concluded that in order for the committee to accomplish the tasks for which it was established, it must include a committee member with current experience pertaining to the equity impacts of net metering, as well as the operational considerations of community choice aggregators under these policies. Ms. Charles has extensive experience on these topics having overseen equity programs as Director of Legislative and Regulatory Policy at Silicon Valley Clean Energy at SVCE, as well as operational and equity programs at the California Public Utilities Commission (CPUC), and at solar technology provider Sunrun, in addition to serving as chief of staff to two CPUC commissioners. The National Academies has determined that the experience and expertise of Ms. Charles is needed for the committee to accomplish the task for which it has been established. The National Academies could not find another available individual with the equivalent expertise and breadth of experience who does not have a conflict of interest. Therefore, the National Academies has concluded that the conflict is unavoidable. The National Academies believes that Ms. Charles can serve effectively as a member of the committee, and the committee can produce an objective report, taking into account the composition of the committee, the work to be performed, and the procedures to be followed in completing the study.

Terry Surles has a conflict of interest in relation to his service on the Role of Net Metering in the Evolving Electricity System committee, because he is currently a Senior Advisor to the California Institute for Energy and Environment, and consults to Hawaii Natural Energy Institute on their work pertaining to an electric service provider (Hawaiian Electric Company) that is affected by net metering policy and has provided net metering services to its customers. The National Academies has concluded that in order for the committee to accomplish the tasks for which it was established, it must include a committee member with current expertise pertaining to the challenges of providing net metering services to electricity customers, and maintaining reliable utility operations. As his biographical summary makes clear, Dr. Surles has extensive current experience pertaining to the electricity industry and distributed resources, as well as direct experience with the Hawaiian electricity system, which presents illustrative lessons related to how net metering performs under high penetrations of renewables. The National Academies has determined that the experience and expertise of Dr. Surles is needed for the committee to accomplish the task for which it has been established. The National Academies could not find another available individual with the equivalent expertise and breadth of experience who does not have a conflict of interest. Therefore, the National Academies has concluded that the conflict is unavoidable. The National Academies believes that Dr. Surles can serve effectively as a member of the committee, and the committee can produce an objective report, taking into account the composition of the committee, the work to be performed, and the procedures to be followed in completing the study.

Susan Tierney has a conflict of interest in relation to her service on the Role of Net Metering in the Evolving Electricity System committee because she is currently employed by a consulting company (Analysis Group) that provides planning, market, and regulatory analyses for a broad range of clients (including utilities, energy companies, governments, non-governmental organizations, and energy consumers) in the electric power sector on net metering and other subjects. The National Academies has concluded that in order for the committee to accomplish the tasks for which it was established, it must include a committee member with current experience in wholesale electric power markets, utility planning processes, and corresponding federal and state regulations. As her biographical summary makes clear, Dr. Tierney has extensive current experience providing technical and market analysis for electricity system operations, including net metering specifically. The National Academies has determined that the experience and expertise of Dr. Tierney is needed for the committee to accomplish the task for which it has been established. The National Academies could not find another available individual with the equivalent expertise and breadth of experience who does not have a conflict of interest. Therefore, the National Academies has concluded that the conflict is unavoidable. The National Academies believes that Dr. Tierney can serve effectively as a member of the committee, and the committee can produce an objective report, taking into account the composition of the committee, the work to be performed, and the procedures to be followed in completing the study.

Committee Membership Roster Comments

Severin Borenstein resigned August 2022.
Melicia Charles resigned March 2023.

Sponsors

Department of Energy

Staff

Brent Heard

Lead

Kaia Russell

Daniel Talmage

K. John Holmes

Rebecca DeBoer

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