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Is Net Metering an Alarming Call for Utilities?

Vincent Kruger

Net Metering Is Still Strong despite Being Dropped from a Few States

(Continued from Prior Part)

State-wise net metering capacity additions

Net metering is authorized in nearly 44 US states. However, the implementaion wasn’t even between these states. The top ten states accounted for 87% of the net capacity addition in 2015. California added the maximum capacity in net metering in 2015. It accounted for 1,154 megawatts compared to 2014. California was ahead of the capacity addition last year. New York only added 186 megawatts in solar net metering.

The primary reason for net metering growth in California was the favorable regulatory environment. Apart from this, helpful weather conditions for solar PV (photovoltaic) and third-party operators like SolarCity (SCTY) also supported the growth. They facilitate net metering arrangements between utilities (XLU), customers, and themselves.

Considering the last five years’ time horizon, nearly 7,873 megawatts of capacity were added in the US through solar net metering. Out of this, 55% or 4,336 megawatts were added in the residential sector. Improvement in solar PV technology, strong growth in the residential sector, and an increased number of third-party facilitators drove the growth.

Distributed generation

Distributed generation is becoming popular in the United States (SPY). It’s a win-win for both customers and the enviorment. However, it sidelines the traditional utility operations appoach because it doesn’t involve a transmission network. Can this be an alarming signal for traditional utilities?

Electric grids are very important for utilities. They transmit power generated in distant power plants to customers. Public Servie Enterprise Group (PEG), XCEL Energy (XEL), and PPL Corporation (PPL) allocated huge sums of their capital spending to grid modernization. Some utilities (JXI) are investing in both distributed generation as well as in their transmission network. However, not changing according to industry developments could be management’s myopia in the future.

Continue to Next Part

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