A Tale of Two Solar Installations: How Electricity Regulations Impact Distributed Generation

Abstract

While renewable energy and distributed generation has and will likely continue to grow, state policies have a significant effect on adoption rates. Renewable portfolio standards and tax credits could continue to encourage penetration of these technologies. Customers cite energy independence and control over energy bills as drivers for installing distributed generation. Net metering – the ability of customers to be paid for the excess electricity they generate – is typically thought of as easy to understand. However, state policies are inconsistent across a number of factors, which discourage adoption for a variety of reasons. In addition to discussing the sometimes absurd differences between state-level policies, the differences demonstrate best practices that all states should adopt. Interconnection – the ability to allow two-way electricity flows – goes along with net metering, and has its own set of state-level policy challenges. No state will consciously choose to be less resilient. However, many are doing precisely that with their distributed generation policies. The problem is how the public utility commissions and utilities themselves are responding to the challenges, mostly economic, posed by increased distributed generation. Using Germany and policies adopted by individual states, the paper proposes what policies states can implement to promote resiliency, both by their citizens and themselves.

Keywords: renewable, distributed generation, interconnection, net metering

JEL Classification: K2, K32, L43, L97, L98, Q48