The utility death spiral is a well-documented phenomenon happening all over the country – especially in California.
But what is it exactly?
As more homeowners and businesses go solar, utility companies have fewer revenues. And they must raise their rates in order to cover fixed costs. These price hikes incentivize remaining utility customers to go solar, resulting in even higher rate increases.
And the process spirals downward.
Understandably, power providers are very worried. And they are doing everything in their power to stop widespread solar adoption.
In our state, the most popular strategy involves getting rid of attractive solar incentives like the California net metering program.
Under net metering, solar customers are allowed to “sell” their unused power back into the grid in exchange for utility credits. With this program, it’s possible to receive negative electricity bills at the end of every billing cycle.
Many utilities throughout the state dislike net metering because they view solar customers as “free riders” who don’t pay their fair share for grid maintenance and upkeep.
In some cases, utility companies have tried to attach special fees and penalties on solar customers. And in more extreme examples, they’ve tried to kill the net metering program altogether.
But surprising new research from the Rocky Mountain Institute (RMI) suggests that the net metering program might actually be helping utilities – not hurting them.
RMI’s Analysis of the California Net Metering Program
The Rocky Mountain Institute published a report not long ago entitled the Economics of Grid Defection, stating that,
We found that in the coming years and decades, large numbers of residential and commercial customers alike will find it economical to defect from their utilities and the electricity grid and supply themselves with power from solar-plus-battery systems.
The report goes on to describe a future in which “customers will have a choice to either cost-effectively self-generate without the grid or be a traditional customer with the grid.”
The message in this is pretty clear.
As utilities continue to jack up rates and fight against the solar industry, customers will take energy independence into their own hands. The economics work out in their favor. Outfitting your own property with solar panels and on-site storage can end up being cheaper than continued reliance on the utility grid.
But in a follow-up companion study entitled the Economics of Load Defection, researchers discovered something startling.
Although continuous price hikes would likely scare away customers, programs like net metering dramatically reduce the need to invest in expensive on-site storage. More specifically, the report determined that the percentage of utility customers who disconnect completely from the grid is relatively small in a world where net metering exists. The majority of solar customers would prefer to simply “store” their excess solar electricity in the grid using this highly popular incentive.
With net metering, customers don’t have to invest in as many solar PV panels – nor do they have to pay out-of-pocket for expensive solar batteries.
In short, net metering reduces the upfront cost of going solar – while simultaneously encouraging customers to remain on the grid for as long as possible.
What These Net Metering Reports Mean for You
Whether you stick with net metering or invest in on-site battery storage, going solar is one of the best strategies for reducing your utility bill and carbon footprint. So these reports shouldn’t affect your decision to install PV panels – you’re covered either way.
The findings are meant more for utility companies across the country.
However – you should know that the net metering program will likely end in California sometime this summer. So if you want the cheapest possible solar storage solution on the market, you should take advantage of this incentive while it still lasts. Those who join now get grandfathered in after the net metering program officially expires. Everyone after will have to find alternative methods for storing their excess energy.
To learn how we can help you go solar today, schedule a free appointment with our expert installation team.