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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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Consensus Study Report

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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Suggested citation: National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. https://doi.org/10.17226/26704.

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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The National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, nongovernmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Marcia McNutt is president.

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Learn more about the National Academies of Sciences, Engineering, and Medicine at www.nationalacademies.org.

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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Consensus Study Reports published by the National Academies of Sciences, Engineering, and Medicine document the evidence-based consensus on the study’s statement of task by an authoring committee of experts. Reports typically include findings, conclusions, and recommendations based on information gathered by the committee and the committee’s deliberations. Each report has been subjected to a rigorous and independent peer-review process and it represents the position of the National Academies on the statement of task.

Proceedings published by the National Academies of Sciences, Engineering, and Medicine chronicle the presentations and discussions at a workshop, symposium, or other event convened by the National Academies. The statements and opinions contained in proceedings are those of the participants and are not endorsed by other participants, the planning committee, or the National Academies.

Rapid Expert Consultations published by the National Academies of Sciences, Engineering, and Medicine are authored by subject-matter experts on narrowly focused topics that can be supported by a body of evidence. The discussions contained in rapid expert consultations are considered those of the authors and do not contain policy recommendations. Rapid expert consultations are reviewed by the institution before release.

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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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COMMITTEE ON THE ROLE OF NET METERING IN THE EVOLVING ELECTRICITY SYSTEM

JANET GAIL BESSER, Independent Expert, Chair

ANURADHA M. ANNASWAMY, Massachusetts Institute of Technology

GALEN BARBOSE, Lawrence Berkeley National Laboratory

SEVERIN BORENSTEIN, University of California, Berkeley1

MARILYN A. BROWN, NAE/NAS, Georgia Institute of Technology

MELICIA V. CHARLES, Mainspring Energy2

MOHIT CHHABRA, Natural Resources Defense Council

ELENA M. KRIEGER, PSE Healthy Energy

JOSHUA M. PEARCE, Western University

AUTUMN F. PROUDLOVE, NC Clean Energy Technology Center

VARUN RAI, The University of Texas at Austin

MOHAMMAD SHAHIDEHPOUR, NAE, Illinois Institute of Technology

NICOLE D. SINTOV, The Ohio State University

THOMAS S. STANTON, National Regulatory Research Institute (Retired)

TERRENCE G. SURLES, Independent Consultant

SUSAN F. TIERNEY, Analysis Group

Staff

K. JOHN HOLMES, Board Director and Scholar, Board on Energy and Environmental Systems (BEES)

BRENT HEARD, Study Director and Program Officer, BEES

DANIEL TALMAGE, Program Officer, Board on Environmental Change and Society

REBECCA DEBOER, Research Associate, BEES

ELI NASS, Research Assistant, DEPS

JASMINE BRYANT, Research Assistant, BEES

KAIA RUSSELL, Program Assistant, BEES

___________________

1 Resigned from the committee August 2022.

2 Resigned from the committee April 2023.

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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BOARD ON ENERGY AND ENVIRONMENTAL SYSTEMS

JARED COHON, NAE, Carnegie Mellon University, Chair

VICKY BAILEY, Anderson Stratton Enterprises, LLC

CARLA BAILO, Center for Automotive Research

DEEPAKRAJ M. DIVAN, NAE, Georgia Institute of Technology

MARCIUS EXTAVOUR, XPRIZE

T.J. GLAUTHIER, TJG Energy Associates, LLC

PAULA GLOVER, Alliance to Save Energy

NAT GOLDHABER, Claremont Creek Ventures

DENISE GRAY, LG Chem Michigan, Inc.

JENNIFER R. HOLMGREN, NAE, LanzaTech

JOHN KASSAKIAN, NAE, Massachusetts Institute of Technology

MICHAEL LAMACH, Trane Technologies (Retired)

JOSÉ SANTIESTEBAN, NAE, ExxonMobil Research and Engineering Company

ALEXANDER SLOCUM, NAE, Massachusetts Institute of Technology

SUSAN F. TIERNEY, Analysis Group

GORDON VAN WELIE, NAE, ISO New England, Inc.

DAVID G. VICTOR, University of California, San Diego

Staff

K. JOHN HOLMES, Senior Director and Scholar

JAMES ZUCCHETTO, Senior Scientist

ELIZABETH ZEITLER, Associate Director

BRENT HEARD, Program Officer

KASIA KORNECKI, Program Officer

CATHERINE WISE, Program Officer

REBECCA DEBOER, Research Associate

KYRA HOWE, Research Assistant

JASMINE BRYANT, Research Assistant

KAIA RUSSEL, Program Assistant

HEATHER LOZOWSKI, Financial Manager

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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BOARD ON ENVIRONMENTAL CHANGE AND SOCIETY

KRISTIE L. EBI, University of Washington, Seattle, Chair

BILAL M. AYYUB, University of Maryland

LISA DILLING, University of Colorado Boulder

KENNETH GILLINGHAM, Yale University

KATHARINE L. JACOBS, University of Arizona

STEPHEN H. LINDER, University of Texas

GARY E. MACHLIS, Clemson University

MICHAEL ANTHONY MENDEZ, University of California, Irvine

ASEEM PRAKASH, University of Washington, Seattle

BENJAMIN KENNETH SOVACOOL, Boston University

MICHAEL P. VANDENBERGH, Vanderbilt University Law School

CATHY L. WHITLOCK, NAS, Montana State University

Staff

THOMAS F. THORNTON, Director

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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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Reviewers

This Consensus Study Report was reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise. The purpose of this independent review is to provide candid and critical comments that will assist the National Academies of Sciences, Engineering, and Medicine in making each published report as sound as possible and to ensure that it meets the institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process.

We thank the following individuals for their review of this report:

Kate Anderson, National Renewable Energy Laboratory

Paul Centolella, Paul Centolella & Associates, LLC

Peter Fox-Penner, Boston University

Matthew Freedman, The Utility Reform Network

Kenneth Gillingham, Yale University

Lynne Kiesling, University of Colorado Denver

Sarah Kurtz, NAE, University of California, Merced

Mark LeBel, Regulatory Assistance Project

Suzanne Leta, SunPower

Amparo Nieto, PA Consulting

Karl Rábago, Rábago Energy LLC

Timothy D. Wilson, NAS, University of Virginia

Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations of this report, nor did they see the final draft before its release. The review of this report was overseen by Granger Morgan, NAS, Carnegie Mellon University, and Anjan Bose, NAE, Washington State University. They were responsible for making certain that an independent examination of this report was carried out in accordance with the standards of the National Academies and that all review comments were carefully considered. Responsibility for the final content of the report rests entirely with the authoring committee and the National Academies.

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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Current State of Equity Requirements and Range of Equity Solutions

Opportunities to Enhance Distributional Equity

Addressing Equity in Regulatory Frameworks

Opportunities to Enhance Net Metering Procedural Equity

Opportunities to Address Intergenerational and Structural Equity

Findings

Recommendations

6 NET METERING AND DISTRIBUTED ENERGY TECHNOLOGIES

Grid Modernization and the Integration of Renewables

Technology Intersection 1: Power Physics-Based Constraints

BTM DG Integration

Increasing Complexity of Operations, Planning, and Forecasting

Technology Intersection 2: Emerging Advances in Power Electronics, Storage, Communications, and Controls

Technology Intersection 3: Cybersecurity and Resilience

Cybersecurity and Privacy Considerations

Resilience Considerations

Summary

Findings

Recommendations

7 REGULATORY, LEGAL, AND MARKET CONSIDERATIONS

The Jurisdictional Split Over Regulation of Wholesale Versus Retail Sales of Electricity

Federal Rate Regulation and Net Metering

State Rate Regulation, Supply Acquisition, and Net Metering

State Action on Net Metering

Principles of Regulation of Retail Rates and Net Metering

Principles of Retail Regulation of Utility Payments for Power Supply

The Utility’s Obligation to Serve and Its Relationship to Customers That Adopt Technologies That Provide Part of Their Own Electricity Needs

Considerations for Control of Net Metering Customers’ DER Assets

Interactions of Net Metering with Local Regulatory Policies and Conditions

Accounting for Clean Energy and Environmental Mandates in Net Metering

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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Preface

In its 2020 appropriations for the Department of Energy (DOE), 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 report responds to that direction. It is intended to provide useful guidance to policymakers, legislators, regulators, utilities and their governing boards, distributed generation providers, electricity customers, and other stakeholders interested in and affected by how the electricity system can continue to provide safe, affordable, and reliable service as it evolves to become increasingly decarbonized, equitable, and resilient.

I wish to express my appreciation to the members of the committee for their dedicated and thoughtful contributions to the study and to its timely preparation. This committee’s careful and nuanced discussions informed the perspective this report takes towards net metering.

The committee is grateful to DOE as well as the representatives of the various organizations that provided presentations, comments, and active participation throughout the study: Michele Boyd (DOE), Scott Burger (Form Energy), Stephen Campbell (GRID Alternatives), Gabriel Chan (University of Minnesota), Colton Ching (Hawaiian Electric), Sachu Constantine (Vote Solar), Jon Creyts (Rocky Mountain Institute [RMI]), Thad Culley (Sunrun), Gavin Dillingham (Houston Advanced Research Center), Mark Dyson (RMI), Matthew Freedman (The Utility Reform Network), Sean Gallagher (Solar Energy Industries Association), Marissa Gillett (Connecticut’s Public Utilities Regulatory Authority), Rachel Gold (RMI), Allison Hamilton (NRECA), Anne Hoskins (Sunrun), Lon Huber (Duke Energy Solutions), Christopher Irwin (DOE), Mike Judge (Coalition for Community Solar Access), Mark LeBel (Regulatory Assistance Project), Roger Lin (Center for Biological Diversity), Shelby Linton-Keddie (Edison Electric Institute), Kevin Lynn (DOE), Michelle Moore (Groundswell), Lee Peterson (CohnReznick), Karl Rábago (Rábago Energy LLC), Daniel Scripps (Michigan Public Service Commission), Benjamin Sovacool (Boston University), Reuven Sussman (American Council for an Energy-Efficient Economy), and Kim Wolske (The University of Chicago).

The committee would also like to thank the National Academies staff—John Holmes, Brent Heard, Daniel Talmage, Rebecca DeBoer, Jasmine Bryant, Kaia Russell, and Eli

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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Nass—for their work to support this study. Finally, we thank Cathy Gruber and the executive office reports staff of the Division on Engineering and Physical Sciences, who provided valuable help with editing the report, and Katiria Ortiz, who managed the report review process. We hope this report can provide instructive and actionable guidance to policymakers, regulators, and stakeholders in the electricity system as they navigate the evolution of net metering to support a decarbonizing, equitable, and resilient electricity system.

Janet Gail Besser, Chair
Committee on the Role of Net Metering in the Evolving Electricity System

Page xvii Cite
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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Glossary

This report uses several key terms, which are defined as follows to facilitate a common understanding and foundation for the committee’s consideration of net metering and the evolving electricity system.

Avoided cost (AC): Cost that an entity (e.g., a utility) would otherwise incur to produce or acquire an additional unit (kWh) of generation or a substitute (e.g., energy efficiency). Several different methodologies exist for calculating avoided costs. In terms of net metering compensation, avoided cost-based rates are typically the lowest because they include only generation costs. These rates often do not include all of the avoided costs, normally comprising only the generation cost.

Behind the meter (BTM): With respect to net metering, BTM refers to energy devices on the customer’s side of the meter which have the potential to export generation and/or discharge storage to the electricity grid. (BTM devices can also include efficiency and demand response technologies that reduce customer usage.)

Clean energy standard (CES): A portfolio standard which mandates that retail sales of electricity to end-use customers contain a given share of electricity sourced from eligible zero- or low-emissions sources.

Distributed energy resources (DER): Energy devices (including generation and storage, as well as energy efficiency and demand response), which are not centrally located or connected into the electricity system, but may be connected at the distribution-level.

Distributed generation (DG): Electricity generated from sources of supply located near the point of use instead of centralized generation sources from power plants. DG facilities are typically interconnected to the distribution system.

Distribution: In the context of this report, this refers to the low-voltage, local electric system.

Economic efficiency: An allocation of resources within a market such that overall value to all participants is maximized while minimizing cost. In order for economic efficiency

Page xviii Cite
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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calculations to be valid, all costs and values must be fully quantified so that the social marginal cost is optimized.

Energy affordability: The affordability of energy bills for all customers accounting for the value of services delivered (see Electric Power Research Institute’s 2021 list of Sustainability Priorities).

Energy burden (also, energy cost burden): Refers to the share of a household’s income that is spent on energy utilities.

Energy efficiency: A measure or device or process improvement that enables a consumer to achieve his/her needs (e.g., for cooling, space heating, lighting) with less energy. The energy service divided by the energy consumed.

Energy insecurity: The uncertainty that a household might face in being able to make utility payments and the risk of shutoffs due to an inability to pay bills.

Energy poverty: Living in a home that does not have access to enough energy to meet essential needs.

Equity: Equity encompasses:

Distributional equity, encompassing the equal allocation of rights, resources, and/or information.

Procedural equity, focusing on who is represented and engaged in decision-making processes.

Intergenerational equity, considering obligations to future generations.

Structural equity, recognizing the roles and legacies of historical, cultural, and institutional power dynamics and structures.

Fixed charge: An element of an electricity bill that does not vary with the customer’s usage.

Grid defection: In the context of this report, this concept includes (a) an electricity customer’s actions (e.g., installation of a generation and storage system) that enable the customer to fully disconnect and operate independently from the broader electricity system; and (b) an electricity customer’s adoption of on-site generation that serves a major share of that customer’s electricity needs. See also Load defection.

Independent system operator (ISO): An entity independent of the owners of generation, transmission, and distribution assets and other market participants that administers

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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the system’s reliability and energy-market functions. Similar to a Regional Transmission Organization.

Investor-owned utility (IOU): A utility that is a private company, with shareholders that own the assets. Almost universally, the rates and investments of investor-owned utilities are regulated by state public utility commissions and the Federal Energy Regulatory Commission.

Load defection: Any action that reduces end-user demand (load) (includes self-supply of electricity from generation, energy efficiency, demand response and/or load-shifting, energy conservation, and disconnection from the grid by the customer).

Location based: Rate varies by location on the distribution system or may be a flat rate available to customers in certain zones of the distribution system; typically, an adder or a component of a value-based rate.

Organized markets (or organized wholesale markets): Electricity markets administered by regional transmission organizations or independent system operators.

Public Utilities Commission (PUC): The state agency (sometimes called the Public Service Commission [PSC] or similar) with responsibility to regulate the prices and other terms and conditions under which an electric utility (in particular, an investor-owned utility) may sell electricity to its retail consumers.

Public Utility Regulatory Policies Act (PURPA): A federal statute P.L. 95-617, 92 Stat. 3117, first enacted in 1978 with the purpose of promoting the efficient production of electricity and the use of renewable energy to produce power. PURPA requires utilities to purchase power from Qualifying Facilities at the utility’s avoided cost.

Publicly owned utility: In this context of this report, this includes utilities that are cooperatives, municipal utilities, federal and state public utility authorities, special purpose utility districts, and other utilities not owned by private investors.

Qualifying facility (QF): A generating unit with size, fuel, and other attributes that qualifies it to sell its output at the utility’s avoided cost as set forth in the Public Utility Regulatory Policies Act and in the associated regulations of the Federal Energy Regulatory Commission.1

___________________

1 See https://www.ferc.gov/qf.

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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Regional transmission organization (RTO): An entity independent of the owners of generation, transmission, and distribution assets and other market participants that administers the reliability, transmission, and energy-market functions of the electricity system. Similar to an independent system operator.

Renewable portfolio standard (RPS): A regulatory mandate requiring that sales of electricity to retail electricity consumers contain a given percentage of electricity production be sourced from eligible renewable generation.

Retail rate: Rates charged for electricity service to the end-use customer. Includes generation, transmission, distribution rates (which may include energy, demand, and/or fixed charges). May include seasonal or other time-of-use variation. The effective retail rate includes all of these costs divided by the amount of energy consumed to be measured in $/kWh.

Storage (electricity storage, energy storage, or stored generation): Energy storage is the capture of energy produced at one time for use at a later time. Electricity storage devices (e.g., batteries, pumped hydroelectric facilities, flywheels, thermal storage equipment) can help to reduce imbalances between energy demand or consumption and energy production.2

Time-varying rates (TVR): Electricity rates that vary based on day of week, and time of day, which are more closely tied to the utility’s actual cost. May also include seasonal variation.

Transmission: In the context of this report, this refers to the delivery of electricity over the high-voltage electricity system.

Value-based rates: Rates based on the value of solar or other distributed generation. Many different methodologies exist for calculating value-based rates. These rates may include societal and/or non-energy benefits or values.

___________________

2 See https://www.epa.gov/energy/electricity-storage.

Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2023. The Role of Net Metering in the Evolving Electricity System. Washington, DC: The National Academies Press. doi: 10.17226/26704.
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Variable charge: An element of a customer’s electricity bill based on the amount used for energy (expressed in $/kWh), or for demand (expressed in $/kW of peak demand, or both) over the billing period.

Wholesale rate: Rates charged to customers for electricity purchased in wholesale markets for their own use or for resale to retail customers.

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Over the last three decades, there have been fundamental shifts in the electricity system, including the growing adoption of clean distributed generation energy technologies such as rooftop solar. Net metering, which compensates customers for excess energy they contribute to the grid, has been instrumental in supporting the integration of these systems into the grid, but these policies may need to change to better address future needs.

The Role of Net Metering in the Evolving Electricity System explores the medium-to-long term impacts of net metering on the electricity grid and customers. This report evaluates how net metering guidelines should evolve to support a decarbonized, equitable, and resilient electricity system.

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