SOLAR POWER
Community solar is poised for significant growth across the U.S. driven by state actions to encourage solar power and incentives in the 2022 Inflation Reduction Act (IRA). Also known as shared solar, community solar allows multiple energy customers to participate in projects that are remotely located and receive credits to lower their electricity bill.
Amid the growing number of initiatives to unlock the benefits of distributed energy resources, states across the U.S. are pursuing measures that support customer-oriented solutions while ensuring reliable system operations.
Net metering policies, which have been instrumental in driving the growth of distributed solar across the U.S., are poised for further evolution as states explore a holistic approach to establish compensation mechanisms. In California, a long-time leader in solar adoption, regulators have approved a significant overhaul of the net metering program, a decision that will likely have broad implications for the industry nationwide.
Technological advancements and climate goals are driving the transformation to distributed energy resources (DER), such as solar photovoltaic systems. The transformation, which is empowering consumers with more choices and energy management options, has also prompted an evaluation of potential cybersecurity risks stemming from anticipated future growth.
Federal and state actions to boost distributed solar show the growing interest in harnessing the technology to achieve broader policy goals.
Amid federal and state policies aimed at catalyzing solar power to facilitate power sector decarbonization, an investigation into circumvention of tariffs on solar panels imported from Southeast Asia has created market uncertainty, threatening U.S. solar buildout.
The importance of U.S. state renewable portfolio standards (RPS) continues to grow, with recent changes reflecting the trend of strengthening renewable energy targets. Several states have expanded their RPS programs to broader clean energy standards, which establish milestones to achieve a carbon-free electricity supply.
The expansion of renewable portfolio standards (RPS) has prompted several states to reshape their solar incentive programs. The market for solar renewable energy certificates (SRECs) is driven by solar carve-outs in RPS programs, which require utilities to procure a certain percentage of their electricity from renewable resources.
A growing number of states are gearing up to leverage distributed energy resources (DER) to support grid operations amid clean energy and climate goals that require investments in and incentives for renewables and customer-sited generation.
The pressing trend towards revisiting retail rate net metering for rooftop solar continues, in a bid to ensure proper compensation for solar customers and avoid cost shifting to non-solar customers. Net energy metering, which credits customer generators for grid-exported power, has been a key component of the policy framework to spur investment in customer-sited renewable energy facilities, including solar and energy storage systems.
Recently, state regulators have stepped up efforts to value distributed energy resources (DERs) more accurately while looking for ways to better reflect the costs they impose on the grid. Among recent actions, New York adopted a mechanism to move the market towards more cost-reflective rates, while California decided to include avoided transmission costs in the valuation, and Connecticut unveiled a study on quantifying the benefits of these resources.
As states continue to reexamine net metering programs in the evolving distributed solar landscape, the industry faces a new challenge: a petition asking federal regulators to exercise jurisdiction over these state-administered programs that compensate behind-the-meter generation for grid-exported energy.
