As states across the country roll back how much they pay rooftop solar owners for the surplus electricity they send back to the grid, Puerto Rico is bucking the trend and protecting its generous solar credits until at least the end of the decade.
California, Arkansas, Idaho, Indianaand North Carolina have all taken recent steps to change or get rid of these payments, known as net metering. But Governor Pedro Pierluisi signed a account last month the expansion of the US territory’s program. The reason, advocates say, is that net metering is too essential to the archipelago’s clean energy goals, and the safety of its people.
“It is our responsibility to promote the transformation of our electricity system and promote any initiative aimed at: avoiding the excessive dependence on fossil fuels, environmental pollution and increasing the effects of climate change,” the law determines.
Net metering plays an important role in boosting solar’s popularity. Systems can cost between $10,000 and $20,000 on average, and even more if they include battery storage. The savings earned from selling excess energy offsets those costs, helping the system pay for itself over time.
“It provides an incentive for people to go solar, and without it, it’s just a lot more challenging financially,” Joseph Wyer, a policy analyst at solar data firm Ohm Analytics, told Grist.
States typically adopt net metering policies to promote the technology’s uptake. “If the net metering policy is stable, the growth of the market should also be much more stable,” Wyer said.
But utilities that benefit reduce or eliminate this compensation argues that the credits granted to homeowners are often overvalued, and that the policy passes the cost of operating the grid onto households that do not have solar. The policy tends to initiate scrutiny once an area reaches a certain level of solar penetration. When California regulators voted unanimously in 2022 to cut credits by 75 percentthey said the subsidy was no longer needed to promote the technology’s adoption.
Those pushing to move away from net metering say doing so would help spur battery adoption, and the way to recoup one’s investment in solar panels would shift from selling excess electricity to storage of it in a home battery and using that energy at night rather than paying for it. power from the grid. In Hawaii, the percentage of projects that included battery storage increased from less than 15 percent to more than 80 after it cut its solar credits in 2015, according to Ohm Analytics.
Proponents of net metering argue that eliminating the benefit causes catastrophic drops in installation rates and undermines renewable energy goals. Three years after Hawaii cut solar credits, Ohm Analytics estimates that the home solar market has shrunk by more than half, and the time it would take to pay off a system has increased from five to nine years. Ohm projects California’s home solar market will shrink 42 percent this year, although higher interest rates are also contributing to that downturn.
Wyer said that dramatic changes like those in California and Hawaii are reactive and not the right way to address concerns about cost shifting or battery adoption. “I don’t think cutting net metering by 75%, or a very sharp decline, leads to a stable, healthy environment for electrification growth.”
A solar eclipse was a risk that policymakers in Puerto Rico were unwilling to take. The area currently derives 97 percent of its energy from fossil fuels – and more than half of that from burning coal and oil – but it has ambitious renewable energy targets. Its legislator passed a law five years ago required the archipelago to reach 40 percent clean energy by 2025 and 100 percent by 2050.
Puerto Ricans also view energy resilience as a matter of survival. Solar adoption skyrocketed after Hurricane Maria in 2017, and today more than 110,000 of Puerto Rico’s 1.2 million households have solar arrays. Due to the constant risk of power outages, almost all of them include battery storage. The archipelago installs around 4,500 systems per month. All that solar power offsets energy demand by about 600 megawatts during the day, preventing daily blackouts.
The meteoric growth is unlikely to be sustained without the solar credits that make financing or leasing affordable. The median household income is $24,000. “The intent of the law is to protect consumers,” said Maritza Maymi, legislative director of the Sierra Club Puerto Rico, which petitioned for the bill.
“For us, it is very important not only to move away from fossil fuels, but also to give energy security to people, especially in times of need,” Maymi added. “Energy is not just a commodity, but a right that people should have access to.”
Puerto Rico’s policy, which was set to expire as soon as this April, offers a one-for-one bill credit for every kilowatt-hour a household sends back to the grid. If a home consumes 800 kilowatt hours in a month and sends, say, 300 kilowatt hours to the grid, it is billed for 500 kilowatt hours. The new law says that any study that reevaluates the policy cannot begin before 2030, and that changes to the credits cannot take effect less than 12 months after they are decided.
The economic and security stakes were high enough that proponents of expanding the net metering policy earned support across all five of Puerto Rico’s political parties. The bill passed unanimously.
“We immediately talked to members of other parties and got support across the aisle so it wouldn’t be a partisan bill,” Maymi said. “We gave them social reasons and economic reasons to support the bill, and they saw the need to protect the program.”
As for the usual criticism of the cost of net metering, Eduardo Bhatia, a former lawmaker who drafted the clean energy mandate in 2019, said the benefits for boosting solar adoption outweigh those concerns. “In my eyes, it pays for itself in a dramatic reduction in old and obsolete generation in Puerto Rico, and in Luma’s purchase of oil and expensive fossil fuels,” Bhatia told Grist, referring to the local utility.
Bhatia added that concerns about why other consumers should subsidize solar credits fail to consider the combined benefit of switching to clean energy, gaining hurricane resilience and taking pressure off the grid. “It has a net positive effect on the entire island of Puerto Rico.”
As for the rest of the country, Wyer said states looking to revisit their solar incentives could consider a middle ground between cutting credits and paying the full retail price for them. In New Hampshire, customers receive a credit equal to approximately 75 percent of the standard electricity rate. That’s enough to entice households to install the systems, and coupled with battery incentives, could make them consider adding storage for more savings. “You have to find a way to boost the battery without killing the solar,” he said.
