A recent study in Montana is showing how little benefit customers receive from solar users selling their excess power back to the grid. A typical solar user provides $.04 of benefit, but is reimbursed at a rate of $.12 per kilowatt from other customers. Montana has the opportunity to bring down the rate of reimbursement to match the benefit to other customers later this year.

Montana’s largest utility overpays for rooftop solar energy, study suggests

By Tom Lutley

Homes and businesses with rooftop solar provide a small benefit to NorthWestern Energy through net metering, the company reported this week, although maybe not enough to warrant current compensation.

In a 40-page cost-benefit analysis of solar net metering, Montana’s largest utility company concluded that the energy rooftop solar delivered back onto the grid had a net value of about 4 cents per kilowatt hour. That’s about a third of what net-metering customers are currently compensated, which is retail value.

The 2017 Montana Legislature ordered the study to determine whether the costs of accommodating net-meterers were being unfairly distributed to other customers. A possible result of the study was that people delivering rooftop solar back onto the grid would have to pay more for the ability to do so, most likely by receiving less credit for the surplus power sold back to NorthWestern.

After the report, which was done by third-party analysts, NorthWestern remained skeptical about the cost benefits.

“The central theme is maybe the value of the electricity that is produced and whether the consumer generator is getting paid a real high price for it,” said Butch Larcombe, of NorthWestern Energy.

The terms net meterers receive from NorthWestern are likely to come up this fall as the Public Service Commission begins a comprehensive review of NorthWestern’s rates, the first review of its kind in several years.

There are 2,100 NorthWestern customers with their own sources of renewable energy, Larcombe said. Most of those customers have rooftop solar panels, though there are a few windmills. Through net-metering, they pump surplus power onto the grid when the sun shines, but then draw electricity from NorthWestern when there’s little solar power to top.

The price of solar panels is less than half what it was ten years ago. Better rates have piqued the interest rooftop solar enthusiasts. There were fewer than 300 NorthWestern customers using net-metering 10 years ago, according to the utility.

Solar advocates say NorthWestern’s study is the starting point of the conversation, not the end.

“This thing’s really going to affect Montana’s energy future,” said Andrew Valainis, Montana Renewable Energy Association executive director. “The way Montana homeowners are going after net-metering. The way businesses are installing net-metering. It’s going to affect how they can do that.”

Valainis sees an under-realized potential for rooftop solar in Montana. The technology gives consumers a choice about where their energy comes from. Homeowners benefit, but business and government buildings with large roofs benefit even more so. There are jobs connected to the installation of the 2,100 net-metering systems online.

There’s a sentiment among renewable advocates that the NorthWestern-commissioned study, which was done by Navigan, has set the net value of rooftop solar too low, a debate that will continue into fall.