Old net-metering program was too expensive, says MIT professor emeritus

Saskatchewan's popular net-metering program was unsustainable because of its growing cost, according to an economics professor. 

Program offered solar customers a 1:1 credit for every kWh generated which passed costs on to others

SaskPower's old net-metering program subsidized solar customers by offering them a 1:1 credit for every kilowatt hour of energy they put into the grid. (Resco Energy)

Saskatchewan's popular net-metering program was unsustainable because of its growing cost, according to an economics professor. 

The program provided solar customers with 1:1 net metering, meaning that for every kilowatt hour of power put into the system, they would get a 15 cent credit back for future energy use. The credit was non-monetary. 

The problem was, that solar energy was only saving SaskPower about 7.5 cents/kWh — but the credit was twice that.

"It shift[ed] costs from those who have rooftop solar to those who don't. It's a subsidy," said Dick Schmalensee, a professor emeritus of economics at the Massachusetts Institute of Technology.  

"Nothing against subsidizing rooftop solar but it's not necessarily the fairest way to do it."

Schmalensee was part of a group of MIT researchers in Boston who looked into solar energy in the U.S. and its future back in 2015.

One of the conclusions was that solar technology needs to advance to the point where it's more affordable. There also has to be policy in place for the shift to greener energy to make sense for the public.

He said generating electricity is just one part of the cost of delivering it. There are still fixed costs which have to be paid, such as maintenance of infrastructure in substations, wiring and other factors. 

The 1:1 metering essentially meant that solar customers were costing the government with every kWh of power they generated.

So the more people that signed up for the net metering program, the more the cost rose for everyone else, Schmalensee said. 

"Those costs have to be covered by somebody," Schmalensee said.

SaskPower's net-metering program came to an abrupt end earlier this year after it reached its 16-megawatt capacity earlier than the government had anticipated. 

In addition to the subsidization, it also offered people up to a $20,000 rebate in installation and equipment costs.

The new program will launch Nov. 1 but with some differences: there will be no capacity limit, no two-year contracts (or contracts at all) and the program has no defined end date. 

There are more sustainable options other than net-metering that the government could explore, said Schmalensee. The United States government has a program which covers up to 30 per cent of the initial investment.

Then, solar users can sell the energy they generate for market costs, rather than a premium, Schmalensee said. 

With files from CBC Radio's The Morning Edition


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