NET ENERGY METERING, ZERO NET ENERGY AND THE DISTRIBUTED ENERGY RESOURCE FUTURE

The report examines how the growth of distributed energy resources (DERs), particularly rooftop solar PV, disrupts traditional utility business models in California. It argues that existing volumetric rate structures and net energy metering (NEM) create economic misalignments and cost shifts from solar adopters to non-adopters. To resolve this, the authors propose three building blocks: improving the measurement of DER costs and benefits, implementing pricing models that reflect the actual value of energy based on time and location, and adapting utility business models toward either an 'incentive regulation' or 'network utility' approach.

• Traditional utility rate structures in California, specifically bundled volumetric rates combined with retail net energy metering (NEM), are poorly adapted to a future with high DER penetration and may lead to a 'cost shift' where non-solar customers subsidize the grid costs of solar adopters.
• Current pricing models fail to provide the necessary signals to encourage DER deployment that maximizes system value; for example, solar owners are incentivized to maximize total energy output (southern orientation) rather than aligning production with utility peak demand (western orientation).
• In PG&E's service territory, it is estimated that one-fourth of all new investments in generating capacity between 2012 and 2020 could occur on the customer's side of the meter, primarily as rooftop solar PV.
• The report identifies two potential future regulatory paths for utilities: an 'incentive regulation' approach, where utilities manage and invest in DERs to reduce system costs, and a 'network utility' approach, where the utility acts as a grid orchestrator using differentiated price signals to direct third-party investment.
• Technological and financial innovations are accelerating DER adoption; third-party ownership (leases and PPAs) accounted for 57% of the California PV market, significantly lowering the entry barrier for customers.
• The report argues that achieving Zero Net Energy (ZNE) can have vastly different grid impacts depending on the method; a combination of energy efficiency, demand response, and solar PV is more beneficial to the grid than simply adding enough solar panels to offset annual consumption.
• California's policy environment, including the Renewable Portfolio Standard (RPS) and the Global Warming Solutions Act (AB 32), is driving a massive shift in the supply mix, requiring a 250% increase in non-hydro renewable capacity and the retirement of 25% of natural gas-fired generation by 2020.

APA

RMI (2012). NET ENERGY METERING, ZERO NET ENERGY AND THE DISTRIBUTED ENERGY RESOURCE FUTURE. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2012-02_PGENetZero.pdf

Chicago

RMI. NET ENERGY METERING, ZERO NET ENERGY AND THE DISTRIBUTED ENERGY RESOURCE FUTURE. 2012. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2012-02_PGENetZero.pdf.

Wikipedia

{{cite report |author=RMI |title=NET ENERGY METERING, ZERO NET ENERGY AND THE DISTRIBUTED ENERGY RESOURCE FUTURE |date=March 2012 |url=https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2012-02_PGENetZero.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2012net, author = {{RMI}}, title = {{NET ENERGY METERING, ZERO NET ENERGY AND THE DISTRIBUTED ENERGY RESOURCE FUTURE}}, institution = {RMI}, year = {2012}, month = mar, url = {https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2012-02_PGENetZero.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }