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Will net metering still be available after 2017? How does a shorter grandfathering period affect its value?

Solar companies are at or near capacity for 2017 installations all around Indiana, and even in neighboring states, because of the perfect storm created by SEA 309 deadlines and emerging equipment shortages. Unfortunately, this will mean that many customers of investor-owned utilities will not be able to lock the 30 year grandfathering period that the legislation provides for net metering customers installed by the end of 2017.

The bottom line is that net metering is still available and still a good deal after December 31, 2017. What changes for 2018 is the length of the grandfathering period – from 30 years to 15 years.  For each year after 2018 and before 2022, the grandfathering period will decrease by one year. As of 2022 (or earlier if a 1.5% cap is reached) , the investor-owned utilities will not  accept any more net metering customers. All customers – solar producers included, except for those grandfathered in to net metering  – will be put on a net billing plan. What this means is that the utility will charge full retail price for every kilowatt hour a customer consumes from the grid. Under net billing , the utility will pay a wholesale rate, typically less than half of retail, for excess kilowatt hours that the solar owner sends to the grid.

Why is net metering a big deal? It provides a credit swap for kilowatt hours on an equal basis between the solar owner and the utility. One self-generated kilowatt hour is equivalent to one utility-generated kilowatt hour in value, and credits for the solar owner’s kilowatts that go to the grid roll over until they are used. Excess production in the summer balances out lower production in winter. The credit swap reduces the cash outlay needed to pay the monthly electric bill. It also buffers the solar owner from rate increases by the utility.

Fifteen years is generally more than enough time to achieve “payback” – the point at which the system has covered the purchase cost by reducing the consumer’s monthly utility bill. From then on, the system produces free electricity for the life of the system, which is measured in decades.  Fifteen from now will be ten years after net metering is no longer available for new applicants.  Not only will you own a system that is appreciating in value because it produces free electricity, but there will be a limited number of such homes on the market.  Because net metering status attaches to the property, it will still command a premium even if you sell the house before the end of the grandfathering period.

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