Utility rate design and metering architecture play an important role in sustaining the growth of renewable energy adoption. The favorable net energy metering policy, NEM 1.0, which compensates energy exports to the grid at the rate of imports, boosted renewable energy adoption but at the cost of cross-subsidies between technology adopters and non-adopters, in addition to utility revenue shortfalls.
To address equity and improved utility cost recovery, NEM 1.0 policy is witnessing immense jurisdictional revisions to successors that reduce the export rate to the so-called avoided cost rate, and consider time-varying rates (e.g., time-of-use) that can be highly differentiated.
