Solar has already, in many ways, come into its own as a renewable energy ‘powerhouse,’ due to a combination of technological innovation and falling costs. The final piece of the puzzle that seems to be falling into place is the growing consensus between consumers and utility companies about the practice of net metering.

Leading the market, residential solar installation has seen steady growth — with 50 percent year-over-year expansion since 2013. Currently, nearly one million homes have solar installed, with capacity additions having increased tenfold.

“As rooftop solar grows, its value may hinge on pairing it with battery storage or any complimentary DER that can shift production either by export or onsite use to match peak electricity price periods,” says Cory Honeyman, senior solar analyst at GTM.

Yet public battles in states like California and Nevada over the rates that residential solar customers are compensated have presented a series of roadblocks to expansion. Thankfully, all of that could be changing with the recent actions by California’s Public Utilities Commission that are set to extend net metering for residential solar customers.

A Crucial Element

“Today’s decision ensures California continues to lead the world on clean energy and solar investment,” said California Senate leader Kevin de León in a news release regarding the action. “Creating affordable and extensive access to solar-powered energy is a crucial element of our efforts to combat climate change and reduce air pollution in our communities.”

The key to the initiative is the pledge to compensate residential solar customers at retail rates for the energy they feed back into the grid. While utility companies have traditionally opposed net metering and urged lawmakers to enforce a lower compensation rate, the exponential growth of the market — combined with solar’s net positive impact on job creation and local economies — has garnered bipartisan support for efforts to extend net metering.

No Net Metering, No Residential Solar

For consumers and the solar installation companies, the ability to allow net metering to continue to compensate consumers fairly for the power they generate is vital. After Nevada moved to eliminate net metering in favor of wholesale rates, prominent residential solar installers simply left the state — taking with them the prosperity and community payback tied to the technology.

According to Honeyman, “Seven of the top 10 residential solar markets have considered or approved some kind of net metering reform.” With California suffering particularly from recent drought and historically high energy prices, the commission’s action signals a sea change for legislators looking to ensure the growth of a potentially lucrative market.

“Utilities should consider putting forward more sophisticated proposals instead of blunt instrument fixed charges,” says Honeyman. While the new proposal isn’t a blank check for net metering — residential solar customers will still be required to pay some increased charges for upkeep of the grid as well as other programs — this is an important first step towards keeping the growth of the residential market humming in an area that The Motley Fool calls “the most important state for solar in the U.S.”

Curious about residential solar and how installing solar panels could potentially help you reduce your monthly energy bill? Contact us today for a free quote.