Net metering policies have grown increasingly popular amongst states for their ability to increase and diversify renewable capacity. As of 2013, 43 states have implemented mandatory net metering policies; however, the details of each state policy vary substantially across states and over time. The impacts of these policies – both on the renewable generation, as well as on consumer electric rates are not well understood.

State policymakers and environmental groups advocate for net metering policies as a long-term, reliable mechanism for expanding the growth of renewable sources for electricity. While net metering essentially reduces the electricity bill for those who install renewable capacity, the value of this program to the consumer can vary greatly depending on program design. While there are important differences between feed-in-tariffs and renewable portfolio standards, Jenner et al.’s (2013) study of 26 European Union countries finds that feed-in tariff policies increase renewable electricity generation; however, policy design is a critical factor.

Costs of net metering programs accrue to the utilities that are mandated to provide credit for renewable generation, making it possible that net metering programs drive up electricity rates to consumers (Wiedman et al. (2012); Yamamoto (2012)). Alternatively, because these programs may offset the need for new generating capacity, or reduce the reserve margins needed to maintain system reliability, net metering programs may keep retail electricity rates low (Duke et al. (2005); Darghouth et al. (2011); Wiedman et al. (2012)). Research on other types of energy policies, such as RPS, feed-in tariffs, or technology development incentivizes, has found mixed impacts of price (Borenstein 2012; Kung 2012). Nevertheless, significant gaps in the literature still exist. These gaps are likely attributable to the complexity, variation, and sporadic adoption of state net metering policies over the past two decades.

We propose to evaluate the impact of net metering policy provisions by estimating the impact of net metering policies on renewable generation and electricity rates to consumers. Frequently, renewable energy policies – and renewable portfolio standards in particular - have been evaluated using binary indicators of policy adoption (see Yin and Powers (2010) for a discussion), leading to a mis-match between the diversity of program characteristics and the measurements used to evaluate the program. In contrast, we seek to code specific characteristics of state net metering programs to derive estimates of the guaranteed electricity rate that consumers receive from renewable generation. Further, by coding other important institutional characteristics of state net metering programs, we seek to understand how different characteristics of program design has impacted renewable generation and state level electricity prices.