Net energy metering opens the floodgates to solar rooftops and other small-scale renewables

A very effective way of quickly deploying solar photovoltaic (PV) systems is the scheme called net metering, also called net energy metering.

This scheme is now in place in 44 U.S. states, opening the floodgates to rapid solar PV deployment in the U.S. What is being called a “net metering war” is now raging in the U.S., with utilities trying to roll-back net metering, especially its pricing model called parity pricing, which credits solar rooftop owners the full retail price for any surplus they export to the grid.

In some U.S. states, the utilities are succeeding. Here in the Philippines, the utilities won the war even before a single shot was fired, by drafting themselves the “net-metering” rules in the country.

For a review of the net metering debate, and the arguments which show that the utilities position actually leads to the double-charging of their net-metered customers, please download my piece “Net metering opens the floodgates to solar rooftops and other renewables“.

Roberto Verzola

Splitting the gain from trade is a value-laden act

In this highly condensed piece of a longer article I’m working on, I analyze a single market transaction between a buyer and a seller.

I point out that the difference between the buyer’s reservation price (or willingness to buy) and the seller’s cost is  the potential gain from trade if this particular transaction is concluded.

For the transaction to actually happen, the buyer and the seller must agree how to split the gain from trade. If they don’t agree, the transaction is aborted, and both sides lose the potential gain from trade.

The problem of how the gain from trade should be split between the two sides is a matter  that involves values about sharing, fairness and justice. It is an inherently ideological act.

I analyze the various ways that this problem is resolved, from various perspectives: neoclassical price theory, game theory as applied to bargaining, social philosophies of justice, and commonly-accepted values of existing societies.

And I show that considerations of fairness almost always figure in the resolution of the problem.

I will also post the longer article, when I’m done with it.

I will appreciate any comments.

Roberto Verzola