Behind-the-Meter Generation

Utility revenue models were built on a simple premise: customers consume power, and the utility bills them for it. Rooftop solar breaks that premise without the utility's permission.

Behind-the-meter generation is electricity produced on the customer's side of the utility meter (primarily rooftop solar, small wind, or backup generators) that serves on-site load directly and reduces (or eliminates) net purchases from the grid.

The meter is the boundary that matters. Power generated and consumed before it crosses that boundary never appears in utility billing data. When a rooftop system covers 80% of a home's load on a sunny afternoon, the utility sees only the residual 20%, but the home is still physically connected to the full distribution infrastructure that makes the other 20% available on demand.

That asymmetry creates the utility death spiral problem. High-consumption customers go solar, reducing their bills. The utility must still recover fixed grid costs from remaining customers, raising rates. Higher rates push more customers toward solar. The fixed-cost burden concentrates on customers who cannot afford rooftop systems, typically lower-income households.

A neighborhood feeder serves 200 homes. Total peak load is 2 MW. Over five years, 50 homes install rooftop solar averaging 8 kW each: 400 kW of behind-the-meter capacity.

The utility's peak demand reading drops from 2 MW to roughly 1.6 MW. Does this mean the feeder infrastructure got 20% cheaper to maintain?

No. The feeder must still be sized for 2 MW, because on cloudy days or at night, all 200 homes draw full load. The utility's capital costs are nearly identical; its billing base shrank by 20%.

How utilities recover fixed costs from customers with solar (through fixed monthly charges, demand charges, or revised net metering rates) is one of the most contested regulatory questions in state utility commissions today.

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