is the question of who deserves to pay for the connection of a solar equipped customer to the grid and how much that should be. An analogy would be good to see it from the customer's side...
When a non-solar customer purchases electricity from a utility, the utility includes a few hidden costs. They add a surcharge for transmission expenses to get power from other utilities and roll that into the cost they charge. They add another surcharge for the distribution system of neighborhood transformers and power lines and even the meters on the customers' box. These charges are also rolled into the total price. As such, each customer is paying for all three - generation, transmission and distribution - as a proportion of that customer's specific use. If in one month he suddenly demands four times the power, he will pay not only four times the generation costs, but he will pay four times the tx and dx costs as well.
When a person purchases a small amount of solar, they now purchase less 'generation' but actually get charged less on all three. This isn't exactly fair to the power company when the tx and dx prices are flat fees that don't vary with use but it is the way they set up their prices so who's to argue with the free market, right? They actually make up this loss from those in the paragraph above.
When a person purchases an excess of solar, the game is changed. If a customer nets more power to the grid than from it, there's a net sale. At this point and under a standard 'swap of credits' program, their rates will pay this customer for all three, again proportional to the sale amount. When this happens, for some reason, they scream about losing profit. They say they're losing profit because those flat charges aren't covered now.
Personally, I say that if they want an aggregated system (which actually allows them to hide lots of overcharging on all customers), they have to take it on the downside equally with the upside.
However, the piece that's missing in all this is the grid's energy balance. Easily, the single largest variable expense the power company has is dealing with peaking generation. This is a form of generator that can be turned off and on rapidly and for short periods. Often its so rapid that they leave it on and spinning so it can be ramped up in seconds. Its even called spinning reserve at times.
As might be imagined, this is very expensive. It's also the majority of the price you pay and why rates climb so often.
What can reduce this cost? Mostly just solar although some 'battery' storage options exist as well. The reason is that the grid's load is highest in the afternoon and the lowest around 3 am. This means a big nuke (which can't be turned up or down very much) must only run at the night minimum and peak power must make up all the daytime margin. When solar is put onto the grid, it reduces this peak requirement and thus SHOULD cut everyone's rate dramatically.
Another benefit they are blessed with from solar is that it's more efficient. Power generated and sent long distances loses up to 7% by the time it gets to your meter. Power sent from your meter to your neighbor's meter loses nothing. This means that they have no costs for 'serving' that power. They also have less tx costs for an area with more customers because the swing of the grid is flatter. The net here is zero to them but missing from this discussion is the gaming they do on transmission lines. This happens when they lobby for a tax to have the government pay them for things like emergency transmission costs, hazard insurance and other externalities. With less sales, they have less justification for such schemes. This, combined with the peak savings, is a huge win for the people that they should actually be getting a break from. But they don't.
Most places don't credit power for later use. These actually bill full price for power purchased but buy your excess at reduced rates equal to just their generation costs. This is a big fallacy because they now get a premium on power you sent to your neighbor who paid full price even while they benefit from charging both for the transmission and distribution costs.
So, the nutshell of it is that increasing solar in an area is beneficial in many ways to the customers (both solar and traditional) but the power companies don't like their games getting turned against them.
What would really expose all of this is splitting the three costs of power and charging for them separately. This would enable all renewables and onsite generation to be paid a fair value while charging fair prices for the services that a community actually needs. In short, it opens up the free market for people to make choices that cut their costs the most. If a community is short on peaking power, they can add solar for the most bang for their buck. If the community is short on transmission capacity, they can add any form of renewable because that's going to be the most economic for them. If a factory comes to town that burdens the grid in some way or if a power plant is built that oversupplies power, the incentives will change instantly and the market can react. Gone are the behind-closed-door games that keep people from moving off fossil fuel monopolies.
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