Solar Net Metering and Deregulated Electricity Contracts

As many of you know, Massachusetts has a very aggressive Net Metering policy to help spur the development of renewable energy. This policy has been so successful (or overly generous) that the 3% cap for private systems, based on historical peak IOU system load, will be reached sometime in 2013 for NStar, NGrid, and WMECO. For most private sector customers, the economics of solar in MA are currently strong. Between the 30% ITC, 50% bonus depreciation, MA income tax deduction, SRECs, and virtual net metering, there is a lot of support behind solar.

Unfortunately, many large customers get an unwelcome surprise when their solar facility goes live. They find that it blows up their third party deregulated electricity supply contract. The reason for this is due to the way that net metering works at the retail level. Large interval metered customers that qualify for solar net metering are given a two channel meter that records facility consumption and solar production simultaneously which is then netted to determine the customer's billed usage. The hourly consumption is reported to ISO-NE and that is what an energy supplier must deliver to ISO-NE to serve the customer's load. The third party energy supplier can't "see" any solar production that is exported to the grid because it is handled at the retail level between the customer and the utility. Therefore, the electricity supplier can't credit the customer for output "pushed back" onto the grid because they only get data from the ISO for intervals where net consumption is positive and that is what they must generate their bills upon.

During MA DPU Docket 11-11, TransCanada presciently raised this issue in Sept. 2011, but it seems that it wasn't a problem that could be resolved within the framework of the Docket. This issue does not represent a barrier to solar adoption for large interval metered customers, but it is an often overlooked constraint during the solar system design and scoping process. Interval metered customers need to decide whether to go big with their solar system and commit themselves to the utility's default basic service commodity price or size their system such that intervals of export to the grid are few and far between. Chances are the person trying to sell you a solar system has no idea how this works. The graph below provides a simplified description of the issue. 

Solar Net Metering Graphic1.png