By Erin Christensen, technical author, Energy Toolbase
In the US, web metering is beneath risk throughout the nation. Quite a few states are abandoning conventional web power metering (NEM) and displaying favor of successor tariffs that considerably lower the worth positioned on exported power. NEM buildings containing time-varying or prevented price compensation buildings along with fastened photo voltaic charges and invoice minimums are quickly changing into the brand new normal. Most of the coverage actions happening as we speak would lead to standalone rooftop photo voltaic now not being a financially possible choice for a lot of companies and owners.
NEM is a billing mechanism that credit photo voltaic system homeowners for photo voltaic manufacturing exported again to the grid and has been a foundational coverage mechanism driving the expansion of the rooftop photo voltaic PV market nationwide. NEM has been broadly utilized and carried out by states because the early Nineteen Eighties as a customer-sited distributed technology (DG) compensation mechanism. However regardless of being probably the most predominant coverage mechanisms fueling photo voltaic adoption, continued progress is being jeopardized as utilities and commissions throughout the US transfer additional and additional away from conventional web metering.
Full-retail worth NEM, which values photo voltaic exports on the identical fee as utility imports, has been beneath risk for years as utilities push regulators to implement successor NEM tariffs. The forms of NEM successor tariffs and compensation buildings being proposed and carried out across the nation range considerably. Some tariffs set export values at a reduced fastened fee; others make the most of non-bypassable fees (NBCs) to low cost the retail fee. Most of the NEM successor tariffs being carried out as we speak mandate time-varying or prevented price compensation buildings, along with imposing charges on photo voltaic prospects by means of “grid entry” fees or invoice minimums. Maintaining observe of all of the NEM adjustments being proposed and carried out across the nation has grow to be dizzying.
The NC Clear Power Know-how Heart (NCCETC) publishes a 50 States of Photo voltaic Report, with the said function of training state lawmakers, regulators, electrical utilities and the photo voltaic business by offering unbiased updates on coverage actions related to distributed photo voltaic PV. The 2021 annual report executive summary states that 46 states took motion in 2021 concerning photo voltaic NEM insurance policies or fee design adjustments.
NCCETC’s 2021 annual report confirmed that coverage actions associated to the worth of photo voltaic had been the main kind of motion. Of the 286 actions taken final 12 months, 98 had been particular to DG compensation insurance policies, similar to web metering, with 25 associated valuations or research happening.
An outline of state NEM markets
Power Toolbase’s analysis signifies that as of early 2022, 29 states have state-mandated net-metering applications that supply full retail worth NEM to their prospects. Nevertheless, many of those states are actually proposing or already on the trail to revising their NEM insurance policies. Regardless of “go inexperienced” initiatives gaining reputation and states declaring daring clear power targets, the full-retail NEM construction is quickly changing into a rarity. For instance the various kinds of adjustments being made, we summarize a handful of state markets which have proposed and/or adopted adjustments within the final 12 months.
South Carolina authorized successor NEM tariffs for investor-owned utilities (IOUs) Duke Power and Dominion Power in 2021, that includes month-to-month time-of-use (TOU) netting the place the worth of exports relies on the time the power was exported to the grid. Moreover, minimal payments had been carried out, stopping rooftop photo voltaic prospects from eliminating their utility payments. The utilities claimed invoice minimums as a vital step to cowl fastened grid prices and reduce the cost-shift to non-solar prospects.
Late 2021, North Carolina Duke Power proposed a NEM revision similar to South Carolina’s by which photo voltaic prospects can be required to be on a TOU fee, with photo voltaic exports valued at roughly one-third of the retail fee, round 3¢/kWh. A call on the state’s successor NEM tariff was delayed by means of an settlement determined upon by Duke Power and three of the state’s largest photo voltaic corporations. The settlement implements a “proposed bridge fee” that entails invoice minimums, NBCs and month-to-month netting of exports on the relevant prevented price fee. This middleman fee choice shall be open to new and present photo voltaic prospects by means of 2026, at which level a finalized successor NEM tariff could have been determined upon.
The Sunshine State has ranked within the Prime 5 states for photo voltaic deployments for 3 consecutive years and now boasts over 8,000 MW of put in PV, when together with each front-of-the-meter (FTM) utility-scale and behind-the-meter (BTM) rooftop photo voltaic segments. Florida’s rooftop photo voltaic business breathed an enormous sigh of reduction when Governor Ron DeSantis vetoed an especially discriminatory anti-solar net-metering invoice (HB 741), which was handed by the Florida legislators earlier within the 12 months. Photo voltaic advocates claimed the invoice would have crushed the fledgling rooftop photo voltaic market in Florida had it been signed into regulation, by mandating extra technology to get valued on the utility’s avoided-cost fee of 2-4¢/kWh by 2029, following a pre-determined discount schedule till then. Moreover, Florida IOUs would have been granted the flexibility to petition to impose photo voltaic customer-specific fastened fees. This good end result in Florida was successfully a dodged bullet, which photo voltaic advocates hope acts as precedent for different states contemplating NEM cuts.
Regulators in Indiana are successfully ending NEM altogether by way of a coverage change that photo voltaic advocates have mentioned will make photo voltaic uneconomic for many all houses and companies within the state. All 5 of the state’s IOUs (Duke Power Indiana, Indiana Michigan Energy, NIPSCO, CenterPoint and AES Indiana) are changing NEM with an extra distributed technology (EDG) coverage that credit photo voltaic prospects at a considerably decreased fee for any unused generated power, in response to the nonprofit group Photo voltaic United Neighbors. This combat is now tied up within the courts, the place a debate over how precisely EDG credit are calculated is happening, leaving the statewide business in limbo.
On a per capita foundation, Connecticut has been a number one state for photo voltaic deployments nationwide. Nevertheless, final 12 months the state’s Public Utilities Regulatory Authority (PURA) authorized a choice to sundown the state’s NEM coverage. As of January 1, 2022, new photo voltaic prospects can both elect a buy-all/sell-all tariff or a successor NEM program that reduces the worth of exports and requires month-to-month netting.
The buy-all compensation construction is successfully a feed-in tariff and values all PV manufacturing at a flat $/kWh fee set by PURA. The shopper can elect to have credit offset future payments, obtain a quarterly money cost, or specify a proportion cut up between the 2 choices. If as a substitute, the shopper opts for the month-to-month netting incentive choice, the shopper’s electrical energy wants are first met by solar energy, with any leftover power then despatched again to the grid. The web extra technology remaining on the finish of the billing cycle shall be credited on the buyer’s retail fee upon contract settlement, minus a single non-bypassable cost. The credit score charges beneath every incentive choice are fastened for 20 years.
The month-to-month netting incentive is much like Connecticut’s earlier NEM coverage, however as a substitute of kWh credit rolling over, financial credit carryover as a substitute. The Renewable Power Options program is at present set to run by means of 2027. Photo voltaic prospects can nonetheless reap the benefits of Connecticut’s new energy storage incentive when pairing a battery with their photo voltaic PV system, which launched the identical day the state’s new NEM coverage went into impact.
With lower than 8,000 houses powered by photo voltaic and solely 71 MW of PV put in statewide, Kentucky’s market has but to shine. However regardless of the sluggish progress, final 12 months the state’s Public Service Fee (PSC) authorized a discount in photo voltaic export values. Relying on the utility, prospects are credited month-to-month for extra technology, between 7-9.5¢/kWh, which compares to a median blended import fee of 11-12¢/kWh for retail power in Kentucky, in response to current Power Info Administration EIA information. In a extra optimistic gentle, the NEM determination the Kentucky PSC finally authorized set PV export values at significantly greater charges than what the state’s IOUs initially proposed (2-3¢/kWh).
The Golden State has lengthy been the bellwether of the rooftop photo voltaic business, with over 35,000 MW of photo voltaic put in, which provides it the highest state rating by a large margin. All coverage eyes have been carefully following California’s extremely contentious “NEM-3” successor tariff continuing, which is predicted to get a last determination by year-end. The NEM-3 continuing formally began two years in the past, in August of 2020. In December of 2021 the California Public Utilities Fee (CPUC) launched a proposed determination (PD) on the matter, which Power Toolbase summarized in a earlier weblog: “The key NEM-3 issues to be aware of.”
The PD adopted many elements of the IOUs’ preliminary proposal, which if carried out would have dealt a crushing blow to the rooftop photo voltaic business. Export values had been to be based mostly on avoided cost calculator (ACC) rates, which equated to 5-6¢/kWh on common. Moreover, the PD levied grid participation fees (GPCs) on residential prospects, which had been based mostly on solar-kilowatt capability put in. Moreover, the PD known as for the grandfathering interval of present NEM-2 photo voltaic prospects to be decreased.
Happily, the PD was soundly rejected, which despatched the CPUC again to the drafting board and led to a chronic delay. Impartial business analysis agency Wooden McKenzie forecasted a forty five% decline within the quantity of residential photo voltaic installations if the CPUC’s December PD was to be adopted. In Could, the CPUC issued a ruling requesting further enter on numerous components of the PD, which Power Toolbase summarized in a recent blog. A revised PD is now anticipated to return in August, with implementation slated for the tip of 2022 on the earliest.
Proposed adjustments to NEM tariffs and photo voltaic coverage actions are persevering with to speed up. After 2021’s large 12 months of change, the Q1 of 2022 NCCETC’s 50 States of Solar report counted 195 coverage actions happening throughout 39 states. NCCETC said that this represented a document for actions taken in a person quarter. DG compensation guidelines stay the highest coverage kind being acted on.
Whereas the forms of adjustments being proposed proceed to range, the one widespread thread is that they trigger erosion to the worth of photo voltaic. As summarized within the examples above, the invoice mechanisms can take totally different kinds, from the discount of export charges and implementation of fastened fees and invoice minimums, to disallowing the carry-forward of credit into future months or credit merely being set to zero on the finish of a true-up interval. Most of the successor NEM tariffs seen as we speak are aggressively eroding the worth of photo voltaic, inflicting the economics of standalone PV tasks to grow to be much less compelling.
The one silver lining of many of those regressive NEM adjustments is that they create a stronger value sign and alternative for pairing photo voltaic with an power storage system (ESS). In states which have aggressively minimize the worth of exported photo voltaic power to the grid, Hawaii being a well known instance, ESS attachment charges have elevated dramatically. As NEM frameworks proceed to evolve, we totally anticipate photo voltaic paired storage to quickly grow to be the usual in lots of of those successor NEM tariff markets.