CES Spotlight Blog
Solar PV Net Metering ‚?? A Case Study
Most U.S. states now have Net Metering laws. Net Metering allows electricity consumers to “spin the meter backwards” and receive credit for electricity produced onsite, even if that production exceeds total onsite consumption during a given period of time. Net Metering effectively allows electricity consumers to receive full retail value for electricity that is generated at wholesale from certain qualifying facilities. Rules vary widely by state as to how large a net metering facility can be and what technologies qualify. Solar PV is probably the most common technology used in conjunction with Net Metering.
The laws on Net Metering have evolved over time and some states now allow for the participation of large solar PV facilities that are located remotely from the end user. These “virtual” net metering rules allow for the avoidance of both retail commodity and T&D costs – just as if the solar PV facility were physically located behind the meter - even though the solar facility and the end user may be many miles apart and on different electrical circuits. This has opened up a number of interesting possibilities for CES clients as well as solar developers.
By way of example, CES was instrumental in helping the University of Massachusetts at Lowell (UML) negotiate a very innovative agreement with the Westford Solar Park. Upon completion, the 4.5 MW Westford Solar Park will be (at least briefly) the largest privately owned solar PV facility in New England. UML assisted the establishment of this significant new solar facility by helping the developers, Cathartes Private Investments and Nexamp, monetize valuable Net Metering Credits. Without UML, the developers would be forced to sell its generation at a much lower wholesale rate that is almost 1/4th of the retail value of the Net Metering Credits.
In exchange for helping Westford Solar to monetize these credits, UML receives a discount off its otherwise applicable transmission and distribution (T&D) bill from its local utility, NGrid. UML has executed an agreement to receive Net Metering Credits that are expected to deliver about $800,000 in savings to the University over the term of the agreement. An additional phase of the Westford Solar facility is under discussion that could bring total savings to more than $1.6 million.
HOW IT WORKS:
Westford Solar will generate electricity at their solar facilities in Westford, Massachusetts. Solar energy is delivered to NGrid, and Westford Solar receives in return Net Metering Credits and Solar Renewable Energy Credits (SRECs). The Net Metering Credits currently have a value of about 14 cents per kWh while the SRECs are now trading at more than 50 cents per kWh.
Under a joint agreement, Westford Solar will instruct NGrid to assign the Net Metering Credits produced by a 1.5 MW (DC) portion of its solar PV facility, to UML. NGRID will provide UML with a line item credit on its normal T&D invoices each month. Westford Solar will sell the SRECs to a 3rd party who will gain all the environmental benefits associated with the solar energy.
Once the credit has been received, UML pays Westford Solar for the Net Metering Credits at pre-agreed discounted rates, therefore realizing automatic energy cost savings with no capital outlay and minimal risk. This structure is projected to effectively reduce UML’s electrical bill by as much as $1.6 million if the full Westford Solar facility is constructed.
CES is currently working on similar solar PV Net Metering opportunities for many other clients, including the other four campuses (Amherst, Boston, Dartmouth and Worcester) in the UMass System.