Net metering rules to change in Vermont

Net metering in Vermont faces major challenges. If you care about the future of distributed, renewable energy in Vermont, please read on.

Vermont law (Act 99) requires net metering regulations to be revised as of January 1, 2017. The state’s Public Service Board (PSB) is charged with establishing these regulations. The PSB has released its draft of the new regulations. See http://psb.vermont.gov/statutesrulesandguidelines/proposedrules/rule5100 for the draft document and other details.

While subject to change between now and implementation, as written the draft regulations contain numerous problems. First and foremost is that the value of net metering for Vermonters will be significantly reduced once the new regulations go into effect in 2017. The silver lining is that the draft regulations grandfather current net metering values for any tracker installed in 2016. Additionally, the draft regulations hugely undermine the development of community solar. I’ll address that further down.

If the regulations are revised as indicated by the PSB’s draft, a tracker customer whose tracker is installed in 2017 (or later) will miss out on thousands of dollars in net metering value, as compared to a customer with identical solar conditions whose tracker is installed in 2016. (For background on how net metering works currently, see FAQ: What is net metering? How does it work?)

Solaflect’s average residential customer has around 85% solar access. (I.e., about 15% of potential sunlight is blocked by trees, buildings, etc.) Depending on the particulars of her solar generation, a Green Mountain Power customer who delays going solar until 2017 is missing out on between approximately $2,600 and $3,900 of net metering in the first 10 years. This represents a loss of between approximately 21% and 31% compared to the value this customer would get from the same tracker installed in 2016.

The main reason for the reduction in value is that the draft new regulations eliminate the Solar Adder, which currently provides 5.3 cents per kWh of bonus credit on a residential solar array for the 1st 10 years of the array’s operation. (See FAQ: What is the “solar adder”?)

The draft regulations do include two possible partial replacements for the Solar Adder, a 2-cent/kWh “Site Incentive Credit” and a 3-cent/kWh “Excess Generation Credit.” Each is problematic.

Both of these added credits apply only to “excess generation.” That refers to any extra kWh of solar generated in a billing period (e.g., one month) above and beyond the kWh used by the household. So if you use 500 kWh in a month and your solar array generates 600 kWh that month, you would have 100 kWh of “excess generation” that could garner the Site Incentive or Excess Generation credits. If you use 500 kWh in a month and your solar array generates 500 or fewer kWh that month, you would not have any excess generation for that month, and therefore no Site Incentive or Excess Generation credits that month.

A typical residential solar array will provide roughly 25% of its annual kWh in the form of excess generation. (This usually occurs in the summer when the solar array is cranking away and electricity usage tends to be lower.) If you get 2 cents per kWh but only on 25% of your kWhs, that is like getting a Site Incentive of a mere ½ cents per kWh on your total production. Similarly with the Excess Generation Credit, once you account for the fact that it only applies to a small fraction of your total production, its face value of 3 cents/kWh turns out to have real value of less than 1 cent/kWh.

Furthermore, the Excess Generation Credit is available ONLY to those net metering customers who give their environmental attributes to the utility. What does that mean? It means you have not gone solar, even though it looks like you have because solar panels are installed at your home. Instead, it means you are responsible for importing fossil and nuclear energy into Vermont. VT Digger had a recent article on “Renewable Energy Credits” (the accounting mechanism for tracking use of renewable energy) and deceptive marketing in the community solar business. The draft regulations only make this kind of deception an even bigger problem. (Also see FAQ: What are “Renewable Energy Certificates”?)

The long and short of it is that the draft regulations—if implemented as written—will make it harder for Vermonters to go solar. The first reason is that the value of residential solar will be reduced for those who go solar after 2016. The second reason is that those who want to go solar will face a perverse incentive to give away the environmental attributes associated with their solar array, thus—when properly accounted—causing the import of fossil and nuclear power into the Vermont mix.

Another huge problem is that community solar is to be restricted to those who live within a mere 10 miles of the community array. Live in White River Junction and want to participate in a community solar project located in Springfield? Too bad. Your church wants to spearhead a community solar project for the church membership? The ones that live more than 10 miles away will have to find a new church. This rule will make it nearly impossible for the majority of Vermonters to benefit from net metering, since most Vermonters do not have suitable conditions at their homes for on-site solar.

The draft regulations are open to public comment through Wednesday, January 13, 2016. If you want to protect the growth of distributed, renewable electricity in Vermont, please consider submitting comments in support of improvements to the draft. Comments should be addressed to Judith Whitney, Acting Clerk of the Board, psb.clerk@vermont.gov.

Solar panel photo courtesy of Wayne National Forest.

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