For three decades, states have served as the proving grounds for connecting renewable energy to the grid. The best practices have emerged; there is no need for a state to reinvent the wheel. Across the board, the most successful states share certain policy components.
Net Metering Guiding Principles and Best Practices:
- Right to self-generate and connect to the grid: Every retail electricity customer has the right to install solar generation equipment at the customer’s site, and interconnect to the utility grid without discrimination.
- Right to reduce electricity use: Any reduction in a customers energy use due to onsite solar generation should not be imputed as a stranded cost to the utility.
- Properly valuing solar electricity, and adequately compensating solar customers: Customer-sited solar generation offers many benefits to the electric grid system and by extension to non-solar customers, including but not limited to: reduction in utility energy and capacity generation requirements, reduction in system losses; avoidance or deferral of distribution and transmission investments; localized grid support including increased reliability benefits; fuel-price certainty; and reductions in air emissions and water use. The aforementioned benefits should be quantified, and solar customers should be adequately compensated for the value their solar energy is delivering to the grid.
- Non-discriminatory practices within cost of service recovery: Any utility charges created specifically for the purpose of recovering embedded fixed costs from net-metering customers should only recover net fixed costs, after accounting for all utility benefits and offsetting cost reductions due to the distributed solar. Similarly, any utility credits created for the purpose of assuring that economic benefits resulting from the deployment of net-metered solar systems are properly assigned back to the net-metering customer(s) should only reflect net benefits, after accounting for all utility costs.
- Statewide application: Net metering rules, regulations, and practices should be standardized statewide.
- Transparency, access to data: Customers, or solar companies on customers’ behalves, should have access to load data (including hourly profiles) to ensure that customers can understand the economic implications of adopting onsite renewable energy technologies. Customers should have access to data regarding their own electricity consumption, with transparency into the tariffs available to them. Billing statements from utilities should clearly show the net energy consumed from the utility, and any energy or dollar credits carried forward as a result of solar generation in previous billing periods.
- Specific net metering best practices:
- Total program/state capacity limits: There should be no aggregate or statewide capacity limit for net metering.
- Individual System Capacity: Any individual system size limitation should be based only on the host customer’s load or consumption (e.g. AZ & CO).
- REC ownership: The owner of a net-metered system should retain ownership of renewable-energy credits (RECs) produced by their owned system, unless transferred to the utility or another party in exchange for acceptable compensation.
- Restrictions on “rollover”: Indefinite rollover, effectively or actually credited at retail rate, should be an option for net-metered customers. The only exception is allowing for payments for annual net excess generation at a price no lower than the average daytime wholesale price for the prior year.
- Metering equipment: Retail electric customers utilizing net metering must not be required to purchase new metering equipment. Smart metering and other digital technology for energy management should be made available by the utility to solar and other customers on a non-discriminatory and open-access basis. Integrating smart meters or other advanced metering technologies would promote more accurate data on solar energy customers. More detailed and reliable meter data would result in more efficient planning and energy use.
- Customer classes: All customers should be able to participate in net metering. g. Aggregation: Virtual net metering and meter aggregation options should be available.
Interconnection Best Practices:
- All utilities (including municipal utilities and electric cooperatives) should be subject to the state policy.
- All customer classes should be eligible.
- There should be three or four separate levels of review to accommodate systems based on system capacity, complexity and level of certification.
- There should be no individual system capacity limit. The state standard should apply to all state-jurisdictional interconnections.
- Application costs should be kept to a minimum, especially for smaller systems.
- Reasonable, punctual procedural timelines should be adopted and enforced.
- A standard form agreement that is easy to understand and free of burdensome terms should be used.
- Clear, transparent technical screens should be established.
- Utilities should not be permitted to require an external disconnect switch for smaller, inverter-based systems.
- Utilities should not be permitted to require customers to purchase liability insurance (in addition to the coverage provided by a typical insurance policy), and utilities should not be permitted to require customers to add the utility as an additional insured.
- Interconnection to area networks should generally be permitted, with reasonable limitations where appropriate.
- There should be a dispute resolution process.