The Future of Solar Net Metering in New York State
Aug 02, 2021
by Tara McDermott
The solar net metering law was passed in NYS in the 1990s and has helped accelerate solar adoption due to the program’s simplicity and benefits for all stakeholders, but we’re experiencing an imminent change in net metering rules.
Net Metering Today
PSEG LI and ConEd homeowners can offset 100% of their usage with solar panels, paying only a basic service charge of around $12-$15 per month. While a properly sized and designed system should allow you to produce your own power of the course of the year, this basic service charge ensures that you can access energy from the grid when your panels aren’t producing enough for your immediate needs, such as overnight or during winter. Known as net metering, this process allows you send excess energy out when you don’t need it and draw power from the grid when you do need it. The exchange of power is monitored through a ‘credit’ system. Through this process, the grid essentially serves as a virtual energy storage system.
New Proposed Solar Fees
Utilities are concerned that solar net metered customers aren’t paying their fair share. They explain that, while solar customers still use the grid, their monthly service charges don’t cover their proportionate share of grid maintenance and that the cost of grid upkeep is shifted to non-solar customers. The utilities are rightly worried about maintaining and expanding complicated infrastructure, staying financially fit, and keeping rates low.
After a Public Service Commission (PSC) proceeding two years ago, it was decided that the best way to address this cost shift was to add a new charge to solar customers known as the Customer Benefit Charge (CBC). At the time, the solar industry felt this was the most reasonable option proposed, but requested that if a charge was implemented, that it would be a low fee of around $20-30 per year. The utilities proposed a significantly higher fee of around $120 per year. The final CBC solar charge is still pending and we continue to advocate for a lower fee.
You can read about the state’s decision to implement this “net metering successor tariff” along with their white paper on the topic here. (Note: the charge was originally set to start Jan 1, 2020 but was delayed a year due to COVID impacts.)
But What is the Value of Solar?
The utilities do see value in solar, especially when paired with batteries. However, there are many questions about financial and technical benefits that solar provides to the system. The last study on the topic was completed several years ago.
Solar advocates are concerned that solar benefits are not being valued properly in current and future proposals and assessments. Solar provides enormous benefits to the grid, including generation when the grid is under strain. Battery systems add additional grid services, especially for peak load shaving, and can mitigate grid upgrade expenses. Solar plus battery systems are just now starting to proliferate, and the current net metering incentive is a key catalyst for this nascent market. Private homeowners and business are also unleashing incredible new clean power generation on the grid by taking the initiative to invest in these systems.
Solar is The Key to Clean Energy and Addressing Climate Goals
In addition to the core technical and financial benefits, solar is a crucial solution to climate change. The New York State law CLCPA calls for 70% clean energy by 2030. In order to achieve these goals solar and battery will expand dramatically. Addressing climate change becomes more urgent by the day.
EmPower Solar’s Position
Long Island Solar + Storage Alliance (LISSA) and New York Solar Energy Industries Association (NYSEIA) have been actively participating in conversations with the state, utilities, and key stakeholders about the most appropriate and fair way to value and put a price on the benefits of solar. While the industry is in the process of updating its position, EmPower maintains a few key points.
1. Market Forces via Rate Modernization and Time-Based Rates
Utilities in NYS charge a flat rate. While new Time of Use (TOU) rates are now optional, making them mandatory and pricing correctly would naturally incentivize:
- Using solar and batteries to reduce consumption during peak hours, and
- Shifting loads to off-peak times.
The wider deployment of smart meters over the past few years now provides rich data for the development of these new rate schedules. This was discussed several years ago, but deferred to wait for additional data. The time is now. You can read more about that here.
2. Updated Solar Benefits Analysis
An independent, highly regarded entity should conduct a review of the benefits of solar and solar plus battery systems for NYS utility territories.
3. Inclusion of Environmental Benefits
Specifically for commercial systems in NYS.
4. Economic Growth
The solar sector is contributing significant job growth in NYS, a key factor to consider.
What is the End Goal?
Instead of penalizing solar customers for investing in clean energy, we are advocating for PSEGLI to use market forces to incentivize all rate payers to make smart, energy efficient decisions and investments.
TOU pricing is an example of this, and something that other utility territories have successfully implemented. In New York, we have one flat price for energy–around $.21 per kWh, while other parts of the country experience rate changes based on time of year and time of day. Customers are charged more when demand is high, such as in the evening and during summertime, and lower rates when demand is low. This practice encourages everyone to be smarter about their electric use. For example, smart consumers will run dishwashers and charge their electric vehicles overnight and be conservative with air conditioning use in the summer between 4-7pm when rates are high
Daily and annual peak demand also happens to be somewhat in line with solar production. Additionally, solar customers have the option to add battery storage to their systems, allowing them to avoid the higher time-of-use pricing rates. This is a perfect example of someone investing in their own home and in clean energy to become more self-sufficient and less reliant on the grid. While we don’t have much of a TOU pricing option or mandate today, that is something that could become available and helpful for solar advocates in the future.
What Can You Do to Avoid the New Charge?
Customers that get their system installed before 2022 will not have to incur this charge. The exact start date and amount are still to be determined, but is tentatively slated to begin January 1, 2022 at $1/kW per month. Clients should sign up this summer to make sure their system is installed and grandfathered in! Sign up here for a solar assessment today.
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*** UPDATE as of 8/13/2021
The NYS Public Service Commission released their order adopting the net metering successor tariff. The full tariff can be found here.
Key takeaways from the net metering successor tariff:
- Monthly CBC charge will be between $0.69 per kW and $1.09 per kW DC depending on utility and customer class.
- This will mainly affect residential customers. Customers that already pay demand charges on their utility bill will not have to pay a CBC.
- The start date for most utility areas in NYS is January 1st.