Increased applications for Net Metering could mean exciting new benefits for utility customers. But before we talk about some of these developments, let’s look at how traditional Net Energy Metering works.
What is Net Energy metering?
Traditional Net Energy Metering (NEM) allows electricity customers with solar capabilities to reduce their electrical load while also receiving a financial credit for onsite solar power production. The NEM customer’s expenses are trued-up annually to include the solar energy contribution for their billing cycle. Typically in North America, the customer generates surplus electricity in the summer while consuming more electricity in the winter. The goal is for customers to fully offset their annual energy consumption with solar energy production to result in a net-zero energy import. What NEM does is allow customers to size their generation to meet their annual load rather than the peak demand.
NEM started in the 1990’s and today is widely adopted in over 43 states. Recognized as an important US policy framework, NEM supports direct customer investment in grid-tied distributed renewable energy generation for commercial businesses, residential customers, and public entities. Most importantly, it provides a long term, predictable benefit that approaches the fully bundled retail rate the customer would normally pay to the utility company. Although in the past NEM has been limited to a single residence or commercial building with a single meter, the policy is continuously expanding its scope.
For example, the California Public Utilities Commission recently initiated a broader NEM application to allow for more complicated ownership structures to increase their commercial solar power production. Many types of commercial buildings and properties are now eligible for these expanded programs. And customers with multiple electricity meters or limited possibilities for incorporating a nearby solar array are now excellent candidates for solar energy production. Thanks to the California Public Utility Commission and its stakeholders, the rules for new NEM applications are expanding to address previous shortfalls.
What about Virtual Net Energy Metering?
VNEM is a way of allocating on-site energy generation virtually through the utility billing system, rather than by hard-wiring separate systems to each tenant’s electricity meter or electrical load center. The result is an increased ability to account for net energy metering of multiple customers with a singular grid tie-in that is separate from the electricity load center.
Who uses VNEM? VNEM is ideal when multiple electricity customers share a single contiguous property such as apartments, strip malls, condominiums and corporate complexes, which lack the area or rights to directly install solar power. With VNEM, a single commercial solar energy system may be installed to cover the electricity load of both common and tenant areas connected at the same service delivery point. The proportion of solar energy owned by the tenants will then be applied to their utility bill. Several pieces of legislature, including The California Community Solar Bill (Senate Bill 43) and the Colorado Community Solar Gardens Act (HOUSE BILL 10-1342) are essentially VNEM policies. Utility companies such as the Sacramento Municipal Utility District (SMUD), Orlando Utilities Commission (OUC) and Seattle Power & Light have all implemented limited VNEM programs to better serve their customers.
Figure 1: Several VNEM customers, image courtesy of sfenvironment.org
What is Net Energy Metering Aggregation?
The structure for NEMA projects (based in California) differs slightly in that it allows for a single retail customer with meters tied to multiple interconnection points, or “service delivery points”, to offset energy consumption across those meters with a single onsite renewable generator. However, in order for multiple interconnection points to receive credit for the renewable generator, they must be on contiguous or adjacent properties. There are some nuances to the definition of “contiguous and adjacent”. For example. the definition does generously allow a public right-of-way such as a road or a power line to dissect the various qualifying properties. The NEMA strategy gets complicated when there are multiple meters on different rate structures or an overproduction of energy compared to consumption.
Figure 2: Net Energy Metering Aggregation (NEMA)
How Blue Oak Energy Can Help
Since these applications are a new twist to the traditional solar NEM structure, Blue Oak can help customers navigate decisions about where to allocate energy and why. We know that both VNEM and NEMA require monthly and annual calculations for costs and balance of energy production and consumption, and in California they allow only 1 MW-ac production. On the positive side, VNEM offers exciting possibilities for multi-tenant buildings and common commercial buildings to install a single solar system to cover common and tenant area loads. And NEMA opens up larger single customer complexes to solar arrays that can contribute to the customers’ full load without applying the power directly to the same meter. These niche onsite commercial solar energy generation applications create new potential for developing and delivering distributed generation solar facilities, and we look forward to exploring these new opportunities.