Net metering: a new paradigm for renewable energy

A new tool that paves the way for innovative ways to increase investment in economically feasible local projects

We have all become accustomed to seeing solar panels on residences and businesses throughout New Hampshire. Until recently, the sizing and installation of these facilities had to be carefully matched to the host – if a facility is too big it cannot take advantage of all of the financial benefits associated with interconnecting with the grid and offsetting the cost of power.

Meanwhile, for many, such an installation is either uneconomic or impractical. Some properties are not appropriate for renewable energy installations. Some businesses, such as renters, cannot make long-term infrastructure investments. Installations require time, effort and energy to figure out the details.

Enter “group” or “virtual” net metering, which allows renewable energy developers to partner with businesses and individuals who want to benefit from local renewable energy without installing it.

In 2013, the New Hampshire Legislature passed Senate Bill 98, which helps facilitate this new kind of investment in renewable energy projects by, in effect, letting a group benefit from a single project.

Virtual net metering allows one person to build a project, while others can use the electricity produced, even if their properties are on opposite sides of the state.

How does it work? Here is a simple example:

Jane wants to build a solar array in her backyard to produce her own energy and take advantage of a variety of rebates and tax advantages. She even has a great site that would permit production of a lot of power. But she has two problems: her site can produce more electricity than she can use and she does not have enough money for the up-front investment.

Enter group net metering. Jane can get a group of friends together to help support her facility. They can enter into an agreement regarding the use of her facility, and share in the up-front costs. The “members” of her group are able to benefit from the energy produced by Jane’s facility, bypassing some of the more complicated (and esoteric) market elements of our electricity grid and helping her pay for a larger investment.

Participants’ electric costs can go down as a result of this partnership. Group members offset their energy bill with power produced by the solar panels, decreasing their overall energy costs over time.

In our example, Jane is the administrator for the group, interfacing with the utility and distributing funds back to group members in accordance with the agreement between the host and her partners.

So long as Jane and her group members are all served by the same electric provider (Public Service of New Hampshire, for example) and they are all default service customers (participants must receive their power from their utility rather than a competitive supplier), the new law permits them to share in the benefits of the project. That means businesses within the PSNH territory in Gorham, Dover, Errol and Goffstown can benefit from a single solar array in Manchester. Group net metering also permits entities with several individual electric meters – like municipalities – to build one facility which can then benefit several buildings.

Different models

Group net metering makes economic sense because under New Hampshire law, you receive a greater financial benefit from using your own energy than by selling that same power back to the grid. Group members benefit when power is used within the group, rather than by other utility customers.

The law is still new, and in June, the New Hampshire Public Utilities Commission moved to finalize rules regarding its application.

Different business models will work for different applications. The examples are manifold. A municipality may form a group for its own meters, saving money for local taxpayers. A neighbor may build a slightly larger solar array than she needs for her own home and then seek investment in the up-front costs in exchange for decreased energy bills from friends and neighbors. A company may serve to connect new facilities and end-users, performing the administrative and investment functions for a fee.

Developers, municipalities, businesses and individuals are exploring this new tool to find new and innovative ways to increase investment in economically feasible local renewable energy projects. Many of these models raise new and unique legal questions about the relationships between the host and the members, as well as the relationship between utilities and these new facilities. Time will tell how these pioneering relationships will play out.

Proponents hope that net metering will provide us all with a new way to save on energy costs while investing in our state’s economy and drawing new investment opportunities into New Hampshire’s clean tech market.

Rachel Aslin Goldwasser, an attorney with the Concord law firm of Orr & Reno and a member of its Energy Practice Group, can be reached at rgoldwasser@orr-reno.com.

Categories: Business Advice

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