In the spring of 2017, the New York Public Service Commission announced the beginning of a shift toward a new way for private solar system owners and public electrical utilities to work together. Previously, a system called Net Metering or Net Energy Metering (NEM) helped make private solar systems financially viable for individual households and small businesses. The good news is that, while the rules of the system are changing, for the next 20 years it’ll be business as usual.
Net Metering Explained
The vast majority of private solar systems are tied into the electrical grid, and for good reason. The grid can serve as a backup source of power at night, during an extended period of overcast weather or at times when your need for power exceeds your system’s capacity.
For homes and businesses “on the grid,” solar is effectively a give and take relationship. YSG Solar prides itself on precision designing systems that meet their customers’ needs, but there will inevitably be times when your array produces more power than you can use, and vice versa.
With net metering, when a surplus of power is generated, it goes back into the grid and can be used by other utility customers. During these times, your electric meter will actually spin in reverse. As such, the utility company actually credits your account for the contribution. Later, when your demand outpaces your solar system’s production, you return to “buying” your electricity from the grid.
With net metering, you “store” energy in the grid, like money in the bank. It should be noted that the credits you receive from your utility company are just that—credits, not actual dollars. If at the end of a given month you have generated more energy than you have used, you do not receive an actual monetary payout. However, your credits may roll over.
The program was typically available for solar systems up to 25 kW in residential buildings, and up to 2 MW in commercial and industrial settings, including systems serving nonprofit organizations, schools, governments and agricultural operation.
Virtual Net Metering
In 2011, New York introduced Remote Net Metering to allow the electricity generated by a clean energy installation to be distributed multiple sites associated with a given utility account. Utilities began allowing farm and non-residential customers to apply excess net metering credits earned by a primary site to other accounts they own.
New York’s Value Stack Tariff & VDER
The new Value Stack Tariff will essentially be identical to New York’s existing net metering system, at least for the next 20 years. At its core, the Value Stack Tariff aims to change not the way customers sell power back to the grid, but rather how the price for that power is calculated. The VDER (Value of Distributed Energy Resources) factors in everything from the price of energy to the avoided carbon emissions and the cost savings to utilities and customers, as well as further savings from avoiding expensive capital investments.
Previously, net metering credit rates were calculated according to market-rate electricity prices. That meant that individuals with private solar systems were being compensated at a rate that included all of the fees rolled into standard utility rates—the value of the electricity itself, plus premiums for grid maintenance, electrical lines, etc. Net metering accounts were effectively getting paid like mini-utilities, despite the fact that they operated with almost no overhead.
Technically, after March 9, 2017, net metering was no longer available. However, existing systems are grandfathered in for 20 years. New systems installed going forward will be eligible for Phase One NEM, which is identical to existing New York net metering in terms of compensation. The only difference is that there is now a term length of 20 years.
Given the rapid pace of innovation today, a solar system from YSG Solar is a great investment. As new large-capacity batteries come online, it’s a good bet that the utility grid 20 years from now will be hardly recognizable to the system we know today. And in the meantime, you’ll be banking your utility bill savings!