SOLAR TODAY - March 2010

neighborhood. The neighborhood system must be behind one of the participating customer’s meters, but only a minimal amount of load needs to be located on-site. A commercial customer may participate in a neighborhood net-metering arrangement too, as long as it partners with at least 10 residential customers. The arrangement may require the utility to “wheel power,” or move electricity across utility distribution lines, from the point of generation to the loads being served. To reimburse the utility for power wheeling among participants, utilities are not required to issue the distribution component of neighborhood net-metering credits.

Interestingly in Massachusetts, the Green Communities Act makes net-metering credits transferrable. Though the regulators and utilities are working out the rules for neighborhood net metering, the concept itself may be moot as customer generators figure out how to simply transfer their excess net-metering credits to nongenerating customers.

California also requires investor-owned utilities to allow nonprofit affordable housing agencies to participate in virtual net metering.

Washington state is putting cash behind its efforts to encourage community solar. Under SB 6170, which went into effect last July, members of a community solar project now qualify for Washington’s production incentive for renewables. The base is 30 cents per kilowatt-hour up to a cap of $5,000 per year per participant. Actual production incentives may be as high as $1.08 per kilowatt-hour when modules and/or inverters used in the community system are manufactured in Washington, a price that some consider overly inflated.

set a contract price for solar that would average $0.10 per kilowatt-hour, not including any RECs purchase.

Now, take the concept of community net metering, remove the geographical boundaries, and you get virtual net metering. Virtual net metering allows a renewable system owner to offset other electric accounts without any proximity requirement. It can be especially useful for municipalities that would like to install a large system to offset energy use at multiple buildings around town. A good example is Rhode Island, which allows cities, towns, schools, farms, nonprofit affordable housing and state agencies to participate. Under a virtual net-metering arrangement, these customers may install a renewable energy system and receive a monthly check or apply excess credits to up to 10 other accounts they own. If a nonprofit affordable housing agency chooses compensation, it is obligated to use the money to benefit the residents.

Shared-Investment
Strategies Emerge

Recognizing that few states require utilities to offer community net metering, some entrepreneurs have come up with creative alternatives that allow a group of citizens to invest in renewable energy despite the lack of such policies. A community solar investment can accommodate a range of system financing options, from direct ownership by individuals and groups to third-party financing through utilities or third-party developers. The Mount Pleasant neighborhood in Washington, D.C., for example, recently began installing solar panels on 48 homes, the result of years of collective bargaining power, research, lobbying and planning. Various investment strategies are under development, in part to accommodate for the differences in individual state laws that govern these arrangements.

As shared-investment strategies and net-metering policies have evolved, so too have the financial incentives that spur investment in community-based renewable projects. Shortly after shared-system net metering was allowed in Maine, the state Public Utilities Commission (PUC) issued a draft rule allowing community projects a choice of incentives: a long-term standard energy supplier contract for the generation, or a renewable energy credit (REC) multiplier in which the value of the REC is 150 percent of the amount of the produced electricity (Colorado also offers such a multiplier). A REC allows the environmental value of the renewable generation to be quantified and to provide the owner a commodity-like product that can be traded. The PUC’s proposal has

Attend the
Community Solar Forum
For the latest updates, plan to attend
“Case Studies in Community Solar”
at SOLAR 2010, May 17–22 in Phoenix:
solar2010.org.

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Resolving Community
Solar Complexities

Despite the promising success of utility-owned models, community and virtual net metering is burdened with administrative, legal and regulatory hurdles. Administratively, if a utility is set up to record and bill only one meter for one account, then new billing software will need to aggregate net-metering credits across accounts, whether for a single customer generator with aggregated meters or for multiple accounts aggregated in a single net-metering arrangement. Fortunately, this upgraded billing software could coincide with developing smart-grid and smart-metering program needs. Some community net-metering arrangements impose further administrative burdens by making a single point of contact responsible for managing the billing interactions between the utility and the group of customers sharing the net-metering credits.

The geographic boundaries that define the “community” for purposes of aggregating meters and accounts can lead to concerns about if and how it is appropriate to compensate the utility for wheeling power. To avoid this, some community solar programs are limited to physically adjacent properties, or they remove the distribution portion of the net-metering credit. But adding more intricate rules for community solar may further complicate the policymaker’s job. Utilities that have come around to traditional net metering, where one customer here or there goes virtually “off the grid,” may be more reluctant to see blocks of customers buying a lot less electricity.

While the success of community solar so far has been limited to programs operated and owned by municipal utilities, the new frontier appears to be at investor-owned utilities. IOUs are seeking new ways to comply with renewable portfolio standards and to indulge customers’ appetite to go solar. Regulators may favor IOU-owned models over private, third-party shared-investment arrangements, because utilities are in the business of distributing power. And utilities may more easily embrace community solar where they own the generation assets. Only time will tell if the solar time-share will become more available, but the future is looking bright. ST