Concord – 13.8KW Residential Net Metering Solar Array
Most people, who already know something about “net metering”, are those homewowners or businesses who have put solar panels on their roofs. Now it’s time for you to look at net metering in an entirely different way ……….even if you do know something about it. It’s time to think BIGGER! Not so much because we expect to see thousands of new small power plants bigger than 1 MW springing up all over the state ………but because we already have over 200 MW of these plants > 1 MW sitting in the state being wasted (economically speaking) by having to send their power out of state ………especially when we (the ratepayers) already spent most of the money to see them built in the first place years ago. How is that possible you say? Let me tell you the rest of the story:
Q1 – What is Net Metering?
Ans: It’s the ability to generate some or all of your own electricity and remain connected to the utility grid. At times when you produce more energy that you are using (in real time), the excess flows back to the grid, is accounted for by your distribution company, and a credit is applied to your monthly bill. For larger projects that are intended to generate much more power than they require, the energy can also be sold to other retail customers who contract with you to purchase your excess power. These larger projects are commonly referred to as “group net metering” projects and sales occur between a willing buyer and a willing seller.
Q2 – What is the significance of the current 1MW size limit as it relates to 362-A, part of the LEEPA statute that allows for retail sales through Group Net Metering?
Ans: It is an arbitrary number. It is not a number that otherwise is used in 362-A anywhere else. Many years ago when net metering was first created in 362-A, the limit was 100kw and then later amended to 1000 Kw (or 1MW).
Q3 – What would be the significance of the proposed 5MW size limit as it relates to 362-A?
Ans: First, it brings the size limit at 5 MW, in line with all the other provisions under the original bill of 1978.
Second, on the heels of this year’s rule making by the NHPUC on Net Metering (call it NM 2.0), combined with the sale of the PSNH generation assets, there is no reason to artificially constrain competition in the electrical generation marketplace, which only serves to keep prices higher. For projects larger than 100Kw, there never was any possible “cross-subsidy” issue between Net Metering and Non-Net Metering customers, as the distribution companies already received their FULL payments for Transmission, Delivery, and all other costs ……….everything but retail energy services. There is no good justification for continuing to limit the Net Metering section of the NH LEEPA regulations to <1 MW, as it only harms producers and consumers (and our state economy) by restraining in-state commerce that could otherwise occur.
Q4 – Who gets to simply use the power generated by a Net Metering producer that is greater than 100kw in size……..and who gets to purchase power from them?
Ans: The generator themselves can use all the power they need behind the meter. It is only the power that flows out the meter to the grid that can then be purchased by others:
Option #1-Directly by the host distribution company at the same cost (annual blended number) as what they pay their 3rd party supplier for “default” energy supply service for projects between 100 KW and 1000 KW (1 MW). Excess power (going to the host distribution company) from the larger projects between 1 MW and 5 MW would be paid the value equal to the utility’s avoided costs for energy and capacity to provide default service as determined by the NHPUC in accordance with Puc 903.o2 (i).
Option #2- For projects that are certified for “group net metering”, the power can also be sold to other retail customers on the same distribution system, much like what you see from signing up for power by other 3rd party retail suppliers like…….. Direct Energy or others.
Q5 – How much power do we already have in the state from existing PURPA or Utility owned projects that would now be included in the 5MW proposal?
Ans: We have approximately 100 MW of wood fired projects, 50 MW of independent small hydropower projects (like Nashua’s) and another 66 MW of small hydro now owned by PSNH but soon to be owned by the winning bidder of their auction, Hull Street Energy LLC , who will fall into the same “bucket” as the other independent hydros. All these projects are larger than 1MW and are not currently eligible to participate in net metering sales in NH. I don’t have a figure on our existing solar, but it is small compared to the other two groups. Likewise, I don’t have a figure for wind projects that would be eligible, but again that would be small compared to the wood and hydro projects.
The combination of the existing wood and hydro projects alone are capable of generating about 10% of the kwhs typically purchased by NH customers on an annual basis. NH electricity consumers have already paid for the majority of the costs for the original construction of these assets. In the case of the former PSNH assets, it was paid for through the normal utility rate base process (costs plus a guaranteed R.O.I). In the case of the PURPA created wood and hydros, it was through their original long term power supply contracts of 15-20 years reflecting the utilities “avoided costs”, largely issued in the 1980’s, with no guaranteed R.O.I. or firm capacity payments.
All of these projects can serve to be “behind-the meter” projects or “load reducer” projects from a utility grid perspective, to keep our own energy and energy dollars inside of New Hampshire ………….if our laws allowed it. They already are fully interconnected to our distribution systems …………..and currently sending their power outside NH ………… because no law automatically allows them to sell it inside of NH. One of our four utility company companies currently would have to “choose” to purchase it as part of their default service power mix. Only the NH Electric Co-op currently “chooses” to do so.
Q6- What would be the construction cost be to replace these existing QF projects in-kind with new ones today?
I can’t give you an exact figure as they vary so much project to project, but it’s safe to say that it would be somewhere between 2.5 to 4 times their current values.
Q7- Will this change serve to increase supply competition and lower prices for consumers?
Ans: Yes, if you believe in the basic principles of supply and demand. Electrical energy was once only provided by a monopoly utility provider, but today we currently have retail options from multiple 3rd party providers. However, these 3rd party re-sellers are still very large national companies or simply “middle men” that stand between the producers and the consumer (much like we see in healthcare). Net Metering sales eliminate the out-of-sate middle men “re-sellers”, so that consumers can access better pricing and longer terms options for electricity directly from our own smaller in-state producers.
Q8- How does this change benefit consumers who decide not to buy this power?
Ans: This change opens the bandwidth of competition in the retail marketplace. Long term, we expect to see it create new supplies as well. Short term, we expect that even this small (<10%) amount of in-state power sales from existing projects will help to lower the pricing curve for all retail customers by introducing greater competition. Additionally, these in-state purchases will reduce line losses and reduce existing and future increases in Transmission charges & Capacity charges ….. all associated with purchases that come from ISO-NE, thereby helping all consumers. Expanding in-state power sources in this way is one of the few actions New Hampshire can take just for New Hampshire consumers and our New Hampshire economy.
Q9 – How does this change benefit the producers?
Ans: Based upon an agreement struck between the NHPUC and our electrical utilities during the deregulation of the electrical industry almost 20 years ago, the utilities were no longer required to purchase power from QF facilities after their contracts expired. The utilities were only required to “wheel” the power out-of- state to ISO-NE. The producers received the same day (spot market) wholesale rates, the lowest that ISO-NE has. Many producers view this as a violation of Federal PURPA law, but the cost of challenging PSNH at the NHPUC or the FERC was astronomical. As net metering has evolved over this same period of time, first up to a 100kw size cap and presently at a 1MW limit, selling QF power under New Hampshire’s Net Metering laws became far more practical and accepted by the public. This final change from 1 to 5 MW allows all of the QF generators in the state to sell some or all of their power (depending on their size) directly to retail customers in NH on a willing buyer-willing seller basis. There are no mandated prices under a net metering generator – net metering customer agreement. This simply both have to be on the same distribution system.
Q10 – How does this change benefit someone like the City of Nashua, who owns two small hydropower projects?
Ans: The City of Nashua owns two QF hydro facilities, one of which is small enough (under 1MW) to participate in Net Metering and does now, but the other is not currently eligible at 3 MW. They can’t presently net meter their own power to themselves on the 3 MW project, they can only sell it to the grid (ISO-NE) or to another 3rd party willing to offer them a contract, as they currently do now with the NH Electric Co-op until 2024.
Mines Falls Hydro – Nashua – 3 MW
Q11- How does this change benefit other municipalities that don’t own projects themselves?
Ans: Our municipalities are large purchasers of electricity. They have the scale to leverage their buying opportunities on bulk commodities. Net Metering projects are not structured to sell to small purchasers on a retail level like homeowners, as their primary operation is to manufacture goods or produce power. Net Metering projects will seek out large buyers like municipalities.
Q12 – How does this change benefit New Hampshire’s general economy?
Ans: By now, nearly every consumer understands that the Northeast region of the country, and New Hampshire in particular, has high electricity and fuel costs. Additionally, in many other parts of the country, the electrical grid is changing rapidly. Consumers are looking for more choices and large centralized power plants are no longer being constructed with the deregulation of both wholesale and retail energy supplies. Even though fuel prices are relatively low today in the country due to expanded sources of oil and natural gas, NH consumers have not experienced corresponding reductions in their electrical rates. With the final deregulation of PSNH and sale of their generating assets, there is now the opportunity for NH to manage itself in a new way to control some of its costs; use existing in-state resources differently; and keep more of its energy dollars in the state.
Changing our net metering regulations from 1 to 5 MW is a good first step to the future. It is one part of how we can lower costs through competition and keep tens of millions of our energy dollars in the state every year.
Q13 – How does this change benefit our manufacturing base in particular?
Ans: Our manufacturing base represents our largest buyers of electricity on a single site basis. They have the scale to leverage their buying opportunities on bulk commodities. Net Metering supply projects are not structured to sell to small purchasers on a retail level like homeowners, as their primary operation is to manufacture goods or produce power. Net Metering projects will seek out large buyers like manufacturers.
Additionally, NH manufacturers are well positioned to take advantage of the higher size limit to undertake or expand their own projects to become net metering generators using a more diverse set of technological options, including solar; co-generation; and some limited hydro opportunities.
ReVision Energy – Wirebelt Company
Q14 – Would this change help to attract more companies (ex.- Amazon) to New Hampshire?
Ans: Yes, providing large companies more choices as to how they purchase and/or produce their electricity is very important. There any many national and international brands that already have their own sustainability energy programs in place that guide their operations at every location. This change would fit into their needs and improve our recruitment chances.
Q15 – Would this change help reduce Transmission and Distribution System line losses?
Ans: Yes, we lose around 5% of our electrical energy on the grid due to extensive Transmission and Distribution line distances from large central power plants. Net Metering projects are referred to as DER (Distributed Energy Resources) supplies because they are smaller and scattered throughout the distribution systems of each electric utility.
Q16 – How can Net Metering projects offer customers longer term fixed price power rates?
For the most part, most QF projects don’t use fuel at all (ex.- solar, wind, and hydro) or are using non-traditional fuels with some built in price stability. Wood fired projects burn wood chips, but they are locally sourced and have better opportunities to stabilized prices because wood chips are not a worldwide commodity driven by supply and demand. Co-generation projects burn fuels, but they typically are dual fuel capable and can fuel switch over to other on-site stored fuel supplies during peak use periods in the winter when fuel prices can spike due to extreme weather and/or supply constraints. Trash-to-Energy projects are stabilized by their long term trash hauling contracts. Methane (landfill) projects burn existing on-site fuels.
Q17- Are there other tangible benefits for NH in doing his?
Ans: Yes, more competition attracts more entrepreneurs and investors for new clean energy projects. Investing capital and growing jobs in NH is good for our economy. Clean energy projects also attract younger workers who have grown up in the more recent solar and wind power era. Access to lower cost and longer term electricity will specifically help our industrial base and assist NH companies to retain jobs and grow jobs in NH. The ability of our municipalities to invest in their own projects, or simply buy lower cost power from other projects, serve to lower taxes burdens for all members of those communities.
Q18- Is there a good reason for not making this change now?
Ans: No, making this change now at the same time as the liquidation of the PSNH generation assets, is the perfect time. New Hampshire needs the courage to stand up for New Hampshire’s economic interests. Other states (like MA) are already shifting ISO-NE costs to New Hampshire through the implementation of their “plans”. Doing nothing is not an option.
Now, none of this prevents a business or municipality from deciding to build a new power project to become a stand alone net metering municipal or industrial project…… or a group net metering project. In fact it serves to improve their chances of sizing a project appropriate to their chosen technology and/or power needs. However, their pricing point for any excess energy they sell back to their utility or to a group net metering customer is very competitively priced, at or below, the default service energy price. But this is New Hampshire, and in our quest to lower energy prices for all customers, new projects will have to be configured in such a way as to be fair to all customers whether they choose to participate in net metering or not. So, let’s get this done now and open up the bandwidth of energy competition to, in one form or another, help all NH electric customers lower their costs. We can do this New Hampshire!