Explaining Net Metering in Massachusetts
Net metering has been called the unsung hero of solar and it’s a description that has some merit. The system of measuring the flow of electricity into and out of the grid underpins the economics of solar and is often the difference between a solar project being a good investment or a bad one.
Net metering in Massachusetts is among the more generous in the country, and goes a long way to explaining why solar adoption rates are higher in the Bay State than just about anywhere else. Changes may be coming, though, as many complain that net metering incentives are unfair to people who don’t own homes.
Several states are revisiting their net metering programs and some, most notably California, are making wholesale changes. The challenge is not so much to come up with a system that pleases everyone, but one that displeases everyone to roughly the same extent.
In this article we’ll take a look at net metering in Massachusetts, how it works, what that means for your own solar system, and we’ll take a glimpse into a possible future when Massachusetts net metering might look very different.
What is Net Metering?
Whenever you have an intermittent method of electricity generation like solar, you are inevitably going to have times when a home is either generating more power than it requires or not producing enough power to meet its current needs.
With solar, the most obvious example is in the evening, when we typically use the most electricity but the sun is going down and the panels are producing little if any power at all. The same imbalance occurs on a seasonal basis when panels produce far more electricity in the summer than in the winter months.
In order to balance out this difference between supply and demand, solar systems are designed to push excess power back into the grid when the panels are generating more power than the home needs and draw electricity from the grid when the house needs to make up for a shortfall.
This allows solar customers to use the grid like a giant battery where they can store their excess power and use it later, once the sun goes down.
To measure this back and forth flow, the house is fitted with a special meter that not only measures the electricity the house consumes, like any normal meter does, but also measures the power it provides back to the grid.
So at the end of the month, the solar customer is billed not for the total amount of electricity they drew from the grid, like most customers, but for the net amount after allowing for the power they pushed back. Hence the term “net metering”.
Exactly how a customer is compensated for their excess power, at what rate and under what terms, is all outlined in a Net Metering Agreement that is signed between the customer and their utility company before the customer can be approved for solar.
These terms vary from state to state, based on local regulations as well as the policies of the utility companies. They may also change over time as various constituents lobby for more or less favorable terms. Solar companies, as you might expect, will always argue for more generous net metering terms. Utility companies and advocates for environmental justice might argue for less.
Caught in the middle are the various Departments of Public Utilities (DPUs) who ultimately decide exactly what net metering is going to look like in their respective jurisdictions.
The History of Net Metering in Massachusetts
Massachusetts has long been a leader in solar adoption, regularly ranking among the top ten states in the nation. Clearly, this is not being driven by New England’s exceptionally sunny weather but, rather, by more than 40 years of proactive policy initiatives, which encourage homeowners and businesses to switch to solar.
Image: White House Historical Association
The first tax incentives supporting renewable energy in Massachusetts were introduced in the wake of the 1973 Arab oil embargo. The state’s first net metering program came into effect in 1981 after congress passed the 1978 Public Utilities Regulatory Policy Act which mandated for the first time that utilities do three essential things:
- Interconnect qualifying solar systems to the grid
- Buy the excess electricity those solar systems generated
- Sell electricity to customers during times when their solar systems were not meeting their power needs.
But while every state in the nation was governed by these new regulations, Massachusetts went one crucial step further. The DPU determined that the three main utilities in Massachusetts would be required to purchase solar’s excess power at the full retail rate. One kWh of credit for every kWh of electricity sent back to the grid.
This one decision had a huge impact on solar adoption for decades to come. Net metering was expanded during a wholesale restructuring of Massachusetts’ energy sector in the 1990s, and expanded further with the passage of the Green Communities Act in 2008.
Now, not only do solar customers get to sell their excess power back to the grid at full retail rates, but those credits can be carried over from month to month. They can also be transferred to other customers within certain parameters.
All of this has provided huge incentives for Baystaters to go solar and for hundreds of Massachusetts solar installers to set up shop in the Commonwealth to meet the growing demand.
Massachusetts Net Metering Rules
In Massachusetts, solar customers located in either Eversource, National Grid, or Unitil territories can take advantage of net metering when their systems produce surplus electricity.
For residential systems, customers receive a 1-for-1 credit for every kilowatt hour they send to the grid as long as their overall system size does not exceed 15 kW. Larger systems can still net meter but their reimbursement is 40% lower.
Net metering credits can be used to offset both the delivery and supply portions of a customer’s electric bill. They can even be used to eliminate the customer charge.
Net metering credits never expire.They can be rolled over month-to-month, or even year-to year.
Customers can transfer net metering credits for one property to another by filling out a Schedule Z form as long as both properties are located in the same utility territory. Check with the local utility for up-to-date information on restrictions to this policy.
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The Future of Net Metering
It seems likely that net metering rules will change in Massachusetts in the years ahead. While there is little doubt that they have acted as a strong incentive to encourage solar adoption in the past, many argue that solar has now become such a clear and obvious benefit to homeowners that such incentives are no longer necessary.
Indeed, some argue that net metering in Massachusetts is unfair because the incentives discriminate against people who don’t own their own homes. Renters are unable to benefit from net metering and yet, through their electricity bills, they pay for infrastructure maintenance that many solar customers are able to avoid paying for.
That was precisely the argument made by advocates for change in California. After two years of back and forth, the DPU recently decided to slash net metering credits to just 25% (i.e. 4 kWhs need to be sent back into the grid in order to receive a 1kWh credit).
While solar companies and homeowners may not like that, some industry analysts predict that it will spur a boom in batteries and other home storage solutions. In other words, if the utility company won’t pay fair market rate for the excess power a solar system produces, maybe homeowners are better off storing it themselves.
Final Thoughts
In conclusion, net metering in Massachusetts has been a major driver of solar adoption across the state, allowing customers to receive 1-for-1 credits for any electricity they send back to the grid. In other states, such as California, the rules are changing and credits are being reduced.
Whatever happens in the future, it is clear that net metering has been an important factor in driving the growth of solar energy and it will remain so, as customers continue to look for ways to reduce their energy bills.
