Virtual Net Metering

Eric Graber-Lopez

Partner

BlueWave Capital, LLC

Environmental Business Council of New England

Energy Environment Economy

An Overview of Net Metering in

Massachusetts

EBC/ DEP Renewable Energy Program:

Renewable Energy for Wastewater & Drinking Water Facilities

October 2013

What is Net Metering? Systems with capacity of up to 2MW per meter and Virtual Net Metering are available in MA

Net metering is an incentive program to encourage customers to install distributed generation

• Customers offset own electricity usage

• Customers are compensated for any electricity they generate and don’t use

• If consumption exceeds generation, customer pays for net kWh consumed

• If generation exceeds consumption, customer receives credit on bill for net excess generation

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How does Net Metering Work?

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Net Metering in Massachusetts Capacity of up to 2MW per meter and Virtual Net Metering is available

• Customers with generating facilities up to 60 KW in aggregate capacity are eligible. Wind, solar and agricultural facilities up to 2,000 KW in aggregate capacity are also eligible.

• Net Metering is available until the total installed capacity of net metered systems reaches 6% of peak demand in the Commonwealth. This number equals a total of approximately ~750MW of total net metering installed capacity.

• One half of the current net metering cap is reserved for private sector projects and the other half of the current net metering cap is reserved for public sector projects. The queue for private sector net metering is currently undersubscribed while the public sector net metering cap is quickly being reached across the state.

• Virtual Net Metering is available for customers as long as meters are in the same ISONE load zone and utility service territory.

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Avoided Costs by Net Metering by Utility and Class Private sector capped at 1MW per system, Public sector capped at 2MW per Unit

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Net Metering Policies in the United States 43 States, Washington DC, and 4 Territories have Net Metering policies In place 17 States have Virtual Net Metering, and the number has been growing

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Virtual Net Metering Available

State VNM(Eligibility

Massachusetts Virtual Net Metering Open to all customers, but with conditions. Public net metering facilities can only transfer net metering credits to other public entities.

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Net Metering Credit Values for the three Major Utilities Values vary greatly by class and IOU on a per kWh basis

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General

Annual

Optional

General

Timeof

Use

G1-33 G7-55

Distribution 0.0120 0.0236

Transmission 0.0190 -

Transition 0.0292 0.0292

BasicService 0.0743 0.0743

NMCValue 0.1344 0.1271

NSTARRates NationalGridRates

General

Annual Demand

G1 G2

0.0488 0.0016

0.0172 0.0149

0.0015 0.0076

0.0680 0.0680

0.1355 0.0921

NationalGridRates WMECORates

General

Annual

Optional

General

Timeof

Use

G-0 T-0

0.0018 0.0028

- -

(0.0031) (0.0031)

0.0778 0.0778

0.0764 0.0775

WMECORates

Net Metering in Massachusetts – Private Sector DPU limits capacity of Private Sector net metering projects

• MA DPU defines a net metering facility, as the energy generating equipment associated with a single parcel of land, interconnected with the electric distribution system at a single point, behind a single meter. Each of these criteria must be met.

• A private net metering project cannot have:

1. more than two MW installed on a single parcel of land;

2. more than two MW interconnected at a single interconnection point; and

3. more than two MW installed behind a single meter.

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Net Metering in MA– Public Sector Public sector Net Metering projects are subject to different (more lenient) standards

• The statute unambiguously states that the generating capacity of a net metering facility may not exceed two MW. G.L. c. 164, § 138.

• The statute also creates an exception, stating that a public entity may include multiple units in a net metering facility as long as no single unit exceeds the two MW limit.

• Thus, net metering projects of public entities are subject to a special rule and may exceed the maximum generating capacity limit established for Class II and Class III facilities, as long as they do not exceed ten MW, pursuant to G.L. c. 164, § 139(f).

• MA DPU found that any renewable energy project that is not the facility of a public entity and that exceeds two MW is ineligible for net metering.

• MA DPU requires that Public Net Metering Facilities only assign net metering credits to other Public entities.

• Any Public Entity seeking net metering allocation must receive certification from DPU that it is qualified as a Public Entity for net metering purposes.

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Average Electricity Prices in MA above US Avg. Despite drop in Natural Gas prices, kWh rates will remain above national avg.

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Bureau of Labor Statistics

Consumer Price Index - Average Price Data

http://data.bls.gov/

$0.00

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AverageElectricityPricesinMA

Delivered kWh rates have risen 7 of every 10 Years Continued declines in electricity prices are unlikely given Natural Gas pricing

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-5.0%

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AnnualPercentageChangeinElectricityPricesinMASince1980

How does a Net Metering Credit Purchase Agreement Work? Continued declines in electricity prices are unlikely given Natural Gas pricing

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How do Net Metering Credit Purchase Agreements get Priced? Generally there are two pricing structures, a floating discount versus the value of the net metering credit or an fixed price (with an escalator) lower than expected inflation. Fixed discounts provide certainty of savings but typically with a lower discount. Fixed price agreements provide higher initial savings and certainty regarding future energy costs

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FixedDiscountPricingScenario

$0.060

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NMCPurchasePrice NMCValue NMCPurchaseFloorPrice

FixedPricewithEscalatorPricingScenario

$0.060

$0.110

$0.160

$0.210

$0.260

$0.310

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NMCPurchasePrice NMCValue

Procurement Options for Public Entities There are several options available to public entities. When not using public owned property, Chapter 30B § 1(b)(33) and (33) provide an efficient means of procurement as it allows for bilateral agreements between private and public sectors.

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BlueWave Capital, LLC

75 Arlington Street – Suite 500

Boston, MA 02116

Tel: 617.209.3122

Fax: 617.395.2730

mmarsch@bluewave-

capital.com

abuckley@bluewave-

capital.com