From batteries to the bank: Could net metering unlock the potential of household solar?

19 July 2018 (Last Updated July 20th, 2018 09:45)

An advocacy group has put forward the idea of instituting net energy metering for solar batteries in California, so users could get paid more to sell stored energy into the grid. Importantly, local utilities are onboard with the proposal. Could battery net metering satisfy all parties, and what would it mean for the rooftop solar market?

From batteries to the bank: Could net metering unlock the potential of household solar?
Blockchain software will enable peer-to-peer solar energy trading.

Solar net energy metering (NEM) has been used across the US for years, but it hasn’t been possible for solar setups equipped with solar batteries. This could be about to change in California if a proposal put forward by advocates is successful.

Both consumers and utilities have been overwhelmingly positive about this proposal which petitions for “modification of decision”.  It would allow consumers with solar panels and batteries to export energy to the national grid, especially in the evenings when consumer demand peaks.

Previously, fears over consumers cheating the system – by, for instance, being compensated for battery-stored energy that came from grid not their own solar panels – have hindered NEM for batteries. “Utilities were concerned that homeowners would charge the battery from the grid at lower rates, and then discharge the battery for a net metering credit at a higher rate,” says California-based solar engineering company SepiSolar’s CEO, Josh Weiner.

Given these fears, could this petition successfully change the energy system in California?

Solar net metering in California

Solar NEM is popular in California, as well as elsewhere, for a number of reasons. Utilities encourage NEM as it increases grid capacity, improves resilience and reduces utility infrastructure upgrade costs, while consumers are economically rewarded for the excess clean energy they generate. NEM enables supply and demand to synchronise, to the advantage of all.

“Because distributed solar generation is co-located with load, net metering the solar generation is largely beneficial for both utilities and the solar industry,” says Weiner. “Since solar reduces load, on-site, on the retail side of the utility meter, when customers (and utilities) need it the most without all the losses in transmission and distribution from a centralised generation source that is hundreds of kilometres away.”

California is set on increasing its residential solar capacity and recently brought in a regulation demanding that new-build houses have solar panels installed as a standard. This is part of the state’s push to get 50% of its energy from carbon neutral sources by 2050.

While NEM has been utilised for years, demand for NEM for solar batteries is relatively new. But as solar panel adoption has increased and battery technologies become more accessible, reliable and affordable, there has been a corresponding growth in interest in NEM for solar batteries.

“Historically, batteries have been predominantly used in consumer electronics and, more recently, electric vehicles,” says Weiner. “However, in the last four years or so, batteries have become cost-effective enough to allow residential and commercial property owners to own their own batteries, which provide a return on investment (sometimes, even better than solar’s ROI), due to managing electricity costs. By net metering the battery attached to a solar PV system, we can accelerate this return on investment for property owners who purchase solar and batteries together.”

Despite interest it has not yet been implemented by any utility company, due to concerns that consumers would simply buy power from the grid at its cheapest, store it and sell it back when prices increased. “Net metering is not intended for power stored from the grid to be exported back to the grid,” says California Solar & Storage Association (CalSEIA) policy director Brad Heavner. “There is a need to establish fair compensation for those exports, but it would be with a vehicle other than net metering.”

A system that can’t be cheated

Last September, CalSEIA put forward a petition to the California Public Utilities Commission asking for solar NEM for batteries. This was reinforced by investor-owned utilities, which responded with a joint statement of support.

“The joint utilities agree with CalSEIA that the time is now ripe for the commission to provide further guidance on criteria that both maintain NEM integrity and permit certain DC-coupled PV plus storage systems to participate in the NEM programme,” their lawyers wrote.

If accepted, the petition would make it possible for consumer to sell energy back to the grid under conditions that ensure the solar energy is generated by the consumer. This is an important aspect of the petition, confirming the benefits to both utilities and consumers.

“It’s quite simple. The petition says that if a battery only charges from a renewable source, like solar, then it should be considered an ‘accessory’ to the renewable generator, or in legal terms, part of the ‘solar property’ and, therefore, qualifies for all the same benefits of solar, including net metering,” says Weiner. “This battery net metering proposal prevents the battery from ever charging from the grid; therefore, only solar electrons can charge the battery and, if desired, later export excess solar electrons to the grid for the net metering credit.

“Essentially, the solar electrons are taking a ‘detour’ from the solar panels through the battery before exiting through the DC-AC inverter and out into the utility grid.”

New solar batteries not included

The petition’s clear definitions of NEM and solar batteries alleviate the main concern that has hampered the inclusion of batteries in the programme. The challenge that remains is ensuring the solar batteries are capable of operating within such a system.

“The petition specifically calls for DC-coupled solar and energy storage systems to qualify for net metering, which means the system must be designed in a DC-coupled configuration,” says Weiner. “This can be accomplished by using one inverter, instead of two, for the entire solar plus battery system – this means the solar and batteries connect to each other on the DC-side of the DC-AC inverter, not the AC-side of the inverter.

It’s also more cost-effective for the project owner, Weiner explains, as they only have to buy one inverter.

Heavner agrees, saying that “the batteries themselves will not need to be redesigned. The inverters or charge controllers will need to be configured to not allow batteries to charge from the grid. It will be possible for inverters to update firmware or software to comply”.

These are surmountable technological challenges; American company NEXTracker has already launched a solar tracker with built-in storage called the NX Drive, which is capable of exporting power from the battery but not importing electricity from the grid.

While the introduction of NEM for solar batteries would require an adjustment period, the clear benefits suggest it’s likely to take-off, especially as the increase in solar PV is making it harder to balance capacity and demand between day and night. “Utility companies like net metering for batteries because they struggle to manage all of the solar generation when the solar only generates between 9am-3pm,” says Weiner.

“Batteries help to ‘smooth out’ the generation from solar over time, even when the sun isn’t shining, fixing things like the ‘duck curve’ problem. Customers like net metering for batteries because it helps them save even more money than stand-alone solar, which accelerates their total ROI.”

As California continues to push for an increasingly high percentage of solar in its energy mix, any incentive is likely to increase adoption. NEM for solar batteries will increase the number and speed at which residential solar panels and batteries are adopted.

“It would accelerate rooftop solar by removing barriers, such as over-supply of solar generation at high-noon, or under-supply as during the evening hours,” says Weiner. “Secondly, as utility rates and solar net metering policies change over the next few years and battery energy management software becomes more sophisticated, homeowners will be further incentivised to install batteries, providing a secondary market for past solar homeowners who had not originally installed batteries.”