Is group net metering the new model for energy?

“God made the country,” observed 16th century poet and hymnodist William Cowper, “and man made the town.” Here in North Sandwich — between the foothills of Mount Whiteface, one of the White Mountains’ smallest 4,000 footers and the village of Center Sandwich — the idyllic scene that opened each episode of the 1980s sitcom “Newhart” is the Dragonfly Yoga Barn Studio and Retreat.

It is a cluster of 18th century barns that have been recycled and repurposed into a yoga retreat by Declan and Katie O’Connell. But hidden beyond the peace and serenity of this spot is a cutting-edge, small-scale energy generation project that changes not so much how energy is produced but how it is shared and financed. It is a model that is creating a boomlet in small ventures.

Declan O’Connell, a talented tinkerer with a Scottish burr and a passion for energy conservation, has installed 60 solar panels, specifically a ground-mounted solar photovoltaic, or PV, system with two sections of 100-foot arrays of panels. They produce, he says, twice as much electricity as they need to run their business and family household. Under what is called “net metering,” the surplus energy that the O’Connells produce can go back into the energy grid and they would accrue a credit by selling it back to their utility.

 The kicker is that it is limited to just one meter. But last summer with the passage of Senate Bill 98 (now RSA 362-A:9, XIV), the state’s net metering law was expanded to include group net (also known as virtual net) metering. The O’Connells’ project is among the first of its kind in the state (and the very first in the service region of the New Hampshire Electric Co-op).

“Group net metering helps expand the market for small-scale renewable energy,” says Attorney Meredith Hatfield, director of state Office of Energy and Planning. “Being able to share the output of small renewable systems allows residents and businesses to install larger systems because multiple meters, at multiple locations, can share in the output from a single system. As a result, it allows more people to become energy producers and helps us become more energy independent.”

Group net metering, simply put, allows the value of surplus power to be shared with other electric utility account holders. The best example is a company that has two buildings with two separate meters: a storage facility with great potential for solar but that uses little energy and a factory with little solar potential but a big electric bill. Now the two buildings (and more importantly the two meters) can share in the benefit. But more importantly, the new law aims to make these projects more profitable and financeable.

It allows for a monthly cash payout for surplus power at “full retail rate,” which is basically the rate that consumers pay.  Today, this is around 16-17 cents a kilowatt, less than what utilities pay for energy. This worries people who don’t like subsidies that arguably burden other ratepayers. Others say that these systems will help reduce electric costs for all ratepayers because solar’s peak generation time (hot summer days) offsets correspondences with peak demand for electricity. When peak demand occurs, power prices can surge by a thousand percent or more. And they note that siting PV is much less difficult than either wind or transmission lines.

The host, the owner of the renewable energy facility, can share surplus energy with others provided that they are served by the same utility and enter a formal agreement. They need not be adjacent or related in any way (the O’Connells’ members, for example, are a collection of neighbors).

New Hampshire is among the last states to enact group net metering. The newly released state energy policy calls group net metering “a good compensation mechanism” that will foster investment in home-grown, renewable energy projects. But questions remain about the specifics — some will be worked out in the state’s administrative rules process.

New Hampshire’s law is unique, says Manchester Attorney Elijah Emerson, who specializes in energy issues. While most states focus on sharing energy, the Granite State’s law “just shares dollars.”  The utility is largely absent from the process — all accounting is done by the host and the member’s electric bill never changes. The benefit, which is not governed by state law, is paid from the host directly to the members. The agreement between the host and the members is the biggest risk, Emerson says: “It needs to be a fair deal.”

It was presumed that the hosts would leverage members’ money to meet the large investment costs of building solar projects, but it hasn’t worked out that way, says Attorney Jack Ruderman, who is the director of the state’s sustainable energy division at the Public Utilities Commission. Some people are concerned that “if you invest in the host facility in exchange for surplus power payments, it becomes a security instrument,” he says, and that is regulated by the US Securities Exchange Commission. 

Ruderman reports that applications for state rebates — one of the first steps toward making these systems more economic — are “off the charts.” The annual budget for the rebate program was recently doubled to $4.4 million yet the state may soon have to create a waiting list for the program.

 One organization, NH Solar Garden, is alone facilitating 20 applications. They develop what are called “Community Solar projects.” Its founder, Andrew Kellar, calls it “a CSA [Community Supported Agriculture] for energy.” Their goal is make solar accessible to average citizens, but they start with an anchor member or host. They focus on wise siting — often on public or quasi-public settings like transfer stations, waste-water treatment plants — and their “host-members agreements” vary and offer greater flexibility to grassroots members. They promise to reduce members’ energy bills by around 10 percent.

Back in North Sandwich, Declan O’Connell is happy and so are his neighbors and the yoga studio customers. “People just love it,” he says. With the various tax credits and other benefits, O’Connell thinks the system will pay for itself in 8-10 years. And then he fills the pause with yet another benefit: “It doesn’t increase the property’s tax assessment.” Then he returns to what, to him, is the heart of the matter — “I did it because it is one less smokestack.”

Categories: NH Law