Massachusetts could be the first state to provide comprehensive guidance focused solely on pairing energy storage with solar panels.
An inquiry underway at Massachusetts’ Department of Public Utilities merges several cases into a single docket (17-146). The inquiry takes up two separate but related issues: the eligibility of energy storage systems to net meter and the application of the net metering rules regarding participation of net-metered facilities in the Forward Capacity Market run by ISO-New England.
It may seem obscure now, but “the issue is going to come up in every jurisdiction,” Todd Griset, a partner with Preti Flaherty's energy and telecommunications practice, told Utility Dive.
Net metering alternative
Energy storage has often been seen as an alternative to net metering. In states where net metering benefits have been reduced or even eliminated entirely, such as Hawaii, energy storage can enable solar owners to store solar power when it is abundant and withdraw the stored energy when electricity rates are higher, saving solar owners money and making up for some of the lost net metering revenue. But combining net metering and storage complicates matters, as seen in the Massachusetts case.
In some respects, net metering and energy storage are at odds. Net metering can be seen as providing a giant battery (in the form of the grid) to solar customers, obviating the need for storage. That conflict was brought under the same roof when automaker and battery manufacturer Tesla bought out SolarCity in November 2016. There is some irony in the fact that one of the companies spearheading the use of both batteries and net metering is Tesla.
In May, Tesla filed a petition with the Massachusetts DPU seeking emergency declaratory relief or an advisory ruling on the eligibility of solar-powered generation systems paired with battery storage for net metering.
At the heart of Tesla’s petition was an email from National Grid stating that it “does not believe that battery storage is eligible for net metering, and does not intend to provide net metering services to a solar facility that includes battery storage.” The email went on to recommend that a solar-plus-storage system could “apply for treatment as a Qualifying Facility” under the Public Utility Regulatory Policies Act.
National Grid is “supportive” of the DPU’s review of the net metering issues, spokesman Robert Kievra said in an email. “There are a number of policy and other considerations that need to be evaluated” such as legal requirements, eligibility criteria and enforcement, he said.
The DPU issued an advisory ruling Sept. 12 finding that the solar-plus-storage system, as presented by Tesla, is eligible for net metering. But the DPU noted in its order that its ruling was limited and that it applied to Tesla only, which appears to be contradicted by a footnote in its advisory opinion.
The DPU “does not adopt any new rule” and that the general eligibility of solar-plus-storage systems “requires further investigation.”
In a footnote, the DPU noted that its advisory opinion “is generally applicable to all solar net metering facilities paired with battery storage” that meet certain criteria. But the DPU also put all net metering stakeholders “on notice” that the outcome of its current inquiry could “alter or expand” its view of solar-plus-storage systems.
The DPU also acknowledged National Grid’s concerns about the potential for gaming with solar-plus-storage systems and said that would be taken up in the inquiry.
One way a paired solar-plus-storage facility could be used to game the net metering system would be if a battery were charged when rates are low and discharged later to receive net metering revenues.
Tesla makes clear in its petition that gaming is not in its intentions. The company stipulates three criteria for net metering eligibility, which DPU cites in its order. They are 1) the solar net metering facility must have a nameplate capacity of 60 kW (AC) or less, 2) the battery will be charged only from the solar net metering facility and 3) the battery storage component will not export power to the grid.
The last criterion would seem anomalous, given that net metering is designed to compensate energy shipped back to the grid from a distributed energy resource. But Tesla’s meaning is made clear in a similar filing for declaratory relief (Docket #4743) it filed in September in Rhode Island. In that filing, the company explains that the default factory setting for the solar inverter on its Powerwall H6 “disables battery charging from the grid and allows charging to occur only when there is power available from the solar panels.” The Rhode Island case is still pending.
The issues raised by Tesla comprise only one part of the ongoing inquiry in Massachusetts. As the DPU notes, the general issue of the eligibility of energy storage for net metering is ongoing and the subject of its inquiry. The DPU also notes that the legislature has been silent on the issue but further notes that the legislature also is trying to encourage energy storage.
The ins and outs of the window
The other issue in the inquiry relates to the eligibility of net metered resources to participate in the Forward Capacity Market (FCM). That issue was raised in one of the first cases rolled up into the DPU’s inquiry.
The case dates back to November 2015 when National Grid, as part of a rate case filing, sought ratemaking treatment of certain costs and proceeds associated with bidding the capacity of customer-owned net-metered facilities into ISO-New England’s FCM.
The DPU does not establish rules for the FCM — they are set by ISO-New England, which is under the jurisdiction of the Federal Energy Regulatory Commission. But net-metered energy falls under DPU’s jurisdiction because it is considered a retail rate.
In 2009, the DPU ruled that utilities could bid customer-owned net-metered facilities into the FCM to offset the cost of the net meter surcharge recovered from ratepayers.
On July 12, 2016, Genbright, which bills itself an integrator of distributed energy resources based in Hingham, Mass., filed a petition regarding the eligibility of a solar-plus-storage system for net metering (#16-116). But unlike Tesla, Genbright was seeking a determination on whether or not storage projects are exempt from net metering regulations, not eligible.
In essence, there is a 30-day window during which a utility may bid customer-owned capacity, such as the output from rooftop solar panels, into the FCM. Genbright is seeking clarity on when that window closes and under what circumstances it would be free to bid capacity that a utility did not bid into the FCM.
Genbright’s July 2016 petition at the DPU predates Tesla’s May 2017 petition, but the DPU issued an order on the Tesla matter in September. All the other pending issues, the Genbright petition and the original National Grid petition, have been rolled into the DPU’s inquiry.
The DPU combined those cases into the single docket in response to comments it received on the issues and because the matter is not dealt with under either state law or regulation. It would also be difficult to rule on the FCM issue without having a comprehensive view on the eligibility of solar-plus-storage systems for net metering benefits.
The DPU has set a Nov. 17 deadline for comments on the issue of eligibility of solar-plus-storage systems for net metering and a Feb. 1 deadline for comments on the FCM-energy storage issue.
A state-by-state approach
If the DPU issues a comprehensive ruling, it could take the lead on the issue. But it is most likely going to be dealt with on a state-by-state basis, Griset said. “For the most part, it’s a states’ rights issue.”
In addition to Massachusetts and Rhode Island, this issue has already come up in other states, including Colorado. As part of a much wider ruling (16AL-0048E), the Colorado Public Utilities Commission (CPUC) in August 2016 ruled that a solar-plus-storage system is eligible for net metering if the batteries are charged exclusively by renewable energy and the “customer can demonstrate the storage system will never export to the grid.”
In a March order (15-E-0751), the New York Public Service Commission, as part of an ongoing effort to determine the value of distributed energy resources, established a value for energy storage systems “combined with certain types of DERs.” New York, however, is also phasing out net metering.
The Massachusetts DPU may not be the first to rule on how a solar-plus-storage system fits into existing net metering rules, but it does shine a brighter light on the matter by focusing an entire docket on the issue. And the state does take up the novel issue of the eligibility of net-metered resources for capacity revenues. The Massachusetts DPU ruling “may not be precedential, but it would be influential,” Griset said.