NEM 3.0: Local Renewables Lower Electric Rates for All Granite Staters

New analysis by Clean Energy New Hampshire shows that allowing homeowners to sell excess electricity from solar panels back to the grid through the policy known as “net metering” decreases electric rates even for people who don’t own solar. According to the testimony of Tom Beach of Crossborder Energy, the avoided system costs that result from deploying local small-scale renewable energy generation substantially outweigh the costs of net-metering, which means the Granite State could afford to pay solar customers more for their generation, and still reduce non-solar customers electric bills by an average of $8 million a year.

For context, later this year the New Hampshire’s Public Utilities Commission (PUC), will decide how much those who generate local renewable electricity should be compensated for the energy they export to grid. This decision will occur in PUC Docket No. DE 22-060, and a negative decision could put solar out of reach for many Granite Staters, hurting both our economy and environment. In that proceeding Clean Energy NH is proposing an expansion of the current net-energy metering (NEM) credit issued to New Hampshire residents, businesses, cities and towns for the clean energy they generate.

Our proposal is a modest increase of the NEM rate for residential customers that would amount to about a 2.5 cent per kWh increase. Under our proposal, non-solar customers in Eversource service territory alone would save $123 million dollars between 2021 and 2023.

Early next year, the New Hampshire’s Public Utilities Commission (PUC), will decide on how much those who generate local renewable electric power should be compensated for the clean energy they export on to the electric grid. This decision will occur in PUC Docket No. DE 22-060, and a negative decision could put solar out of reach for many Granite Staters, hurting both our economy and environment.

“Net-Energy Metering” is a mechanism that for decades has been the bedrock of the economics that allow homeowners, municipalities, and businesses to install solar. For each kilowatt hour (kWh) of extra electricity that the small generators produced, they would receive a credit on their account. This credit ensures that small and mid-sized solar generators get fair value for their energy and investment.

Previously, solar customers received a credit that was equal to the full kWh rate of electricity, but following a decision by the public utilities commission in 2017 that rate was decreased  because of concerns that net-metering would increase electric rates. The previous rate is now referred to as NEM 1.0, and the current rate is called NEM 2.0. Critics of solar have claimed that the credits for excess solar energy generation represents a cost shift to electric customers who don’t own solar. These critics claimed that when solar customers reduce their bill, non-solar customers have to pick up the slack and pay for the fixed costs of the electric grid.

However, our most recent analysis flips that argument on its head, and finds that local clean energy systems not only aren’t a burden on ratepayers but in fact directly benefit them.

Obviously, purchasing solar panels for a home or business results in a decrease in electric bills. These savings are a result of the solar arrays largely replacing the value of the electricity that would have otherwise been purchased. However, our analysis shows that when your neighbors buy solar panels, you also experience a reduction in your bill, even if you never go solar.

Based on this analysis, CENH is recommending that NEM 3.0 should increase the compensation that solar customers receive for their excess generation. Even after increasing the NEM credit, our proposal will save non-solar customers approximately $8 million per year and $123 million between now and 2035. That’s $123 million dollars that will stay in the New Hampshire economy rather than be “exported” to pay for out of state fuel sources. 

The CENH proposal will improve the economics of distributed generation, which will mean more investments in local renewable energy generation, allowing the industry to grow at a sustainable rate. 

While modest, our proposed rates would give fair compensation to the solar customers for the unseen value that small-scale, broadly-distributed generation provides to the electric system such as:

• Avoiding purchasing expensive electricity and capacity from large power plants during expensive times of year,

• Wasting large amounts of electricity by transmitting it from far away, and

• Avoiding the need to upgrade local electric infrastructure by generating more electricity close to where it is consumed. 

A decade ago, we knew much less about how decarbonization would impact the electric grid, and it seemed wise to proceed cautiously. Now, armed with more experience and data, we can modestly increase how much we are paying local renewable energy, and still reduce the cost of electricity on everyone's bills.

Read CENH's full testimony in the net metering docket:

Testimony of David Littell

Testimony of Tom Beach