Tesla Petitions DPU for Solar + Storage Facility’s Right to Net Metering Credits

For the purposes of qualifying for net metering credits, section 138 of M.G.L. c. 164 defines a “Solar Net Metering Facility” as “a facility for the production of electrical energy that uses sunlight to generate electricity and is interconnected to a Distribution Company.”  The statute and accompanying regulations are silent regarding the co-location of energy storage equipment with such a qualifying Solar Net Metering Facility.

National Grid has interpreted this silence to be a total prohibition on solar + storage for net metering facilities. On March 21, 2017, the utility issued a notice stating: “Systems using [battery backup/storage system] technology can’t be Net Metered.”  In response, Tesla filed a Petition with the Massachusetts Department of Public Utilities (DPU) seeking emergency declaratory relief or an advisory ruling that would allow a Tesla facility to take advantage of net metering credits if: (i) the solar generating system is 60 kilowatts AC or less in size; (ii) the storage battery charges from solar power only; and (iii) the storage battery does not export to the electric power grid.  Tomorrow is the last day to submit public comments to the DPU in response to the Tesla Petition.

Why exclude storage from the benefits of net metering incentives?  Utilities are concerned that a facility utilizing battery storage could “game” the system and receive on-peak net metering credits for “renewable” energy that was “recycled” from the grid during off-peak times, which would inflate the value of the credits received by the solar + storage facility.

Given recent state policy trends, however, it is clear that Massachusetts intends to encourage the co-location of energy storage with renewable generation.  Massachusetts intends to set a storage target next month, intended to encourage the expansion of the energy storage market in the Commonwealth.  DPU and the Department of Energy Resources (DOER) are also working on a new solar incentive “SMART” program, expected to take effect some time in 2018, which would provide “adders” to renewable facilities that take advantage of storage technologies. See our recent blog post for more information on the SMART program.

So how will the DPU respond to Tesla’s Petition?  Utilities are concerned about the future of the grid with large-scale integration of storage technology, but the Commonwealth sees the potential for storage to increase the benefits of its growing renewable energy market. As the DPU has acknowledged, this is a “matter of first impression” for the Department.  If DPU issues a favorable Order in response to the Petition, it is only relevant to similar facilities satisfying the parameters referenced in the Petition (a facility no greater than 60 kW AC with a non-exporting battery), and such an Order would be binding only as to Tesla and National Grid.  That leaves open a larger question: Given the preponderance of net metering and the DOER’s intent to design the SMART program to be compatible with net metering, is excluding storage from net metering projects good policy?

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