Most of us today understand the basic benefits of installing solar energy and, generally speaking, we all agree on it’s significance for our communities and overall future. A few of these benefits include utility savings, various tax benefits, and a lesser need to burn coal & fossil fuels, etc. The list goes on. However, there is much more going on behind the scenes that serves as the foundation and support for these benefits. Local policies and programs, for example, play an immensely understated role in the adoption of renewable energy across the nation.
Solar PV is just one of many types of distributed generation (DG), which is a method of generating electricity from sources near the point of use (often renewables) instead of the centralized sources like power plants which require transmission over long distances. State and local governments have implemented policies and programs supporting distributed generation and its use to help adoption overcome potential market and regulatory barriers. While some of these policies and programs are very well known and utilized as common practice among solar PV projects, there are others that are much less known about, yet, interestingly enough, open the doors to far more lucrative strategies than simply installing your standard home solar system.
Most people who are enjoying the benefits of solar PV systems, whether they’ve purchased or leased the panels, are homeowners and are probably familiar with Net Energy Metering (NEM), or Net Metering, which is a billing system that credits utility customers for any excess electricity they generate on-site and provide back to the electric company via the electric grid.
Benefits of NEM:
Customers are generally credited full retail electric price for Net Metered energy
Eliminates the need for costly & high maintenance battery storage systems
Provides a level of security knowing the power company will have inspected the solar system & approved interconnection to the electric grid
While many homeowners have already made the transition to solar and have been familiarized with the fundamentals of residential Net Metering, few people know much about (or anything at all) of NEM’s various branches which have more recently been put in place in many states to cater to multi-unit, commercial, and multifamily properties.
Net Energy Metering Aggregation (NEM-A) is a sub schedule billing system to NEM that allows a single utility customer with multiple meters on the same property, or on adjacent or contiguous properties, to use distributed generation to serve the aggregated, or combined, load behind all eligible meters and receive the benefits of NEM. What this means is the owner of a property with multiple meters, such as some multi-unit properties or garden style apartments with separate common area meters, can offset electric consumption behind each meter from a single solar PV system rather than multiple smaller PV systems, so long as the meters are associated to the same utility account.
Benefits of NEM-A:
Simplifies solar PV installations for multi-metered properties
Eliminates the added fixed costs of separate solar PV systems
Provides all the benefits of NEM to all eligible meters
A more recently adopted version of NEM, which seems could be the foundation of more solar adoption on larger multifamily buildings
(a sector that has lacked in solar adoption) is Virtual Net Energy Metering (NEMV). NEMV allows a building with multiple meters that are individually metered to use a single distributed generation system to receive bill credits to offset each benefiting account bill.
The generation meter monitors the amount of total solar generation, while separate meters monitor each unit and common area’s consumption. Units within the building and common areas are allocated a percentage of the solar-generated electricity as predetermined by the building owner or manager.
Benefits of NEM-V:
Allows multifamily tenants with their own individual utility meters to directly benefit from a building’s solar PV system (prior to NEMV this was not generally possible)
Enables the building owner to allocate desired percentages of generated electricity to specific units
Provides all the benefits of NEM to allocated units
As we witness the rise of distributed generation and the evolving policies which support it’s adoption across the nation, properties now have more available resources, choices, and strategies in regards to energy. As an owner of tenant occupied real estate, the levelized cost to generate electricity from on-site solar panels can be up to 80% less than the utility’s retail price being charged to the tenants. In an age where tenants can directly benefit from solar PV as easily as they can now, it makes you wonder when more multifamily property owners will recognize the revenue potential & value add they have right at their fingertips.