Massachusetts Reviews NEM Eligibility for Combined Solar + Energy Storage Systems

Although cautioning that its ruling was advisory only and that further study of the matter was needed, the Massachusetts Department of Public Utilities (DPU) has informed a solar developer that, at least for the interim, certain of its small-scale solar power projects that are paired with battery storage facilities should be able to enroll in net energy metering (NEM) programs. 

The solar developer, Tesla, Inc., had complained to the DPU that the National Grid companies (Massachusetts Electric Company and Nantucket Electric Company) had refused to net-meter any of Tesla's solar complexes that also had energy storage capabilities. Tesla asked the department to order electric utilities in the state to treat solar facilities the same for purposes of NEM, regardless of whether they also include energy storage technology. 

In its petition to the department, Tesla related that this past spring, National Grid had issued a formal statement asserting that distributed generation installations that incorporate battery backup or some other type of energy storage systems could not be net-metered. In releasing its statement, the utility averred that it had relied on Massachusetts law that defines a solar net metering facility as one that uses sunlight to generate electricity and is interconnected with a distribution company. The utility pointed out that a separate section of the law governs energy storage systems. 

However, National Grid said, nowhere does the statutory construct specifically address energy storage equipment being installed in nexus with a solar project. Therefore, the utility contended, inasmuch as the statute was silent as to such combined facilities, there simply was no lawful basis for extending NEM to solar cum energy storage systems. 

In seeking intervention from the DPU, Tesla argued that it made no sense to deny an otherwise qualifying solar facility from being eligible for net metering credits just because it also had energy storage capacity. Tesla maintained that it is clear that Massachusetts has instituted energy policies targeted at expanding opportunities for renewable energy, especially solar. It claimed that energy storage was a natural outgrowth of renewable energy and would contribute to the desired growth in renewable energy options. 

Although conceding that the state has yet to set forth an explicit policy on energy storage per se, the developer stated that there have been plenty of signals from the state legislature that it fully intends to enact new laws and standards that promote energy storage technologies and provide incentives for the co-location of battery backup systems with distributed generation projects. Tesla thus advocated for a DPU directive recognizing eligibility for NEM for solar facilities that include backup battery storage. In examining Tesla's request, the department admitted that there was a "regulatory gap" in the law as between solar projects and energy storage systems. It agreed with the developer that because the law has separate provisions for solar units and energy storage projects, but fails to set forth any terms for combined systems, developers such as Tesla face significant uncertainty, which could become a disincentive to further investments in renewable energy projects. 

At the same time, though, the DPU found merit in some of the concerns voiced by National Grid. The department explained that it was not unreasonable for the utility to have reservations about the possibility that some distributed generation systems that also have energy storage capabilities could receive NEM credits at peakhour rates for renewable energy that is produced during those hours but then stored and not actually delivered until off-peak times. Such a scenario could manipulate the NEM schedules and disturb proper valuation of the solar output, the DPU admitted. 

Nevertheless, the department determined that only larger facilities would be capable of distorting NEMrelated price signals. As a result, the DPU posited that until such time as a more in-depth review of the issue can be conducted, it would be appropriate to grant Tesla's request. 

However, the department stressed that its decision pertained exclusively to Tesla and to the facility restrictions outlined in the company's original petition. That petition had listed three specific criteria for net metering to be available to smaller solar installations with battery backup: 

(1) a capacity rating for the solar facility of no more than 60 kilowatts; 

(2) a co-located battery backup system that charges solely from solar power; and 

(3) no exportation of power from the battery system directly to the grid. 

Observing the extensive stakeholder interest in the Tesla proceeding, and citing the "complexity" of the interactions involved, the department concluded that an independent investigatory proceeding should be initiated through which to consider all potential issues surrounding the propriety of applying NEM to solar facilities that also have energy storage capability. Re Tesla, Inc., D.P.U. 17-105, Sept. 12, 2017 (Mass.D.P.U.).