Due to recent regulatory and market changes, owners and managers of large retail facilities can feasibly generate a larger share of their own energy on-site from alternative and renewable energy sources (including solar, small wind, and other “distributed generation” technologies), as well as become eligible to receive credits from their local distribution utility for excess power generated by eligible on-site “net metering” facilities and contributed back into the power grid.
What is Distributed Generation?
Distributed generation (DG) is any electricity generating technology installed by a customer or independent electricity producer that is connected at the distribution system level of the regional electric grid. This includes all generation installed at sites owned and operated by utility customers, such as photovoltaic (PV) systems or a cogeneration facility that serve large or small retail facilities. It also covers any commercial-scale or net-metered electric generation that is connected to the power grid at the local distribution level versus the regional transmission level.
Net metering is an electricity metering and billing arrangement recently authorized by state regulation that allows customers to receive value during periods when their eligible on-site distributed generation (such as a solar array or wind turbine) generates more electricity than they use. The electric meter runs backward whenever a customer’s net metered facility is producing more power than is being consumed and their account gets net metering credits for net excess generation at the end of the customer’s monthly billing period.
As net metering is a creation of state statute, implemented by state-specific utility regulations, these same regulations also control and typically limit the extent to which private consumers, including retail facilities, can take advantage of net metering incentives and opportunities to connect their on-site distributed generation system into the regional power grid.
For example, in Massachusetts, eligible commercial consumers who install solar PV arrays or wind technologies, up to 2 megawatts (MW) in DG system capacity, may become eligible to apply for net metering benefits. Pending state legislation proposes to, among other consumer-friendly changes, add small or micro-hydroelectric to the list of renewable technologies eligible for net metering. In New York, consumers using PV, wind, micro-hydroelectric or fuel cells may be eligible for net metering benefits, and specific DG system capacity limits vary by eligible technology. In New Jersey, DG facilities using electricity produced by tidal, wave, and sustainable biomass technologies (in addition to solar, wind and micro-hydroelectric), may also become eligible for applicable net metering benefits, with their system capacity tied in part to a given consumer’s annual on-site energy consumption.
Benefits of Distributed Generation & Net Metering
Benefits to landowners and managers of large retail facilities of distributed generation and Massachusetts net metering laws and regulations, include:
- Reducing the retail property’s overall environmental impact and “carbon footprint”, or more specifically its contribution to regional greenhouse gas emissions, by utilizing non-fossil fuel based renewable energy generation technologies.
- Decrease monthly electrical bills and overall utility costs associated with retail properties.
- Where net metering is applicable, net metering credits on monthly utility bills from your local electric distribution utility for excess generation.
Connecting to the Power Grid
- Interconnection Agreements: are required with local distribution utilities to allow on-site facilities to interface with the regional electric power grid.
- Procurement Contracts: with distributed generation equipment providers, as well as energy consultants, are also typically used by landowners and managers to purchase or lease, as well as install and maintain, on-site renewable energy technologies.
- Power Purchase Agreements: with on-site or off-site energy suppliers, in addition to or instead of procurement contracts, to provide landowners with the opportunity to contract with a third-party provider for distributed generation to benefit their property.
Although much of the technology currently behind net metering and distributed generation has been available for many years, many new state-specific regulatory environments are, at long last, creating a climate of opportunity for retailers.