Net metering (aka net energy metering or NEM) is a solar incentive that allows you to export stored energy back to the grid and receive a net energy metering credit if the battery can verifiably charge 100% from solar PV. In certain cases, NEM paired storage can meaningfully increase the amount of savings an energy storage system can capture. Energy storage net metering effectively enables a battery to utilize its full capacity by discharging fully when a strong price signal exists. NEM paired storage was codified into law in California in February of 2019, permitting customers with an energy storage system to receive credits for storage energy sent back to the grid if the storage system verifiably charged entirely from solar.
How does it work?
Energy storage net metering enabled the battery to utilize its full capacity by discharging when the price signal is strong, without any restrictions. For this same reason, NEM paired storage can provide a meaningful benefit to commercial and industrial (C&I) customers also. Especially customers that have load profiles which use most of their energy during the day and then drop-off significantly at night, like an office or school building. California’s shift to new time-of-use rates lowers the value of solar at midday and increases the price of evening power. In another way, it leads to reduced payback for traditional solar customers who can only export when the sun shines and then must buy power from the grid at night.
On the other hand, NEM paired with storage batteries, though, could store midday generation and sell it to the grid at the peak time-of-use rates, if allowed. Hence, solar customers with energy storage and the net metering option would make more money by exporting just when utilities are scrambling to fulfil the steep ramps required in the evening, when solar generation drops off and electrical demand spikes. “We have become very good at supplying solar power in the daytime; now we need to start supplying solar power in the evening,” said Brad Heavner, Policy Director at the California Solar & Storage Association.
Why NEM paired storage is so valuable?
NEM paired storage also provides significant benefit to utilities and independent system operators. Enabling storage systems to dispatch their full capacity can help alleviate low supply, high demand grid imbalance issues. In California, the “duck curve” is a result of a sharp ramp-up in the system peak in the early evening due to residential load coming online, coupled with falling supply from solar PV production going to zero.
This is a perfect opportunity for NEM paired storage to play a role and is not much different from utility grid services programs that allow distributed energy resources to participate in wholesale markets and capture revenue through demand response. Energy storage net metering is a win-win situation: it enables a battery to utilize its full capacity and maximize value capture, and it helps utilities balance the grid. With the help of advance technology and better law, all parties can benefit from it.
