Net Metering 101

Do you ever wonder how people can use solar power without having solar panels on their roof or property? It’s all possible through virtual net metering (VNM).

First, it might help to understand the basics of net metering. Net metering is a mechanism that enables solar energy system owners to feed excess electricity back to the grid, and receive a credit for the amount of electricity contributed. For example, if a property owner installs solar on their roof, it may generate more electricity than is used and the electricity meter will run backwards to provide a credit towards their utility bill. Net metering ensures that solar array owners receive a fair value for the energy that is being added to the grid.

Virtual net metering enables property owners, renters and communities to access solar energy, even if they cannot put solar on their roofs or do not have suitable land for a solar array. In its most basic form, VNM allows you to generate solar power in one place and use it in a different place. VNM is applicable in scenarios where an organization or homeowner wants to install solar, but does not have suitable property conditions (small roof, too much shading, in need of repair, structural issues, etc.) for on-site solar.

Community solar projects are a great example of VNM in action. For these projects, electricity is produced at an off-site solar array and then purchased by multiple shareholders in that community. Community solar is great for cities or towns who wish to power entities such as a school, town hall, police station or other facilities, and is also beneficial to individual homeowners, condo owners, and others to wish to offset their existing electric bill with solar energy.

Between power generation and final use, the solar energy produced from an array is measured and tracked in a series of steps:

  1. Sunlight reaches the solar panels at the host array, which converts the sunlight into electricity. As it is generated, the electricity that is not immediately consumed on-site enters the grid.
  2. The utility meter at the host array measures the balance of electricity produced, by calculating total electricity produced minus the electricity (if any) consumed on-site at the host array.
  3. The utility company takes the output data from the meter, and uses it to calculate the amount of net metering credits earned, assigning the appropriate dollar amounts to the energy balance.
  4. The solar array owner tells the utility where (which energy user’s account) to apply the calculated net metering credits by filling out a Schedule Z form.
  5. The net metering credits are applied according to the Schedule Z form, and are applied as a credit against energy consumed by the end user.

Virtual net metering eliminates many of the traditional barriers to broader solar power usage. VNM  enables public entities, including low income housing authorities and municipalities, to take part in solar development, even if they lack adequate space for on-site, behind the meter, solar projects.  Or, VNM can encourage a wide range of new solar adopters – from large companies in highly populated areas (such as the Bloomberg building in New York City), to renters, to homeowners with shady roofs – who can all now benefit from the power of the sun.

So how does VNM compare to behind-the-meter solar? Behind the meter solar means that the solar panels provide electricity that is fully consumed on-site. The whole generation and consumption process occurs at one meter, so no schedule Z form is typically required.

Generally, during normal business operating times all solar electricity produced is consumed on-site without needing to enter the grid. Outside of normal operating times (such as on the weekends), the solar panels are still converting sunlight into electricity although there is very little being consumed by the site.  The electricity produced during these times enters the grid through a utility meter, which measures the amount of solar energy contributed. Conversely, at times the solar panels are not producing at top capacity  with standard levels of energy consumption, the site will pull electricity from the grid, and will be credited back any electricity that had previously entered the grid.

The main difference between virtual net metering and behind the meter solar is where the electricity is produced compared to where it is consumed. In both cases, the electricity is generated and interacts with the grid, but the final destination of the energy determines how the process is classified. Both are excellent means with which to reduce energy costs and save the environment!

The Challenge

Net metering, used in both systems scenarios described above, allows solar energy owners to be credited at the retail price for the energy a solar array produces. Some people don’t believe it is necessary or fair for solar energy owners to be compensated for produced energy at the same rate they are charged and current net metering regulations cap this compensation. These net metering caps have already been hit in 171 of the 351 towns and cities in Massachusetts, and hundreds of solar projects are stalled because of it.

You can make a difference by sharing your voice with your state Senator and Representative. Reach out to your legislators and let them know that solar policy, specifically net metering, is something you care about and support. Together, we can keep solar going in Massachusetts.

For more information on how to share your voice on solar policy, visit www.solarisworking.org/get-involved.

The Golden Age of Solar

By now you’ve probably heard about why going solar in Massachusetts is a smart financial decision. Solar is everywhere and there’s a good reason for that. Right now in Massachusetts, solar incentives are at a peak and there’s never been a better time to go solar.

Massachusetts has become a national leader in solar energy. With more than 841 MW of solar installed as of May 2015, Massachusetts is the fourth largest state in the country in terms of solar capacity. And the growth isn’t slowing down; we’re well on our way to exceeding former governor Deval Patrick’s goal of 1,600 MW of solar installed by 2020. The growth in solar has helped spur the state’s recovery through increased economic activity and the addition of skilled labor to the workforce.

So how did this  “Golden Age of Solar” come to be?  Let’s take a look at different policies and factors that contributed to the industry’s rapid growth, and that continue to make solar energy  a smart investment.


SREC

SREC II: The introduction of the Solar Renewable Energy Certificate II (SREC II) program in Massachusetts in April 2014 quadrupled the “solar” goal for the state – from 400 MW to 1600 MW by 2020. The state reconfirmed its commitment to the industry and adoption on rooftops by commercial business. There are specific incentives that favor these types of installations.

 

Taxes

Federal Investment Tax Credit (ITC): The current federal investment tax credit (ITC) is scheduled to expire on Dec, 31, 2016. The 30 percent tax incentive has been a huge boon to businesses and has led to rapid growth of solar across the country, especially in Massachusetts when combined with the strength of the SREC market. While it’s unlikely the ITC will disappear, a change in terms could impact businesses that wait.

 

Net Metering

Net Metering: The state has a favorable policy which allows for flexibility in how electric rates are “credited” to various accounts. However, there are potential changes to the net metering policies in several states, including Massachusetts. For businesses that generate more electricity than they consume, this “credit” could be negatively impacted if you wait too long to enter the program.

 

BlogPostImagesfinancing

Financing: The solar financing market in Massachusetts has become incredibly creative and strong, with banks and third-party financers realizing the bankability of solar. For commercial property owners interested in exploring the benefits of solar, there is a financing solution that will work for you.

 

Value

Value: Solar technology has become more efficient and more cost effective. New companies and existing manufacturers are making panels more efficient, but we’re also seeing big strides forward in making inverters and storage solutions more efficient and cost effective as well. According to the SEIA, year-over-year, the national average PV installed system price declined by 11 percent from Q3 2013 to Q3 2014. Since the third quarter of 2010, the average price of a PV panel has dropped by 63 percent, and in the first six months of 2015, PV price has dropped 6-13% more, according to the DOE.

We’ve seen huge growth in solar in the past several years, and while incentives are still at a peak, the end of the current federal investment tax period is drawing near and state solar policies are expected to decline.  If you’re considering a solar installation, our advice to you is simple: Don’t wait. Incentives are the best they will ever be.

Contact us today for a free site assessment of your property.

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Melanoma Awareness Month: Respect the Power of the Sun

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As a commercial solar company, Solect realizes just how powerful the sun can be.  That’s why we’ve partnered with the Melanoma Foundation of New England (MFNE) to sponsor Melanoma Awareness Month this May, to  help spread awareness and educate the outdoor & construction worker community about the impact of sun exposure on health. Most importantly, we want to make sure our installers and others in the construction industry take the necessary precautions to help prevent harmful sun exposure on the job.

To help communicate this important message, former Major League Baseball Player and skin cancer survivor, Mike Trombley, has joined forced with MFNE and Solect to raise awareness. “I understand first hand, the importance of being proactive with your health and getting your skin checked,” said Trombley.

Mike will be speaking at the Solect Sun-Safety training event on May 21st, 2015, and sharing his personal story throughout Melanoma Awareness Month. The highest mortality rate of melanoma is in men over 50. It is our hope that a personal story from a former MLB player will really resonate with this population.

Mike Trombley - Solect solarEver since I was a kid, I loved playing outside. Almost every day you could find me throwing a baseball or football or hitting a golf ball. I was lucky enough to be able to do that for a living for almost 20 years. I played professional baseball from 1989-2002 with the Minnesota Twins, Baltimore Orioles and Los Angeles Dodgers. After my baseball career ended in 2002, I played on the Celebrity Golf Tour until 2008. What a great gig! Being in the sun all day was just up my alley.

In 2001 with the Orioles, the Johns Hopkins Cancer Center was offering free skin cancer screenings for the team. As usual, I made excuses to myself not do it. I was only 33 years old. I never felt stronger and healthier in my life. Older people get skin cancer. But, I agreed to do it only because of all the screenings I had turned down in the past. The doctors immediately expressed concern to an area beneath my right eye. The next day I was at Johns Hopkins having the growth biopsied. It was diagnosed as basal cell carcinoma (BCC). Within 2 days, I had a nickel sized circle cut out of my cheek to remove the entire growth. 10 stitches later and I was back playing baseball. The doctors urged me to stay committed to skin cancer screenings and to never go without sunscreen.

Before that day I had always made excuses to ignore certain problems. I was the kind of guy to overlook health related issues. Since that day, I realized that early detection is the key to prevention in almost all health related problems. Many of my former MLB teammates and opponents have had similar skin problems. Some a lot worse! What would have happened if I continued making up excuses to not do the screening?

Community Solar Emerging as a New Way to Benefit from Renewable Energy

The concept of community farming has been around for a while, but it’s the concept of community solar that’s really starting to catch fire in Massachusetts. Community solar is a model where third-party residents or businesses receive allocations of energy generated from a “community owned” solar project and receive net metering credit on their electricity bills.

Community Solar is emerging as an efficient way for people and businesses to have access to renewable energy when circumstances don’t allow them to install solar systems on their own property — whether due to issues of orientation and shading, problems with roof quality or roof angles, issues with available capital or even because they rent their property instead of own.

Community solar projects can be built as roof-based systems or as land-based arrays. They’re attractive to both landowners and building owners because community solar projects qualify for the most-beneficial SREC-II factor of 1.0. This means that for every 1000 kWh produced from a community solar project, a full SREC (Solar Renewable Energy Certificate) is awarded.

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On the other side of the equation, community solar is attractive to off-takers who are interested in solar but cannot host a system themselves for one or more of the reasons listed above. Community solar is linked to a customer’s bill through a process called virtual net metering, which credits the customer with a prorated share of the array’s production based on the share of the power generated. The array does not need to be at the same site as the customer’s electricity meter; in fact, it can be dozens of miles away.

Other customers of community solar include businesses that have already installed a solar system but have run out of space to host additional solar panels, and want to offset a larger portion of their energy consumption. These customers already understand the economic benefits of solar, including the lower cost of energy and the ability to better control their operating costs against the rising price of electricity from the Grid.

According to a study from the Massachusetts Department of Energy Resources (DOER), there are two optimal scenarios under which community solar will work best in Massachusetts:

  • Participant ownership model: A private entity, such as an LLC, is formed by organizing participants for the purposes of developing a community solar project. A private entity owns or leases property on which the solar system will be installed. Participants realize a return on investment and benefit from net metering credits generated by the system.
  • Public lease model: The public entity leases property to a private entity for the installation of the community solar project. A private entity owns and operates the solar system. Participants benefit from net metering credits generated by the system.

Community solar projects have the ability to benefit communities, businesses, and residents within those communities who want to reduce their carbon footprint. An experienced solar project developer can help you learn more.

This article was originally published in the  New England Real Estate Journal March 2015 issue.

Solect Heads to Haiti with Be Like Brit

As a renewable energy company, we get the opportunity to “do good” for the environment all the time by working with companies in New England to deploy solar energy solutions. One of our next projects, however, takes us much further south and has much deeper meaning.

On September 13, a team from Solect will be traveling to Haiti to donate and install a solar system atop the “B’ shaped Be Like Brit orphanage in Grand Goave, Haiti. The orphanage is a tribute to the spirit of Britney Gengel, a 19-year-old student from Massachusetts, who while volunteering at a local orphanage in Haiti, was killed when a devastating earthquake struck the country in January 2010. Her family worked tirelessly to honor Brit’s memory by making one of her dreams come true: opening an orphanage to serve the children of Haiti.

Because the costs of building and operating an orphanage are high, Solect and its partners are donating the solar PV system to help the orphanage reduce it operating expenses, ensuring that more of the non-profit’s donations can be used to provide care for the children, instead of paying for lighting and HVAC.  Solect, along with Downing Electric, will be sponsoring two solar installation team members who will travel to Haiti to help with the system installation.

Ed and Keith Solect Solar
Ed Kelly from Solect and Keith O’Regan of Downing Electric will be traveling to the Be Like Brit Orphanage in Haiti to install the solar energy system.
Be Like Brit Orphanage
The “B” shaped Orphanage built in Brit Gengel’s memory.

 

 

 

 

 

 

 

We’ll be posting updates and photos from the installation as it progresses. In the meantime, more information about how you can help Be Like Brit can be found on the organization’s website.

Proposed C-PACE Legislation Offers New financing Options for Solar Energy Projects

Jim Dumas, Principal – Solect Energy

As commercial solar projects continue to gather steam in Massachusetts, the state has positioned itself as one of the top states in the country for renewable energy. The SREC and SREC II programs, coupled with attractive federal tax incentives, have made Massachusetts a great place to deploy solar photovoltaic (PV) energy solutions. Considering that buildings consume 49 percent of all energy used in the United States and account for 75 percent of electricity usage, placing energy efficient projects as a high priority at the state and municipal level makes a lot of sense.

Now, thanks to a proposed bill (S.177) in Massachusetts that would allow Commercial Property Assessed Clean Energy (C-PACE), there’s potential for Massachusetts to become even more solar-friendly to businesses. The Massachusetts Senate Committee on Ways and Means is currently reviewing the bill, and if passed, C-PACE would allow commercial property owners to receive a new type of financing for their solar project.

Under the Commercial Property Assessed Clean Energy (C-PACE) initiative, a building owner can finance their solar array through the Mass Development Bank with 100 percent financing for up to 20 years at a low rate. The loan would be repaid along with the quarterly tax bill on the property. Since the loan is connected to the property, it would not tie up the owner’s credit line. If the owner sold the building, for example, the loan would transfer to the new owner. The proposed legislation also includes a similar initiative for residential clean energy projects simply called PACE.

The C-PACE legislation enables MassDevelopment, a quasi-state real estate funding agency that already issues bonds to the capital markets, to handle PACE financing, making it easier for municipalities in Massachusetts to offer C-PACE financing. Also, S.177 will allow projects related not only to renewables and energy efficiency, but also to climate change resiliency investments.

C-PACE financing is either implemented or under legislative review in 31 states. If passed in Massachusetts, S.177 would create another very attractive financing option and incentive for property owners looking to deploy solar or other renewable energy solutions.

The Massachusetts Green Buildings Council Massachusetts Chapter has been heavily involved in sponsoring this initiative, and has a great website that provides background and benefits on the initiative, updates on its progression through the state legislature, and contact information for how Massachusetts commercial business owners can show their support. Visit www.usgbcma.org/PACEfinancing for more information as this initiative progresses or contact us for more information on how you can support the C-PACE legislation.

Jim Dumas, Principal of Solect, writes a monthly column for the New England Real Estate Journal’s Green Building section. Above is an adaptation of his most recent article regarding proposed C-PACE Legislation in Massachusetts.  

Business Beyond Profit: Focusing on the Triple Bottom Line

Recently, Solect decided to take a step back and reevaluate the company brand to make sure it appropriately reflected our services, industry, and most of all – our core values. Going through this process revealed a compelling philosophy that reflects the very values Solect was founded on; a philosophy that remained nameless to us until now. That philosophy is the triple bottom line.

The triple bottom line is a relatively new concept that was founded on the idea that businesses can be economically successful while at the same time socially and environmentally responsible and sustainable. It’s a concept that was created as a framework to measure an organization’s social, environmental and financial sustainability. Traditionally, businesses are focused on one bottom line – profit, which is undoubtedly essential for any business to survive and grow. But sustainable businesses shift their practices to consider two additional and equally important bottom lines – people (or social capital as it is sometimes called) and our planet (natural capital). These three dimensions of the triple bottom line – people, planet, profit – are what Solect has been committed to since our inception in 2009.  In our own terms, Solect has focused on these three key aspects in the following ways:

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People: Solect is committed to our employees, customers and community.  We’re dedicated to establishing long client relationships and strong jobs. Additionally, Solect donates solar energy systems, goods and services to support several local non-profits and charities. We work hard to build a culture of excellence through the development of our employees and to create a work environment that inspires innovation and teamwork.

planet-iconPlanet: Solar energy is clean, renewable and abundant. Unlike fossil fuels, solar energy does not generate harmful carbon emissions and other greenhouse gases that are known to contribute to global warming. With solar, you can significantly reduce your ecological footprint,  and decrease overall dependence on fossil fuels such as oil and natural gas. When you invest in solar energy, you’re investing in the future — for all of us.

profit-iconProfit: Businesses across a wide range of industries are investing in solar energy to save money and generate new revenue. Solar energy continues to experience tremendous growth in the Northeast as incentives and attractive pricing on equipment and installation make investing in solar photovoltaic (PV) systems a smart business decision.

Incorporating the triple bottom line into your business yields several benefits. It can help to reduce energy, waste & materials expenses, reduce operational risks, increase employee satisfaction and productivity, and increase revenue.  Solar energy inherently supports the people, planet, profit philosophy and the timing is perfect to reap the benefits. Interested in learning more about how  solar energy can help your triple bottom line? Contact us today!

Commercial Property Owners Poised to Benefit from Latest SREC-II Solar Energy Incentive Program

Solar in Massachusetts just got stronger! On April 25th, the MA Department of Energy Resources (DOER) officially announced its newest solar energy program, commonly referred to as SREC II (pronounced “S” “REC” “TWO”).  In order to gain a full understanding of the program, let’s start with a brief history.

Solar Renewable Energy Certificates (SRECs) were created as part of the Solar Carve-Out Program; a market-based incentive program established to help utilities meet the Renewable Portfolio Standard (RPS) requirement of generating 15% of their electricity from renewable energy sources. The SREC program supports residential, commercial, public, and non-profit entities in developing new solar photovoltaic (PV) capacity across the Commonwealth of Massachusetts by offering solar array owners credits for the amount of solar electricity they produce. While the program was originally capped at 400MW with a goal to meet this by 2020, the cap was reached in the summer of 2013, showing the extreme popularity of the program.

The SREC II program seeks to build on the success of the original SREC program, and has been revised to support the solar market until 1,600 MW of PV capacity has been installed statewide. The much awaited program continues to incentivize businesses and organizations to install solar and reap its many environmental and financial benefits.

The SREC II program provides financial incentives to owners of solar photovoltaic (PV) systems based on the amount of electricity the system produces.  For every 1,000 kWh (kilowatt hours) of solar electricity produced, the owner of the system will receive a certain number of Solar Renewable Energy Certificates (SREC).  Theses SRECs can then be ultimately sold to the utility companies (and others) in the state to help them reach their state mandated goals.  The SREC II program brings some changes and three areas worth noting are:

  1. Market Sectors – All solar projects are not considered equal in the program!  The state has identified four (4) market sectors and provided different incentives accordingly.   Three of the sectors are specifically defined and the fourth is a “catch all” for any system that does not fit into the first three.   The state’s goal is to better manage and incent where solar is being installed.
  2. SREC Factors – Each market sector has a different “factor” that is used to calculate the number of SRECs a system owner will receive.  The factors range from .7 to 1.0 – i.e. a system with an SREC factor of 1 will receive 1 SREC for every 1,000 kWh’s of production each quarter.  Qualifying for a certain SREC factor will be a key decision for a project owner due to the financial impact.
  3. 10 Year Term – All systems that qualify under the program will receive a 10 year term in which they can participate in the annual SREC auction.  The auction price will decrease per a set schedule over the term.  The fixed term and published schedules will help project owners and lenders to model and evaluate financial performance.

These three areas are major influences on the types and number of solar energy systems that will be installed in Massachusetts over the coming years. The introduction of SREC factors is intended to create a more balanced development of solar across different Market Sectors mentioned above. In addition to the state sponsored SREC II program, the federal government still offers a 30% Investment Tax Credit (ITC) and accelerated depreciation for solar.

Contact us at info@solect.com or call 508-598-3511 to learn more about the programs and incentives in more detail, and to determine if solar might be a fit for your business.