Pairing Behind the Meter Storage and Solar – Focus on Massachusetts

Pairing Behind the Meter Storage and Solar – Focus on Massachusetts

By Ed Toppi

Combining storage and solar intuitively makes sense.  Until recently, it has been challenging to make the business case due to high costs and regulatory barriers.  The tides are changing and there are now viable opportunities throughout the country that make the solar/storage combination a legitimate economic solution. 

Net metering, the mechanism by which electricity consumers receive a credit for the production of customer sited solar (or other qualifying type) generation systems above the customer’s consumption, has been a boon the development of the solar industry. While beneficial for solar development, the netting of retail charges has removed the incentive for adding energy storage.  Many states have realized that the cost of net metering needs to be reduced.  State policies to remove net metering, or impose caps and are now making energy storage a practical alternative. 

In April 2016, Massachusetts, reduced the net metering credit for new systems to 60% of the retail rate for most non-residential systems. This significant reduction in the net metering credit creates an incentive to use energy storage to shift the excess solar production to another time of day rather than export it to the grid.

The state of Massachusetts is also creating other policies that help make the case for energy storage paired with solar.  The Massachusetts Department of Energy Resources recently released its proposed rules for the successor to the SREC II program—the Solar Massachusetts Renewable Target (SMART) program. Under SMART, there is now an additional incentive in the form of an adder of $45/MWh for inclusion of storage with the solar system.

Storage paired with solar can also be eligible for extension of the federal investment tax credit to the cost of the storage system if at least 75% of the charging energy is provided directly from solar.  This is ideally suited for systems where a primary objective is optimizing the value of the solar production due to lower net metering credits.

Furthermore, advanced energy storage technologies when coupled with solar, can offer multiple use applications.  For example, energy storage can help reduce the high demand charge for C&I customers in Massachusetts while simultaneously optimizing the solar production.

Finally, energy storage costs are coming down exponentially, and the trend will continue.  It is time to consider the inclusion of energy storage as part of the business solution. 

As states begin to address the challenges posed by the success of solar policy and industry improvements through adjustments in net metering or other policy changes, the value proposition of behind the meter solar will continue to be challenged. Storage provides an increasingly more economical solution to extend the value of solar in the face of these challenges. Additionally, because storage can provide a multitude of services the return on an investment in storage can be measured across multiple value streams in addition to optimizing solar.

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Ed Toppi is Vice President of Integrated Solutions at Customized Energy Solutions.   Customized Energy Solutions, Ltd. (CES) is a leading service provider for competitive load serving entities throughout the US and also a pioneer and award winning leader in the energy storage sector.