Question of the Month: What is net metering for solar projects?

Sep 1, 2023

Many homeowners have heard about rooftop residential solar panels either from their relative or neighbor who has solar panels or from the countless solar companies inquiring about solar installation. Solar can be an effective non-carbon energy resource in the right applications. The Investor-Owned Utilities (IOU) typically have higher overall electric rates than Municipal Light Plant (MLP) communities, such as the Merrimac Light Department. The IOUs provide “net metering” incentives for rooftop residential solar installations as one way to address these higher overall rates. Net metering is a billing mechanism that allows energy from a rooftop solar system to be “stored” until it is consumed because there are times when the owners of rooftop solar will not be generating any electricity (for example, cloudy days or nighttime hours and times when a solar system is generating more than that particular consumer is using at any given time) This net metering storage cost is then spread among all the IOU rate payers. In an IOU service territory, you are effectively paying for someone else to have rooftop solar because the storage cost is allocated among all ratepayers.

Rather than support rooftop solar through these cross subsidies, Merrimac Light Department is purchasing solar energy from large solar installations located throughout the New England power pool. These large solar installations are the most cost-effective means to get solar energy into our electric supply portfolio. These large solar installations are also professionally maintained and monitored to assure optimal output.

If you are planning to install rooftop solar, under some form of long-term lease arrangement please carefully read the fine print of the transaction. Solar companies that have ownership of the solar panels can place a lien on your property or even require prior approval of the next purchaser of your home when you decide to sell your home. You are signing a multiyear contract and the solar panels are an asset to the solar company. Please fully understand what a lien is before signing any contract. In addition, if there needs to be repairs done to your roof during the solar panel life, some solar companies will charge you to remove the panels and reinstall them back onto the roof. Also, like all energy generation equipment, there is degradation of the amount of solar produced over time as the system ages. I don’t want to be alarmist because solar is truly a valuable resource, but high-pressure rooftop solar sales are now commonplace and the financial benefits of rooftop solar are simply not as great in a public power community compared to a privately owned utility.

In short, under the right circumstances rooftop solar is an effective non-carbon energy resource. However, there are fewer financial benefits to adding solar to your home in a public power community. At Merrimac Light department, our rates are low already, so the financial benefits associated with rooftop solar are more limited and our power supply already has an increasing amount of renewable energy.

Solar for Merrimac Light Department

As we mentioned MLD does support solar and has solar in our power portfolio to meet the state requirement that over 50% of all our energy is non-carbon generated by 2030. MLD does this through several non-carbon resources, including solar. The Merrimac Light Department has energy generated from onshore wind, hydro and large solar fields throughout the region. We also have a large solar project within the Merrimac service territory and currently we obtain 6% of our power from this facility. MLD is currently researching the benefits of building a battery to store more of this energy in the future.

If you have a question that you want answered, please submit it to office@merrimaclight.com. First week of the month, the question will be answered.

Question of the Month is a new program for answering questions we receive from customers at the office.