Energy Storage Net Metering: An Illustration of Why It’s So Valuable

on April 22, 2020

Energy storage net energy metering (aka NEM paired storage) allows a customer with a behind-the-meter solar + storage system to discharge their battery, exporting stored energy back to the grid and receive a net energy metering credit, if the battery can verifiably charge 100% from solar. In certain cases, NEM paired storage can meaningfully increase the amount of savings an energy storage system (ESS) can capture. As illustrated in the graphic below, energy storage net metering effectively enables a battery to utilize its full capacity by discharging fully when a strong price signal exists, regardless of customer usage.

Policy background
NEM paired storage was codified into law in California in February of 2019 when the California Public Utilities Commission (CPUC) finalized a decision permitting customers with ESS to receive credits for storage energy sent back to the grid if the storage system verifiably charged entirely from solar. The policy change was initiated by the California Solar and Storage Association (CALSSA) who filed a petition for modification (PFM) to grant the permissibility of NEM paired storage. CALSSA’s PFM drew support from California’s big three investor-owned utilities who filed a statement of support, which helped pave the way to the CPUC decision. Energy Toolbase published a blog “CPUC Approves Energy Storage Net Metering” summarizing the eligibility requirements laid out in that CPUC ruling.

Several months later the IOUs began allowing NEM paired storage systems to be interconnected to their grid. Energy Toolbase published another blog in December of 2019 entitled “California Utilities now Accepting Applications for Net Energy Metering (NEM) – Paired Storage,” which summarized many of the new metering and verification requirements, including the newly created Certification Requirements Decision (CRD) standard, which allowed utilities to verify the ESS charges entirely from PV. Previously, for ESS systems larger than 10 kW, customers were required to install additional metering hardware, which could be time-consuming and prohibitively expensive.

Case Study: NEM Paired Storage
To illustrate the value of energy storage net metering, we compared two identical solar + storage systems operating in time-of-use (TOU) arbitrage mode. We held all project inputs and assumptions constant, except in Case No. 1 we ran the ESS dispatch simulation assuming ESS cannot export to grid, and in Case No. 2 we ran the simulation assuming NEM paired storage: ESS can export to grid, but it must charge entirely from PV.

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