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NEM 3.0: Local Renewables Lower Electric Rates for All Granite Staters

Regulators in New Hampshire are reconsidering how much small-scale renewable energy resources should be paid for energy they export to the grid through the policy known as “net metering”. Clean Energy NH is proposing an expansion of the current net-energy metering (NEM) credit issued to New Hampshire residents, businesses, cities and towns for the clean energy they generate.  


A careful review and re-analysis of a study sponsored by the State of NH found that renewable energy generators in the state are providing savings to all NH ratepayers. This upends the often repeatedbut never quantifiedclaim that when more people invest in solar, electricity rates rise for everyone else. By re-balancing NEM to reimburse solar customers for more of the value they produce, our proposal will continue to lower electric customer bills, while catalyzing further investment in solar by homeowners, local governments, and businesses to pursue energy independence and financial security. Under our proposal, non-solar customers in Eversource service territory alone would save $123 million dollars between 2021 and 2023.


CENH's proposed net metering rate would add compensation for an additional 50% of the distribution rate for small generators (<100kW) and 50% of the transmission rate and 50% of the distribution rate for large generators (>100kW).


Early next year, the New Hampshire’s Public Utilities Commission (PUC), will decide on how much those who generate local renewable electric power should be compensated for the clean energy they export on to the electric grid. This decision will occur in PUC Docket No. DE 22-060, and a negative decision could put solar out of reach for many Granite Staters, hurting both our economy and environment.


“Net-Energy Metering” is a mechanism that for decades has been the bedrock of the economics that allow homeowners, municipalities, and businesses to install solar. For each kilowatt hour (kWh) of extra electricity that the small generators produced, they would receive a credit on their account. This credit ensures that small and mid-sized solar generators get fair value for their energy and investment.


Previously, solar customers received a credit that was equal to the full kWh rate of electricity, but following a decision by the public utilities commission in 2017 that rate was decreased  because of concerns that net-metering would increase electric rates. The previous rate is now referred to as NEM 1.0, and the current rate is called NEM 2.0. Critics of solar have claimed that the credits for excess solar energy generation represents a cost shift to electric customers who don’t own solar. These critics claimed that when solar customers reduce their bill, non-solar customers have to pick up the slack and pay for the fixed costs of the electric grid.


However, our most recent analysis flips that argument on its head, and finds that local clean energy systems not only aren’t a burden on ratepayers but in fact directly benefit them.


Obviously, purchasing solar panels for a home or business results in a decrease in electric bills. These savings are a result of the solar arrays largely replacing the value of the electricity that would have otherwise been purchased. However, our analysis shows that when your neighbors buy solar panels, you also experience a reduction in your bill, even if you never go solar.


Based on this analysis, CENH is recommending that NEM 3.0 should increase the compensation that solar customers receive for their excess generation. Even after increasing the NEM credit, our proposal will save non-solar customers approximately $8 million per year and $123 million between now and 2035. That’s $123 million dollars that will stay in the New Hampshire economy rather than be “exported” to pay for out of state fuel sources. 


The CENH proposal will improve the economics of distributed generation, which will mean more investments in local renewable energy generation, allowing the industry to grow at a sustainable rate. 


While modest, our proposed rates would give fair compensation to the solar customers for the unseen value that small-scale, broadly-distributed generation provides to the electric system such as:

  • Avoiding purchasing expensive electricity and capacity from large power plants during expensive times of year,

  • Wasting large amounts of electricity by transmitting it from far away, and

  • Avoiding the need to upgrade local electric infrastructure by generating more electricity close to where it is consumed. 


A decade ago, we knew much less about how decarbonization would impact the electric grid, and it seemed wise to proceed cautiously. Now, armed with more experience and data, we can modestly increase how much we are paying local renewable energy, and still reduce the cost of electricity on everyone's bills.




Read CENH's full testimony in the net metering docket:


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3 Comments


Zeke Schmois
Zeke Schmois
Dec 18, 2023

I agree with other commenters that there needs to be a bit of clarity added to the post. In any case, this is great news. My interpretation is that from NEM 2.0 to 3.0 there will be a 25% increase in distribution payback (from 25% up to 50% in NEM 3.0). Was that the major change proposed? Is there more we might've missed?

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Hi,

I don't think you explained this very well, even for someone who is supposed to understand this issue. For example, you don't describe what the charts mean. You put them in, but never explain them and just list the benefits of 3.0. I think what you are trying to say is that in the NEM 1.0 solar customers were provided economic compensation for not only the generation portion of their bill, but they were also inherently provided economic compensation for the transmission and distribution portion of their bill. This meant that those "fixed costs" of transmission and distribution had to be absorbed by the "non-solar" customers, hence increasing their costs a little. In NEM 2.0 this issue was addressed,…


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I don't quite understand this. As a residential solar customer beginning 2021, Eversource looks at my generation, then my usage, and nets them out and puts the excess into a credit account. This would seem to imply that I get the same cost for my generation as I pay for generation. So does the reduced rate for generation (NEM 2.0) show up in fees charged? I thought those fees were my share of distribution costs.

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