This spring, National Grid will launch a new online marketplace that allows customers in Rhode Island to shop for solar and receive an incentive for improving energy efficiency at the same time.
SolarWise Rhode Island is part of National Grid’s 2016 Rhode Island Renewable Energy Growth Program, which launched last year. The initiative will help the state meet its goal to increase the amount of electricity generated by customer-owned equipment by 160 megawatts over a five-year period.
National Grid is partnering with EnergySage to deliver the SolarWise program. Through EnergySage’s online marketplace, customers will be able to compare solar options for their home or business and receive competitive quotes from preapproved installers. National Grid is the first electric utility company in the nation to offer a transparent platform for the purchase of distributed solar.
“We’re trying to offer solar in Rhode Island by partnering with the marketplace,” said Ed White, National Grid’s vice president of new energy solutions, in an interview.
“We’re trying to show we’re not against solar,” he added. Rather, National Grid -- which is deregulated and decoupled -- is actively seeking ways to leverage the market concept as a new business opportunity for all parties.
Customers who go solar through SolarWise RI will benefit from the stability of a guaranteed long-term payment from National Grid for their solar output, at prices set under the Growth program by the Rhode Island Distributed Generation Board.
Customers may also be eligible for a bonus solar incentive if they take steps to improve their energy consumption before installing a PV system. The more energy-saving measures a customer adopts, the higher their long-term solar payment stands to be.
“We are tremendously excited about the SolarWise Rhode Island Program,” said Marion Gold, commissioner of Rhode Island's Office of Energy Resources. “The program is consistent with Governor Raimondo’s commitment to lowering energy costs and expanding clean energy in the Ocean State. Through SolarWise RI, Rhode Islanders will have the opportunity to lower their energy bills, take steps to protect the environment and keep more of our energy dollars in state. It’s a win-win-win.”
Alternative to net metering?
While working to boost Rhode Island’s solar economy, SolarWise is also intended to offer an alternative to traditional net metering.
“There’s a desire to have more renewables by state policymakers, but they’re also watching the debate around net metering and don’t necessarily want to get into that debate,” said National Grid's White.
National Grid has also stated that it does not believe net metering is a long-term solution for supporting distributed solar, and is actively involved in finding alternatives in the states where it operates.
“The thing that happens behind the scenes with [the Rhode Island] offering -- in addition to the incentives for energy efficiency and solar options -- is that customers adopt solar through a rate tariff,” said White. “So it wouldn’t be net metering in perpetuity; it would be a 15-year or 20-year set compensation for the solar.”
Customers want to know that their investments are secure. And with net metering, it’s possible customer investments could be undermined in the event of a major rate change, as recent events in Nevada have demonstrated. By offering long-term solar contracts, “We’re trying to bracket the economics for the customer,” said White.
Residential customers who enroll during the 2016 program year, starting April 1, will receive a rate of 37.65 cents per kilowatt-hour of solar generation fixed for 15 years. Under the 20-year option, they’ll receive 33.45 cents per kilowatt-hour.
Commercial customers, who will likely install larger PV systems, can earn between 22 cents and 25 cents per kilowatt-hour of solar generation, fixed for 20 years.
The long-term rates are higher for customers who qualify for the efficiency bonus. The rates are also subject to an annual regulatory review, and are expected to drop over time to reflect declines in solar project costs.
While it could become a net-metering alternative, solar customers in Rhode Island are not currently required to use SolarWise. They still have the option to choose traditional net metering, which credits customers for excess generation at the retail rate for electricity (about 19 cents per kilowatt-hour). The program is limited to 3 percent of peak load for Block Island Power Company and Pascoag Utility District. National Grid does not have an aggregate cap.
Christopher Kearns, spokesperson for the Rhode Island Office of Energy Resources, said the relative benefit of the two solar programs varies based on system size and location, as well as customer preference. Depending on the option, a customer could see a faster payoff or longer-term savings.
A separate upside to pairing efficiency with solar under National Grid’s program is that the solar system size can be reduced to serve a smaller load, which allows for more solar projects to be built under the 160 megawatt Growth program cap.
Expanding the distributed energy marketplace
White said he believes the efficiency incentive, coupled with rate stability and the convenience of a market platform, offers a holistic package that customers will appreciate.
“The SolarWise Marketplace offers customers simplicity, transparency and choice when shopping for solar,” said Vikram Aggarwal, CEO of EnergySage. “When consumers receive multiple quotes from several installers, they are substantially more likely to go solar.”
Last year, Georgia Power launched a solar sales and consultation service that connects potential customers to local installers, as well as Georgia Power's own solar installation arm. National Grid's service is unique in that the platform includes all types of installers and the utility is completely neutral. EnergySage is already speaking with several other utilities that have expressed interest in setting up similar systems, said Aggarwal.
National Grid sees an opportunity to apply this model in other states and to products other than solar. The utility could also offer a marketplace for electric-vehicle charging systems, energystorageor inverters. Under New York's Reforming the Energy Vision proceeding, regulators are asking utilities to find new ways to connect customers with distributed energy resources and to find new ways to make money beyond the rate of return.
The SolarWise marketplace in Rhode Island lays the foundation for a new utility business model, while also providing a benefit to solar installers, said White. Soft costs, including customer acquisition, make up the majority of residential and commercial solar system costs. So when customers go through the National Grid marketplace, it makes customer acquisition much less expensive.
White believes that elements of the SolarWise RI program are transferable to other states and other utilities as they also adapt to a distributed energy future.
“Do I think it’s going to immediately work in Arizona or Nevada? Probably not,” he said. “But hopefully it's something people can point to and say, ‘Look at what they did in Rhode Island. The divide between utilities and solar companies isn’t as vast as we thought.’”