The Connecticut State Capitol. Image source: CT Mirror
If you’re a Connecticut homeowner interested in getting solar panels for your home, one of the first things to learn about is net metering.
It is through net metering that home solar panels save you money. It is a program that allows you to earn credit for the extra energy your panels produce during the day that doesn’t wind up getting used by you, and gets sent to the grid instead. Your utility company keeps track of it all and lets you use the credits to offset the energy you take from the grid when your panels aren't producing power.
Connecticut had a net metering program for a couple of decades, but that all changed on January 1st, 2022. The program that began on that day is called the Residential Renewable Energy Solutions Program. Thankfully, it’s just as good as net metering, and offers some additional flexibility that should make solar more available to people who weren’t able to afford it before.
Despite the long name, Connecticut didn’t see fit to give the program a snappy acronym, so we’ll just call it “the RES program” to save us from having to type it out over and over again. We’ll cover everything about it below, but first here are some important points:
Key takeaways:
- The RES program was designed by the Connecticut Public Utilities Regulatory Authority (PURA) with the goal of fostering a solar industry that installs 50-60 megawatts (MW) of solar each year.
- To do that, they came up with rates that provide a good financial return to solar installation owners, with certainty for the future.
- The RES program offers two ways to sell solar back to the grid: a “Netting Tariff” and a “Buy All Tariff” (a tariff is a set of rules for how a utility will charge or pay a customer for energy).
- The Netting Tariff is the best option for most homeowners. It offers monetary credits for excess solar energy on their energy bills that are equal to the retail rate for every kilowatt-hour (kWh). In addition, for 2022, Eversource customers will receive a small extra payment for every kWh they send to the grid, in exchange for the renewable energy credits generated by the system. A customer who enters the program will be enrolled for 20 years.
- The Buy All Tariff is useful for companies that want to offer Power Purchase Agreements (PPAs) to homeowners looking to go solar. It offers a set dollar amount for all the energy generated by the system, which stays the same for 20 years.
- Both tariffs have additional energy credits available for low to moderate-income people, and those who live in state-identified “distressed municipalities”.
Why did Connecticut move away from net metering?
The simple answer for why Connecticut moved away from net metering is because it wanted a more modern program that would ensure solar customers were supported, but didn’t cause an undue burden on non-solar customers (there is a persistent myth of a “cost shift” between solar and non-solar customers).
The decision to move away from net metering was made in Public Act 19-35, a law that set December 31, 2021 as the firm end of the net metering program in the state. The Act required utility companies to offer two new kinds of tariffs to customers who own Class I renewable energy sources (of which photovoltaic solar is the most popular).
A tariff is basically like the terms and conditions of an energy service contract. In this case, we’re talking about tariffs for customers who own renewable energy generators (aka residential solar systems). The two new tariffs required by the Act were:
- A tariff for the purchase of all energy and renewable energy certificates on a cents-per-kilowatt hour basis
- A tariff for the purchase of any energy produced and not consumed during a month, as well as all renewable energy certificates generated by a solar installation on a cents-per-kilowatt hour basis
The CT legislature designated the task of coming up with a program design to the state Public Utilities Regulatory Authority (PURA). Guided by its framework for “an equitable modern grid”, PURA opened a proceeding to establish a successor to the net metering program.
Essentially, PURA looked at what kind of program would be necessary to continue solar installations at the rate of between 50 and 60 MW per year, in order to meet the goal of a 100% zero-carbon electric grid by 2040. They also looked to design a program that would benefit all citizens of the state, and increase participation in renewable energy from low and middle-income residents.
In October of 2021, they revealed the results of that proceeding, which are the subject of this article. Here’s a look at what they came up with:
The two kinds of metering under the RES program
To satisfy the requirements of Public Act 19-25, PURA came up with two new tariffs, which they call the “Netting Tariff” and the “Buy All Tariff”.
Between the years of 2022 and 2027, all customers of United Illuminating (UI) and Eversource will have to choose one of these tariffs, under which they will receive service for 20 years. At the end of the 20-year period, customers will revert to whatever tariff exists at that time.
The Netting Tariff is the better choice for most homeowners, because it provides monthly monetary bill credits to offset energy used from the grid when the sun isn’t shining or their solar systems aren't producing power. The Buy All Tariff will mostly be used by solar companies that want to offer their customers easy-to-understand savings in a Power Purchase Agreement (PPA).
How the Netting Tariff differs from net metering
The previous net metering program netted energy production and consumption on a monthly basis, providing a kWh credit for excess generation that was then applied to the next month’s bill. Any kWh credits that remained as of March 1st each year were paid out at the wholesale energy price (~$0.04/kWh).
The Netting Tariff changes those kWh credits to monetary credits that are now equal to the retail rate, and allows them to roll over indefinitely (no wholesale payouts!). That’s actually better than the old version of net metering.
In addition, the Netting Tariff has been set up by PURA to encourage more consumers to adopt solar power. To do that, PURA wanted to target a specific rate of return on a solar investment, so that customers would feel like they’re getting a good deal. In this case, the target rate of return was between 9% and 11% (which is better than the historical return of the stock market).
PURA looked at the current retail rates offered by UI and Eversource, and calculated that Eversource customers would need an additional per-kWh payment to see a rate of return that was greater than 9%. So for 2022, all Eversource customers who sign up for the Netting Tariff will get an additional $0.0318/kWh in exchange for the RECs generated by the system over the 20-year period.
UI customers will not receive the REC payment, because UI’s retail cost of electricity is higher.
Here’s a quick example of how it all works:
A customer installs a solar system on their roof. In the first month, the solar panels send 500 kWh of electricity to the grid during the days when they produce more energy than the customer needs. During the evenings, the customer draws a total of 400 kWh from the grid. This means the customer has generated an excess of 100 kWh during the month.
The utility multiples those 100 kWh by the retail rate (we’ll just use a ballpark figure of $0.21/kWh for simplicity), which generates a $21 credit that will be applied to the customer’s bill the next month.
If the customer’s system generates a surplus again the next month, the new credit will be added to the old credit. These credits will be used during a month in which the customer’s solar system sends less excess energy to the grid than the customer draws from the grid at night.
How the Buy All Tariff works
The Buy All Tariff allows solar installation owners to connect their systems directly to the grid and receive a fixed payment per kWh of energy over 20 years. The payments come in exchange for the energy and RECs produced by the system. For contracts that began in 2020, the payment is $0.2943/kWh.
Essentially, the 20-year fixed payment provides certainty for solar developers. They know that if they build a solar installation, it will result in a certain return on their investment. In addition, the system owner can designate that part of the per-kWh payment goes to another utility account, something that makes the buy-all program flexible.
This option may not be the best for homeowners who just want bill credits, but it would work well for a developer who wants to offer a PPA to a customer looking to finance their solar installation.
The way that would work is the developer would agree to install the system on a customer’s home and then offer the homeowner a portion of the per-kWh payment. The customer would receive the payment as a check from their utility (monthly for United Illuminating and quarterly for Eversource), in exchange for offering their roof to the developer.
Simply put, the Buy All Tariff is a way to ensure that a solar installation will generate a certain amount of income for its owner, as long as the panels keep working for 20 years (which in almost all cases shouldn’t be a problem).
Other additions within the RES program
In addition to the tariffs described above, the RES program has a few other new rules.
First, each tariff comes with an additional per-kWh payment for low and middle income (LMI) households. To qualify, a household must be under 60% of the state median income (which is $75,052.20 for a family of four in early 2022). This adder is worth an additional $0.025/kWh in 2022.
A second additional per-kWh payment comes for people who live in state-identified “Distressed Municipalities”. Solar installations in these neighborhoods qualify for an additional payment of $0.0125/kW in 2022. A person does not need to qualify for the LMI adder to receive the Distressed Municipalities adder, and vice-versa.
Another new rule in the RES program is the ability to oversize a solar system, based on expected future changes in electricity consumption. A solar system may now be sized according to the historical needs of the home, plus enough solar to meet the needs of up to two electric vehicles AND enough solar to accommodate a “fuel switch” for major appliances (for example, replacing an oil furnace with an air source heat pump).
How Connecticut residents can take advantage of the Residential Renewable Energy Solutions Program
First, find local Connecticut solar installers and do some shopping around by getting multiple quotes for a solar system installation. Make sure to discuss the RES program with the sales representatives and talk about whether you’re eligible for the LMI and Distressed Municipalities adders.
Also ask about other incentives like the federal solar tax credit and the Energy Storage Solutions program.
PURA has done a great job designing a program that keeps the financial and societal benefits of solar available to all Connecticut residents. If you’re ready to embark on the journey of adding solar panels to your home, living in Connecticut makes it pretty easy!
Thi Deremer
Solar Policy Analyst and Researcher
Ben Zientara is a writer, researcher, and solar policy analyst who has written about the residential solar industry, the electric grid, and state utility policy since 2013.