First Rules Set for Solar + Storage in Rhode Island

By TIM FAULKNER/ecoRI News staff

WARWICK, R.I. — The Rhode Island Public Utilities Commission (PUC) has approved regulations for solar arrays with battery-storage systems, but solar and battery titan Tesla Inc. already wants to amend the new rules.

The 3-0 decision on Nov. 28 allows for the installation of so-called “solar arrays + storage” systems under four conditions. First, the rules only address solar arrays with 25 kilowatts of capacity or less, which the industry considers small arrays. By comparison, a 9-kilowatt solar system covers the energy needs of the average New England home.

The rules only apply to solar arrays that connect to the power grid using a net-metering billing process. All solar systems must connect to the grid in order to sell electricity to a utility company. Selling power to the grid ultimately repays the cost of the array to the owner, be it a leasing company or the property owner.

However, there is one major drawback to grid connection: when the power goes out, so does the electricity from solar panels. Battery storage, though, keeps the lights on. And because of a spike in power outages, consumers have been asking solar installers about battery backup.

"The economics are still in favor of a (fossil fuel-powered) generator, but solar + storage presents a quieter, cleaner, fuel free and hopefully more environmentally friendly option,” said Eric Beecher, founder of Providence-based Sol Power.

Most solar + storage systems exceed the cost of a portable gas generator, adding between $8,400 and $12,000 after tax credits to the price of a residential solar array. But prices are expected to drop drastically as Tesla and other battery manufactures build massive factories to increase the supply of cheaper and more powerful storage units.

Tesla is making a big push into the commercial battery market, as large energy consumers like manufactures embrace solar + storage for cutting energy expenses. National solar installers such as Sunrun Inc. are marketing Tesla’s batteries to the residential solar sector. Some states, such as Hawaii, are establishing rules for solar + storage. Both Tesla and Sunrun petitioned the PUC to amend the net-metering rules, after National Grid, the state’s primary utility, expressed apprehension about the new solar systems.

Rhode Island modeled its new rules on regulations passed by Massachusetts in September. The utility commissions in both states plan to write comprehensive guidelines to include large renewable-energy systems and other pricing incentives, such as Rhode Island’s popular RE Growth Program.

In addition to the 25-kilowatt cap, the PUC’s recent ruling has other conditions meant to address National Grid’s concern that solar owners will take advantage of electricity pricing. The utility worries that solar + storage owners might “game the system” by charging batteries from the grid when rates are low and reselling that electricity to the grid when rates are higher.

“We want to be sure we are paying the right price for (the electricity),” said Tim Roughan, director of regulatory strategy for National Grid.

To prevent such abuse, the PUC included a provision that only allows storage batteries to be charged by the sun. The rules also restrict solar customers from subscribing to “time-of-use” (TOU) pricing. TOU assesses rates based on demand and strain on the power grid and power plants, thus allowing ratepayers to save money by timing their electricity use.

Rhode Island, however, doesn't offer TOU pricing and therefore gaming the system, known as pricing arbitrage, is impossible. And without TOU pricing, the restriction inhibits a fourth rule that prevents solar + storage from sending stored electricity back to the grid.

On Nov. 30, Tesla filed a request with the PUC to rescind the final rule and allow stored power to be returned to the grid so that customers, presumably larger commercial users, can manage their energy supply and demand while receiving compensation for excess electricity. The concept is a key premise of net metering and without TOU pricing “an actual constraint on discharge would be meaningless, where today’s rates preclude price arbitraging,” according to Tesla.

National Grid, however, noted that arbitrage is still possible if a ratepayer buys electricity from a third-party vendor. Roughan said there no mechanism to police that type of arbitrage abuse. “Who's going to bear those costs?” he asked.

The PUC has yet to reposed to Tesla’s request and has 10 days to decide what action to take.

Tesla, based in Palo Alto, Calif., didn't respond to a request for comment.