Virtual Net Energy Metering (VNEM) has been a requirement for many California solar programs including the Low Income Weatherization Program (LIWP), Multifamily Affordable Solar Housing (MASH) and Solar on Multifamily Affordable Housing (SOMAH) which incentivizes a significant portion of tenant solar PhotoVoltaic (PV) system loads in multifamily affordable housing properties. The California Housing Partnership hosted a GREEN Talk on October 17, 2018 with the discussion focused on VNEM tariffs and some challenges that multifamily affordable housing owners may face in accessing it.
The discussion was led by three experienced presenters:
- Nick Dirr, Director of Programs at Association of Energy Affordability (AEA), who implements the LIWP Multifamily program and is a SOMAH Program Administration Team representative.
- Michael Rush, Operations Manager at EAH Housing, who has installed more than 4 MW of solar PV systems using MASH and LIWP.
- Dave Brenner, Community Development Coordinator at Fresno Housing Authority, who has also worked on several PV projects across the portfolio and is currently managing a solar PV project funded by the Electric Power Research Institute (EPRI).
They provided an overview of VNEM and how it works, and also delved into the process, different considerations, tenant implications and best practices for affordable housing owners.
- VNEM has a net generation output meter which keeps track of all the electricity that the PV system generates, of which 100% is sent out to the grid.
- At interconnection, property owners are required to let the utilities with VNEM know the percentage split of the credits and how it’s shared in the building. For example, in a 5-unit property, the property owner may split the credits in the following way: 30% of all the credits for one common area meter, 20% to another common area meter, and 10% to each of the 5 units.
- The utilities are responsible for distributing and allocating the credits on the individual utility bills for those meters. All the credits are virtually allocated by the utilities on the percent allocation basis determined by the property owner.
- The VNEM keeps track of how many electrons come from the grid and how many go back to the grid from the PV system. At the end of the year, there will be a true-up where the utilities look at all the credits. If there are more credits than what is pulled from the grid, then the common area and tenant’s utility bill is wiped out beyond some fixed costs.
Preparation and Considerations:
- There is a lot happening in the green building industry around new electrification, and fuel-switching opportunities. Those are potential new loads available to be offset by solar PV especially while going through a rehab project or to meet Title 24 requirements. But property owners still have to work with the utility to justify having a PV system that generates more than the building’s historical load based on these potential upgrades. Alternatively, some upgrades will downsize the system size.
- Fresno Housing Authority is currently working on a new reconstruction project with EPRI with a large common area load, EVs and 56 units. They are trying to distribute the energy so that there would be revenue streams to pay back the debt on the system. For them, there are a lot of unknowns about how it will function once it becomes a LIHTC project with the investor and all the rules that come with that. It was hard to figure out how distributed energy through a VNEM process works without first figuring out revenue streams. It’s important to get the timelines to work together.
Time Of Use (TOU) Impacts:
TOU has a direct impact on the solar credits received through the VNEM meter. For the PV system, the value of the solar credits is based on the time of day during which electricity is sent to the grid. For customers that are on the TOU rate, when electricity is sent to the grid during off-peak hours, the dollar value of the electricity is relatively lower than it was before TOU. If a solar PV system is facing more west and is producing electricity during the peak hours, those credits that are sent to the grid will be high dollar value credits. However, once the sun sets, customers are going to pay a high cost for electricity when they are unable to get solar credits. Therefore, when property owners look at the cash flow analysis for the solar PV systems, these assumptions for future years must be made regarding the dollar value of the credits.
Tenants face multiple barriers around solar PV and VNEM bill credits. It is essential to educate tenants on what to expect, including:
- Energy saving tips as consumption creeps up due to the reduction in costs of electricity.
- Bill credits are not reflected until a few months after the installation or may be reflected retroactively as the utilities typically take several months to consolidate their in-house operations even after granting the permit to operate the system.
- The time gap between when the solar PV system is installed and when it is turned on.
- Credits get virtually allocated to all tenants even though the solar PV system may not be installed on all tenant’s roofs.
- The basic working of VNEM and true-ups as the information given to residents is usually third-hand knowledge through property management staff who are often not experts in the technology and don’t have sufficient time to manage the process.
- The opt-out process for TOU takes a lot of time and is burdensome for tenants.
Challenges and Best Practices:
VNEM systems are quite different from the traditional direct meter type system. So, there are many more interconnection requirements that the utilities will request compared to a traditional PV system.
Finding the right contact within your utility that can help coordinate with the property owner and the contractor and facilitate the process will be very crucial.
Several programs like SOMAH and LIWP provide robust technical assistance to coordinate between utilities and the property owner or contractor.
Utilities often ask for additional requirements and documentation that is not communicated during the pre-application phase. This stretches out the timeline and adds more workload for the property owners.
Make sure to have an interconnection plan in place and coordinate with your utility even prior to beginning construction to ensure everyone is on the page and there are fewer surprises.
VNEM is still a new process and is evolving even within the utilities. It’s not clear who handles what portion of the VNEM process. In a lot of cases, the utilities want to deal with the contractor rather than a property owner.
Hire a contractor that has experience in VNEM meters. The CSI website keeps statistics of MASH program contractors who have worked on systems that are dedicated to tenant load. The SOMAH program will have a similar contractor database.
There are certain levels of review within the utilities that only happens after property owners provide certain documentation.
Get in touch with your utility as soon as possible and get concurrence with the utility on plans and timelines.
In the case of Fresno Housing Authority, the review process was lengthy. The utility requested several upgrades to their solar sizing and their project contractor put in a counter-proposal which pushed the project back almost 5 months. The utility wasn’t happy with the counter-proposal, triggering a design discussion. It was unclear as to how to reach a common ground.
Be prepared for evolving feedback from your utility which means extended timelines and additional work scope.
The California Housing Partnership convenes the Green Rental home Energy Efficiency Network (GREEN), a network established in 2010 to increase access to energy efficiency, clean energy, and water conservation resources for low-income households living in affordable rental properties in California. To receive notices about upcoming GREEN Talks, please contact Srinidhi Sampath Kumar at firstname.lastname@example.org.