Connecticut homeowners have taken a liking to solar energy. Due to favorable policies and strong incentives over the past few years, a large number of residents have had solar panels installed to save on their electric bills and carbon footprint. A major incentive has been 1-to-1 net metering, which allowed solar users to receive full credit on any electricity they sent back to the grid.
What Is Net Metering?
To be able to interpret the changes, it is worthwhile to first know what net metering is. Net metering is a billing system that enables the homeowner with solar panels to have credits when their systems generate more electricity than they consume. In case your solar panels produce more energy than you consume, the excess energy is fed back to the electric grid. With the conventional 1-to-1 net metering, your utility would compensate you at the full retail price per kilowatt-hour (kWh) of electricity that you feed in.
Why Is Connecticut Changing the Policy?
Connecticut is not the only state to move toward changing 1-to-1 net metering. The current net metering model, as with the original one, is unsustainable according to utilities and state regulators as more people adopt solar.
Among the concerns is that conventional net metering can cause cost shifting. When solar customers are credited with full retail value of their energy they pay less in the use of grid. They still however use the grid when the sun is not providing energy such as during the night or when there is no sunshine. According to utilities, this imposes a higher financial burden on non-solar customers who are required to bear the cost of grid maintenance.
Connecticut has chosen to move to a new billing system that is more sustainable in the long-term and fairer.
What Replaces 1-to-1 Net Metering in 2025?
Connecticut has a new program in 2022, the Residential Renewable Energy Solutions (RRES) program. This program spelled the demise of the conventional net metering. Under the RRES scheme, the customers who install solar after 2022 will have to select between two new forms of compensation: the Netting Tariff or the Buy-All Tariff. By 2025 the program will be the standard of all new residential solar systems in the state.
The Netting Tariff
This option is somewhat like normal net metering, but with some differences. With the Netting Tariff, you still get credit on the excess energy that you export to the grid but it is now in monetary form rather than in kilowatt-hours. The credit is computed at the retail rate less some fees and it can only be applied to the supply part of your bill.
The other significant change is that the credit is not expired on an annual basis. Rather, it rolls over, to provide homeowners greater flexibility in using their credits over time. But the unused credit cannot be redeemed at the end of the year as it was the case with the old system.
The Buy-All Tariff
The Buy-All Tariff allows customers to sell all of their solar energy to the utility at a fixed price over a 20-year period. They do not utilize any of the solar energy in their houses. Rather, they still purchase all their electricity at the standard retail price, still through the utility.
This option is less intuitive but attractive to those that want predictable payments over time. This is particularly prevalent in third party owned systems, e.g. leases or power purchase agreements (PPAs) whereby the homeowner does not own the solar system.
What Happens to People Already on 1-to-1 Net Metering?
In case you installed your solar panels prior to the policy change, you have a lucky streak. Connecticut is grandfathering the customers who already have net metering under the initial 1-to-1 model until December 31, 2039. This implies that your existing arrangement and compensation package will not be changed in the next few years.
But when you make drastic modifications in your system, such as scaling it up, then you may be obliged to switch to the new program. Therefore, you should consult your installer or utility prior to making changes.
How Does This Affect New Solar Customers?
In the future, the new policies will have a direct effect on the value of solar to homeowners who are looking to purchase solar in 2025 and beyond. Although the financial payback will not be as great as it was with full net metering, solar remains a good investment, particularly as utility rates continue to increase.
The decision between the Netting tariff and the Buy-All tariff will depend on your personal objectives, how you intend to fund your system and the amount of electricity your home usually consumes. Each option has its own pros and cons.
Pros of the Netting Tariff:
- Allows you to use your solar energy directly.
- Excess generation earns credits at near-retail rates.
- Credits roll over indefinitely.
Pros of the Buy-All Tariff:
- Predictable compensation for 20 years.
- Simpler billing process.
- Attractive for third-party-owned systems.
Special Incentives for Low-Income Households
The new policies have increased the financial incentives to low- and moderate-income (LMI) households in Connecticut. These incentives are in form of per kWh bonuses over the normal compensation rates. Residents of the identified distressed municipalities can also receive additional adders.
These bonus payments assist in enhancing solar access and affordability to the families that need it most. You may save even more under the new system provided you qualify on the basis of your income or location.
Potential Policy Challenges in 2025
Although the RRES program is now the formal solar compensation system, some proposed state legislation in 2025 has been of concern. A single bill that would help to decrease the total utility cost contains a language that would further depreciate the net metering by removing credits on delivery charges. This would in effect reduce the total amount of credit solar customers get and make solar less economical.
Energy activists fear that such changes may stall the use of solar energy, particularly among low-income earners. There is a lot of work to be done by policymakers to balance affordability, equity, and climate goals.
