Ohio lawmakers introduce new bill to address issues with net metering policy

Blog Post

A new bill introduced into the Ohio Senate addresses some critical issues festering in Ohio regarding its net metering policies.  Senator Dolan is the sponsor of SB 275 and he has been working for almost a year on this distributed generation initiative.

Ohio initially passed net metering in 1999, allowing electric customers to build renewable and other distributed generation on their property to power their home or business while also receiving value for any excess generation that was put back on the local wires (i.e. distribution grid) of the utility.  The program has been modified a number of times, most recently in 2017 when regulations were adapted that allowed projects to be either on the customer’s property or on adjacent property, and also allowed projects to be sized up to 120% of the customer’s annual electric load.  Ohio’s law also allows third party ownership of the energy project.  This structure, also known as a PPA (power purchase agreement), allows customers to access onsite energy without any upfront development costs.  This structure puts the construction and operational risk on the off-taker and investor, and NOT the utility.  If the energy system fails to produce, or the off-taker fails to pay – it is the investor that is at risk and NOT the utility or other rate payers.   

In the 25 years of net metering experience, three critical policy issues have emerged in Ohio. The first issue is the challenge of putting solar on rooftops.  The second, is the growing stress on Ohio’s electric grid with the risk of shortages growing rapidly.  The third critical issue is the need for more resources to address Ohio’s distressed properties like brownfields, landfills, abandoned mine lands, and other unusable areas. 

SB 275 builds on the history and success of Ohio’s net metering program by introducing virtual net metering into Ohio.  This is mechanism already being used in the neighboring states of Pennsylvania and West Virginia.  Virtual net metering addresses the roof issue while also helping to alleviate gird stress and incentivizing investment in distressed properties. 

A key component of SB 275 is to limit virtual net metering to only distressed property. This has the potential of bringing hundreds of millions of private capital into Ohio to redevelop distressed property.  The bill expressly prohibits development of farmland and greenfields.

As previously mentioned, grid stress has emerged as a top public policy issue in Ohio.  Utility scale projects cannot address this issue because of the backlog and time frame for PJM projects.  Distributed generation can begin to meet this need almost immediately.  The bill provides for natural gas-fired generation and battery to be added to virtual net metered renewable projects in order to decrease intermittency and better address grid weakness at any time of the day. 

Lastly, with the introduction of virtual net metering, it will allow the off-taker of the energy project to be located anywhere within the territory of the public utility where the energy project is located.  Also, like Pennsylvania and West Virginia, the bill allows the off-taker to aggregate the meters of the off-taker (meaning a net metering generation system could supply power to a customer that has multiple buildings served by separate meters). 

Proposed SB 275 is fiscally conservative and pro-market competition: it uses the financial structure and energy crediting system in current Ohio law.  It does not introduce any new or enhanced energy credits for energy developers and investors.  It relies foundationally on the mechanisms of current Ohio net metering law and then builds on that foundation to help redevelop distressed property and address coming grid shortages. 

If you have any questions regarding Ohio's energy policies, contact Michael Wise.

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