Solar and Storage Under Successor Tariffs

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1. 02 The mechanism How successor tariffs are built, and the line that decides the battery

   Successor tariffs replace full retail net metering, and they come in a few types. Net billing credits exported solar at the utility's avoided cost, which is what the utility saves by not having to generate or buy that kilowatt-hour itself. Time-of-use netting credits an export based on the hour you sent it. A lot of successor tariffs add minimum bills, which keep you from zeroing out your bill, and fixed solar fees. Some stop unused credits from carrying into the next month, or set leftover credits to zero at the true-up, which is the periodic settlement of your account. Every one of these mechanisms lowers what your exported solar is worth.

   State or proposal	Structure	Export value, low	Export value, high
   North Carolina, Duke Energy proposal	Required time-of-use rate, exports valued at roughly a third of retail	3 ¢/kWh	Single proposed value
   South Carolina, Duke Energy and Dominion Energy	Monthly time-of-use netting plus minimum bills	Depends on the hour exported	Depends on the hour exported
   Kentucky	Monthly credit for excess generation, varies by utility	7 ¢/kWh	9.5 ¢/kWh
   Florida bill, vetoed	Would have valued exports at avoided cost	2 ¢/kWh	4 ¢/kWh
   California proposed decision	Avoided cost calculator export values	5 ¢/kWh	6 ¢/kWh

   Indiana operators should read the state's own successor tariff closely. All 5 utilities of Indiana's investor-owned utilities are replacing net metering with an excess distributed generation policy that credits unused solar output at a significantly reduced rate. Solar advocates have said that policy will make solar uneconomic for most homes and businesses in the state. Not every proposal passes: in Florida, Governor Ron DeSantis vetoed a bill that would have cut export credits to avoided cost.

   One line in the tariff

   The netting period decides whether a battery has a job

   Two operators with the same solar array and the same export credit can get very different value out of a battery, and the difference can come down to one line in the tariff. The netting period is the window over which your utility offsets what you exported against what you bought before it applies the export credit. It can be monthly, hourly, every 15 minutes, or instantaneous.

   Timing counts less

   Monthly netting

   The month's exports and purchases get offset against each other, so the hour you exported may not matter at all. A battery can be left with very little to do.

   Timing counts a lot

   Sub-hourly or instantaneous

   Every moment the array outruns your load counts as an export at the reduced credit. A battery that holds that output for on-site use has real work to do.

   Timing earns more

   Time-of-use netting

   A kilowatt-hour exported in an hour the utility values highly earns more than one exported in a low-value hour. Each utility labels its own hours.

   You find your netting period in your utility's tariff. You can also find it in DSIRE, the Database of State Incentives for Renewables and Efficiency, which is the reference for each state's net metering rules. Monthly netting means the timing of your solar exports matters less. Fifteen-minute or instantaneous netting means timing matters a great deal, and that is where a battery starts to earn its place.

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2. 03 What it does to you What the export gap costs, and when a battery earns its place

   Under a successor tariff, every kilowatt-hour your solar array exports instead of using on site gives up the difference between the export credit and what you would have paid for that power. Take Kentucky as one example. Depending on the utility, the export credit there is set between 7 ¢/kWh and 9.5 ¢/kWh, against an average blended retail rate of 11 ¢/kWh to 12 ¢/kWh. On those blended figures, every exported kilowatt-hour appears to give up somewhere between 1.5 ¢/kWh and 5 ¢/kWh. Your real gap against your own energy charge may be smaller.

   Kentucky export credit against blended retail rate

   Put that gap in dollars. Say your array exports 100,000 kWh/year. At the top of the Kentucky range, a 5 ¢/kWh gap, those exported kilowatt-hours earn you up to 5,000 $/year less than they would have been worth if your building had used them. The larger the share of output you export, the larger that number gets.

   What the export gap costs at the top of the Kentucky range

   100,000 kWh/yearx5 ¢/kWh = 5,000 $/year

   Annual exports multiplied by the export gap gives the value your solar gives away by crossing the meter instead of serving your load.

   Self-consumption

   The first fix: size the array to your own load

   The first fix for the export gap is sizing your solar array for self-consumption. Self-consumption is the share of your solar output your own building uses as it is produced, so it never crosses the meter. An array sized to your own load keeps more of its output worth the energy charge you would otherwise have paid, and it exports less at the reduced credit. A smaller array costs less up front. What it gives up is the export revenue a larger array would have earned, and under a successor tariff, export revenue is exactly the part getting cut. The payback on a self-consumption design depends on how closely your load profile, meaning how much power your building draws hour by hour, lines up with the hours the array produces. Any older sizing math built on a retail-rate credit needs its export side rebuilt.

   Storage

   When a battery earns its place next to solar

   A battery earns its place next to solar when the array exports a large share of its output at a credit well below your retail rate, under a netting period where timing counts. Battery storage, also called an energy storage system, charges from your solar and discharges later. Instead of exporting a kilowatt-hour at the reduced credit, you store it and use it on site, so you avoid buying a kilowatt-hour at the retail rate. Under time-of-use netting, you can also hold it and export it in an hour that pays more. The measure is the export gap multiplied by the kilowatt-hours a battery keeps from being exported each year under your netting period. Energy Toolbase, which tracks these tariffs, cites Hawaii as the well-known example of a state that cut export value hard, and reports that the share of solar projects there that add a battery has climbed dramatically.

   A battery can also earn money a second way, through the two main lines on your bill. Energy is billed per kilowatt-hour, the total you use over the month. Demand is billed per kilowatt, the highest rate of draw the utility records in a set interval, and that line is your demand charge. A battery that discharges during your highest-draw interval can lower that peak, and with it your demand charge. A battery can also earn from grid services programs, the most common being demand response, a utility program that pays you to cut your draw from the grid when the grid is strained.

   1. 1 What the battery costs against your export gap.
   2. 2 How many kilowatt-hours it keeps from export each year under your netting period.
   3. 3 Whether any demand charge or grid services value in the model can actually be verified on your meter. This is the condition most proposals skip.
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3. 04 The trap that costs money The meter, the demand charge and the standby line proposals leave out

   Here is how a solar and battery project loses money after installation. You add a battery to earn demand response payments, and the program cannot credit you, because nothing on your meter proves the battery did the work. The meter you elect at interconnection, which is the utility's approval to connect your system to the grid, decides what your project can earn before any panel goes up.

   Your metering configuration is how the utility meter records what crosses it. The utility meter is the legal and commercial boundary between the utility and your facility, and every dollar your solar or battery saves or earns passes through it. There are 3 configurations, and each one measures the same electricity differently.

   Billing

   Net meter

   Records only the net exchange with the grid. Enough for an array sized conservatively to cut the kilowatt-hour line on your bill.

   Incentives and certificates

   Production meter

   Also called gross metering. Records the total output of your system no matter how much your building uses.

   Batteries and grid services

   Parallel metering

   Also called dual-channel metering. Records generation and load as separate streams so each asset can be verified.

   A standard net meter cannot tell the difference between your battery discharging 500 kW during a demand response event and your building simply using that much less. Grid services programs need that difference verified, so parallel metering is typically necessary if you want a battery to manage your demand charge or earn grid services revenue. If your goal includes incentive payments or renewable energy certificates, most of those programs calculate off total generation. In PJM territory the certificate registry is PJM-GATS, and in New England it is NEPOOL-GIS. For most commercial systems, those registries require a revenue-grade production meter, accurate enough that the registry will issue certificates and pay incentives off its readings. The net meter the utility bills you on does not count as one.

   Two lines most models skip

   The demand charge gap and the standby charge

   The second trap shows up on the power bill after installation: your energy line drops, your demand charge does not, and a standby charge appears that nobody modeled. Net metering and the successor tariffs that replace it credit the energy line. Solar lowers your demand charge only when it is producing during the exact interval the utility uses to set your billing demand. A ratchet clause carries a past peak forward into later bills. A non-coincident peak basis sets demand at your own highest interval whenever it happens. Under either one, well-timed solar may not lower the demand line at all. A standby charge, which some utilities assess against your generation capacity, can apply no matter how much energy the system produced. If your operation runs refrigeration around the clock, give this line extra scrutiny, because refrigeration load can set a peak that a ratchet clause then carries forward.

   What the proposal implies	What your tariff and meter decide
   Solar will cut my demand charge.	Only if the array produces during the interval that sets your billing demand, and a ratchet clause or non-coincident peak basis can block it entirely.
   My net meter will prove what the battery did.	A net meter sees only the net exchange. Demand charge management and grid services typically need parallel metering confirmed in writing.
   The savings model shows every charge.	A standby charge reduces savings regardless of output, and it is the line most vendor models leave out.
   Today's export credit holds for the life of the system.	Only a grandfathering provision protects it, and only for the years that provision actually runs.

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4. 05 Your leverage Grandfathering, the order to work in, and the questions to ask

   A solar proposal that holds today's export credit flat for 20 years assumes the rules can never change. Grandfathering is the provision that decides whether that assumption holds. It lets you keep the compensation rules in effect when you interconnected, for a set number of years, even after the utility adopts a new tariff. The length of that period against your project's payback period tells you how much of your payback is protected.

   States are rewriting solar export rules fast. The NC Clean Energy Technology Center, which tracks state solar policy, counted actions on solar net metering or rate design in 46 states in one year, 286 actions in total. The following year it counted 195 actions across 39 states in a single quarter, which it called a record. According to Energy Toolbase, the common thread across the proposed changes is lower value for exported solar.

   How fast states are rewriting solar export rules

   286actions

   Net metering and rate design actions in one year

   46states

   States that acted that year

   195actions

   Policy actions in a single record quarter

   39states

   States acting in that quarter

   Solar export rules are being rewritten across most of the country at a record pace, and the direction runs toward lower export credits.

   California is the clearest example of a successor tariff that took hold. Its newest rules are a net billing tariff, and the compensation in effect at interconnection can lock in for up to 20 years, but only if the state's grandfathering provision actually covers that duration. You find your own grandfathering period in your state's net metering statute or your utility's tariff.

   Size for self-consumption

   Short or missing grandfathering

   A project sized to export a large share of its output over a 15 years to 20 years life carries a risk of losing the export credit its payback depends on partway through. A standard proposal will not show it.

   Export-heavier design holds up

   Grandfathering covers payback

   When the protected period covers your full payback, an export-heavier design carries less risk of losing its core revenue assumption mid-life.

   Read the tariff, confirm the meter

   The order to work in

   The order to work a solar and storage decision

   1. 1 Ask whether the financial model includes a standby charge line, and whether it shows the calculation basis your utility uses.
   2. 2 Ask whether the interconnection agreement allows a dual configuration, meaning a net meter for billing plus a production meter for incentives, or restricts you to one or the other.
   3. 3 Ask whether your state's tariff has a grandfathering provision, and how many years it runs against the project's payback.
   4. 4 If a battery or grid services program is in the plan, ask whether the configuration has already been confirmed eligible for that program's measurement and verification requirements, or whether the vendor is guessing.

   This week, pull your utility's interconnection agreement and get written confirmation of which metering configurations it permits for your account class and system size. Ask your utility for a standby charge calculation and the tariff language behind it. Look up your state in DSIRE, which lists 6 parameters to check, and read your utility's tariff. Write down the export credit, the energy charge per kilowatt-hour, the netting period, how unused credits roll over and settle at true-up, and the grandfathering period, then compare that period to your payback. DSIRE also shows who owns the renewable energy certificates your system generates, which in some states is the utility, and whether credits can cover more than one meter on the same property. If incentive payments or certificates are part of your goal, ask your regional registry, such as PJM-GATS or NEPOOL-GIS, what production metering standard it requires, and check that against the proposal.

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5. Decision matrix

   When a solar or storage decision is ready to act on

   ✓ Act on it

   • The array is sized to your own load, so its payback rests on avoided energy charges rather than export credits.
   • Your grandfathering period covers the full payback of the project as proposed.
   • Your export credit sits well below your energy charge and your netting period is sub-hourly, instantaneous or time-of-use, which gives a battery work to do.
   • The utility has confirmed in writing that parallel metering is allowed for any demand charge or grid services value in the model.
   • The utility, not the vendor, has calculated the standby charge and it is already in the savings model.

   ✗ Hold or rework the plan

   • The proposal holds today's export credit flat for the life of the system with no grandfathering check.
   • The design exports a large share of output under a tariff with short or missing grandfathering.
   • A battery's value rests on demand charge or grid services savings your meter cannot verify.
   • Your netting period is monthly and your export gap is narrow, leaving a battery very little to do.
   • The model shows demand savings it cannot tie to your billing interval, or no standby charge line at all.
   Questions for your morning huddle

   1. What is our export credit against the energy charge on our tariff, and what netting period does our tariff use?
   2. How many years does our grandfathering period run, and does it cover the payback on this proposal?
   3. Has the utility, and not the vendor, calculated our standby charge, and is it in the model?
   4. For our engineer: does our interconnection agreement permit parallel metering, and can it verify a battery's output for our demand charge or for demand response?
   The one thing to remember

   Under a successor tariff, your solar decision is a tariff and meter decision before it is an equipment decision. Read the tariff and confirm the meter before you size the array.

   This week, write down your export credit, energy charge, netting period and grandfathering term, and get written confirmation from your utility of which metering configurations your interconnection agreement permits.

   The Energy Decision Blueprint

   Know if the numbers actually pencil out before you sign anything.

   A written second opinion on the project in front of you, whether that is a rate change, new equipment, or a renewable installation.

   1. 01A short call, to figure out quickly whether we can actually be helpful. If we can't, we'll say so on the spot.
   2. 02We pull the data, your bills, your rate structure, vendor proposals, project specs.
   3. 03You get the verdict in writing: whether the payback will materialize, and the opportunities or risks nobody has raised.

   Get a Blueprint at blueprint.tac-nrg.com Free for Indiana-based operations spending five figures or more a month on electricity. No obligation. You keep the write-up either way.
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6. Questions operators ask

   what is the difference between net metering and net billing for commercial solar

   Net metering credits every kilowatt-hour your solar array sends to the grid at roughly the retail rate you pay to buy power. Net billing is a successor tariff that credits those exports at the utility's avoided cost, which is what the utility saves by not generating or buying that power itself. Under net billing, a kilowatt-hour you export is worth less than a kilowatt-hour your building uses, so sizing the array to your own load carries more weight.

   should I add a battery to my commercial solar system

   A battery next to commercial solar earns its place when your export credit sits well below your retail energy charge and your netting period is sub-hourly, instantaneous or time-of-use, so timing counts. The battery stores output you would have exported at the reduced credit and uses it on site. If your netting is monthly or the gap is narrow, the battery may have little to do. Any demand charge or demand response value also needs a meter that can verify the battery's output, typically parallel metering confirmed in writing by your utility.

   does solar reduce demand charges on my utility bill

   Solar lowers your demand charge only when it is producing during the exact interval your utility uses to set billing demand. Net metering and successor tariffs credit the energy line, not the demand line. If your tariff has a ratchet clause, which carries a past peak into later bills, or sets demand on a non-coincident peak basis, well-timed solar may not lower the demand charge at all. Check your billing demand method in your tariff before counting demand savings.

   what is a standby charge on commercial solar

   A standby charge is a charge some utilities assess against the generation capacity of your solar system. It can apply no matter how much energy the system actually produced, so it reduces your savings even in a weak production month. It is the line most vendor financial models leave out. Ask your utility, not your vendor, to calculate it and show you the tariff language it comes from, then put it in the model before you buy.

   should I wait for net metering rules to settle before installing solar

   Waiting for solar export rules to settle does not remove the uncertainty. States are rewriting these rules at a record pace, with 195 actions counted across 39 states in a single quarter, and the common thread is lower value for exported solar. A pause can cost you whatever grandfathering window is still open under your current tariff. The lower-risk default is to size the array to your own load so the payback rests less on export credits.

   do I need a production meter for solar incentives or RECs

   Most solar incentive programs calculate payments off total generation, and renewable energy certificates are generated on total production. For most commercial systems, certificate registries such as PJM-GATS or NEPOOL-GIS require a revenue-grade production meter, and the net meter your utility bills you on does not count as one. Confirm in your interconnection agreement that a production meter is permitted alongside the net meter, and ask the registry what metering standard it requires.

   Glossary

   Export credit

   What your utility credits you for each kilowatt-hour your solar array sends onto the grid. Under a successor tariff it sits below the retail rate you pay to buy power.

   Successor tariff

   The rule many states now use in place of net metering. It credits exported solar below the retail rate and can add minimum bills, fixed solar fees and limits on carrying credits forward.

   Net billing

   A type of successor tariff that credits exported solar at the utility's avoided cost, which is well below the retail rate.

   Netting period

   The window over which your utility offsets what you exported against what you bought before it applies the export credit: monthly, hourly, sub-hourly or instantaneous.

   Self-consumption

   The share of your solar output your own building uses as it is produced, so it never crosses the meter and keeps the value of the energy charge you would otherwise have paid.

   Parallel metering

   Also called dual-channel metering. Records generation and load as separate streams, which is typically necessary for a battery to manage demand charges or earn grid services revenue.

   Ratchet clause

   A tariff provision that carries a past demand peak forward into later bills, so well-timed solar may not lower your demand charge.

   Standby charge

   A charge some utilities assess against your generation capacity. It can apply no matter how much energy your solar system produced.

   Grandfathering

   A provision that lets you keep the compensation rules in effect when you interconnected, for a set number of years, even after the utility adopts a new tariff.

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