What is Virtual Net Metering (VNM)?
Virtual net metering
Is a communal bill crediting system. It implies an arrangement where customers can avail credits by subscribing to communal projects even if the solar generator is not on their own property.
Net energy metering has traditionally been used to support solar for qualifying ‘homeowners’ only. It was considered restrictive in nature as it did not cover two types of audiences, the 1) Renters and 2) A section of homeowners who did not qualify to have solar installed on their roof or who preferred not to have their own personal panels.
For Solar contractors hence, a significant chunk of solar market remained inaccessible under the scheme. In this context, VNM is a better crediting arrangement that embraces more customers, not just those with solar panels on their roofs, to take advantage of cheap solar energy. An example of VNM would be a group of tenants receiving such credits for an apartment building solar PV project.
How VNM works?
In Virtual net metering the credit compensation structure is similar as in the Net energy metering https://sinovoltaics.com/learning-center/basics/net-metering-how-to-sell-you-solar-power-to-the-grid/ (NEM): utilities pay customers for the solar energy that their generator feeds in to the electric grid, customers only pay for the net amount of energy they consume and they are given credit for the energy they sell to the utility.
This credit is then used to offset the cost of any power that the customer draws from the grid. The net energy metered is the difference between what customers contribute and what they consume. However, the credits generated in VNM get distributed among ‘multiple’ customers (as opposed to net metering method where one customer avails all credits) and in proportion to a specific customer’s contribution towards the shared solar installation. To see how it works: https://news.energysage.com/virtual-net-metering-what-is-it-how-does-it-work/
Advantages of Virtual net Metering
- Shared system on a centrally cost optimized site: Because the energy is shared between many people, the installation costs are shared among them as well. This results in a smaller installation cost per person; also there is need for only one meter that transacts electricity back and forth to the grid.
- More options for financing like crowd funding: Unlike in traditional net metering, the financing can be procured through a mechanism called crowd funding as well where large number of beneficiaries can pay small amounts each to contribute towards the installation of a common solar generator.
- A great option for ‘renters’, not just homeowners: More and more renters can be a part of communal solar systems where they can share a common meter with other tenants within the same property or premises. For example, in California’s Multifamily Affordable Solar Housing (MASH) Program rated at 20.5 megawatts, 323 projects have been interconnected that serve 6,371 housing tenant units.
- Economies of scale: VNM project sizes are huge which results in overall cost minimization, associated with installation and project maintenance. According to a study by the Lawrence Berkeley National Laboratory, installed cost of solar dropped over 30 percent when moving from a 2-kilowatt system to a 10-kilowatt system.
- Expedited project development: In this arrangement, some of the red tape associated with interconnection application and review process is reduced both for utilities and customers.