Changes to Ontarios Net Metering Regulation to Support Community-Based Energy Systems

27.10.20 09:32 AM

On October 8, 2020, the Ministry of Energy, Development and Mines posted a proposal detailing planned amendments to Ontario’s Net Metering Regulation to allow for “demonstration of community net-metering projects.” The proposal summary states that community net metering “would support the development of innovative projects such as net-zero communities using distributed energy resources.”

Proposal summary

We are proposing amendments to Ontario’s net metering regulation that allow for demonstration of community net metering projects. Building on the current net metering framework, community net metering would support the development of innovative projects such as net-zero communities using distributed energy resources. 

Proposal details

Net metering is a billing arrangement between an electricity utility and a customer, such as a home owner or business. Under a net metering arrangement, the customer generates electricity from a renewable source for their own use while still drawing electricity from the grid when needed. Net-metered generators are eligible for credits on their electricity bills for renewable electricity generation they send to the grid. Credits are valued at the same rate customers are charged for their electricity drawn from the grid.

The Ministry of Energy, Northern Development and Mines is seeking input on a proposal for community net metering demonstration projects. Community net metering refers to a net metering arrangement that allows for the transfer or sharing of credits from generation facilities within a community across multiple metered accounts. Enabling community net metering demonstration projects would provide customers and developers more options to participate in net metering initiatives that may help lower the community’s costs and meet sustainability goals.

Embedded renewable generation would be a key feature of the net-metered community, generating power for local use and sending generation exceeding the community’s needs to the grid in exchange for credits that are applied to energy consumed from the grid. Electricity bill credits would be shared among participating accounts, and the community would draw power from the grid when there is insufficient local generation.

The proposed community net metering model would be prescribed in regulation and include the following requirements:

  • Electricity utilities enter into a net metering arrangement with the customer leading the community net metering demonstration project;
  • The customer who leads the community net metering demonstration project can use more than one meter to manage generation and loads within the community, and generation credits are transferrable between these meter billing accounts;
  • Behind the meter renewable generation, and potentially energy storage, are part of the community electrical system serving customers within the community;
  • Billing of sub-metered customers within the community is in accordance with Ontario’s Energy Consumer Protection Act, 2010, the Unit Sub-Metering Code, and any other applicable codes and rules;
  • Limited participation in the demonstration (e.g., total number of projects; capacity limits for individual projects and/or all projects);
  • Reporting requirements to measure performance;
  • Net metering agreements that describe the roles, responsibilities, and obligations between the utility and lead community net metering customer; and
  • Compliance with all applicable electricity codes and rules in Ontario.

The community net metering model would align with Ontario’s broader electricity policy objectives, including: rate fairness for all customers; consumer protection for sub-metered customers; mitigation of local impacts by ensuring generation matches the community’s power needs; ensuring meaningful opportunities exist for Indigenous participation and economic development in Ontario’s energy sector and, enabling new business opportunities.  Ontario is interested in hearing from Indigenous peoples and communities about how this model could be applied for communities and is seeking feedback on interest in this demonstration or future related opportunities.

The proposed regulatory changes, if approved, would provide an opportunity to test how net metering could provide a framework for integrating generation and other distributed energy resources, such as energy storage, in a local community setting. The Ministry is seeking input on the proposed community net metering requirements, including flexibility that may be needed to encourage innovation in integration of distributed energy technologies and applications.

The Ministry intends to monitor and evaluate the performance of the demonstration projects to inform future policy development. Enabling these demonstration projects will also  and would inform the Ministry and the sector about how larger net metering projects could provide capacity relief to the grid, or potentially avoid costly upgrades by integrating distributed energy resources. Results from this initiative could guide potential future enhancements to the net metering framework.

To support specific program design elements, and overall administration of community net metering demonstration projects, additional regulatory changes may be required.

Analysis of Regulatory Impact:

The proposed model would aim to remove regulatory barriers to enable business opportunities and spur innovation in the sector. Demonstration projects could test the potential for innovative energy solutions to provide benefits to customers and address grid issues (e.g., reduce demand in a local distribution company service territory). 

Electricity utilities administering community net metering demonstration projects may incur costs associated with billing and settlement of participating customers and from meeting potential reporting requirements.

As part of its evaluation process and monitoring of community net metering demonstration projects, the Ministry would assess cost to electricity utilities and broader system impacts resulting from implementation of the proposed regulatory changes. These findings would improve knowledge and understanding of regulatory challenges for net metering at a community level to inform future policy development.

The Ministry is interested in input on any potential benefits, impacts, and costs to electricity utilities and other stakeholders related to the proposed regulatory changes and community net metering demonstration projects.