Senate Bill 295, now Act 278, was signed into law March 13, 2023 by Gov. Sanders to amend the Arkansas Renewable Energy Development Act of 2001 and Act 464 of 2019. This will greatly impact the state’s solar net metering customers and how much they can benefit from excess energy generated from their solar arrays. These changes will take effect in late 2024. Though the premise of the bill is to “ensure fairness to all ratepayers”, the utility companies will be benefiting as solar net metering customers will be credited only avoided costs for their excess energy generation versus the current retail rate. It works out to approximately two-thirds loss in the rate of compensation for Arkansas solar net metering customers.
Changes at a Glance:
1: Net metering rates will change from a 1:1 kWh for kWh to a two-way billing structure.
2: Existing systems and new projects that are installed and commissioned before September 30th, 2024 will be grandfathered in at the current rate structure of 1:1 with rollover until June 1st of 2040. New system installations or upgrades must be completed and a Standard Net Metering Agreement submitted to the utility before the cutoff date.
3: New net metering facilities installed after September 30, 2024 will be subjected to a new rate structure. Any excess energy that is fed back into the grid will only be worth a fraction of what it is today.
4: 100% offset of one's annual usage will not be obtainable after September 30th, 2024.
5: After September 30, 2024, excess solar energy derived from one generation meter and being applied to other meters under the same account (known as meter aggregation) will be limited to a 100 mile radius of the generation meter, and credited at a lower wholesale rate.
The original Arkansas Renewable Energy Development Act of 2001 was designed to help increase the deployment of grid-tie solar projects in the state and create new jobs, which it successfully accomplished. Unfortunately, changes have been made that will temporarily impact the progress of the booming solar industry in the state, costing jobs and slowing the future deployment of new solar projects.
One of the biggest changes to the policy is changing from a 1:1 credit to a two-way billing structure, affecting the amount credited by the utilities for excess solar fed back into the grid. With these new rules set to take place late next year, we find it imperative that anyone interested in going solar or looking to expand upon their existing grid-tie solar array, know that it would be to their advantage to complete any installation before the cut-off date for grandfathering in, September 30, 2024. One-hundred percent offset and meter aggregation are only possible with the current net metering rules.
What Are The Current Net Metering Rules?
Think of the utility grid acting as a large battery bank with endless capacity. For example, excess solar energy produced in the fall can be banked by the utilities to offset usage in the winter during low light conditions. Under the current net metering policies, a person or business is credited for any excess energy delivered to the grid at an equal rate as to what is delivered by the utilities, known as a 1 to 1 ratio. These credits are applied at the end of each billing cycle, and any excess credits that are unused are rolled over to the next billing cycle. This net metering mechanism, storing any excess solar production for later use, effectively allows businesses and homeowners to offset 100% of their energy usage throughout the entire year, paying only a monthly fee for grid maintenance.
What Is The Grandfathering Clause to 2040?
After September 30, 2024, the amount of credit that will be applied to any excess energy not absorbed directly in the home or business will only be credited at a discounted wholesale amount, or an avoided cost rate set by the utilities. This may be roughly 3-5 cents but is yet to be determined.
Systems installed and commissioned before the cut-off date of September 30th, 2024 will be grandfathered in until June 1st, 2040 at the current rate structure of 1 to 1 with excess credits to rollover month to month. This short grace period of 15 months will allow time for anyone interested in solar to take advantage of the current rate structure of a 1:1 credit with rollover and aggregation until 2040, locking in any current or future projects and ensuring that these investments are protected.
What Is Meter Aggregation And How Does It Benefit Homes and Businesses?
Meter aggregation is a useful billing tool for a home or business owner to offset multiple utility accounts. Businesses with multiple meter accounts in Arkansas, under the same name and utility service, can locate a solar array at one ‘generation’ meter allowing any excess credits from that singular meter to be aggregated to other non-solar accounts. In other words, a solar array miles away can offset a home or business that does not have a single solar panel located on the premises.
Under the new rules the meters to be offset will have a locked in 100 mile maximum radius from the generation meter and all excess credits will be subject to the new net metering standards of the two-way billing structure rather than the current 1 to 1 ratio.
If you are interested in taking advantage of the current net metering policies before they come to a close in the state of Arkansas, please be sure to give allowable time, well before the cut-off date, for the process of the install and commissioning work to be done. The install will need to be completed and the Standard Interconnection Agreement with the utility submitted, before September 30th, 2024. Anything completed by this date will be considered grandfathered in at the current rate structure, terms, and conditions in effect before December 31, 2022, until June 1st, 2040.
For more information below is a link to Act 278:
It is New Farm Solar’s goal to work diligently to provide each and every customer with a system design focused on the highest potential solar benefits a home or business has to offer. With over 40 years of combined experience installing solar, and with in-depth understanding of the workings of both grid-tie and off-grid solar energy, we strive to present our customers with every option available to them so that they can make an educated choice moving forward in their home or businesses solar installation.