Behind-the-meter solar: What you need to know

Synapse woman at desk

It's well known that the behind-the-meter (BTM) solar on your rooftop can reduce the demand for grid-scale electricity: every megawatt-hour (MWh) produced from BTM solar is one fewer MWh that needs to come from the grid (often from a dirty coal or natural gas power plant). However, the "price effect" of BTM solar is less known. When BTM solar lowers the amount of electricity that expensive power plants need to produce, it also reduces the price that all utilities pay. This means that BTM solar can both avoid the creation of dirty electricity and lower the price that everyone in a region ultimately pays for electricity. As a result, when you install BTM solar, it benefits you and your neighbors.

Just how much does your solar panel system benefit your neighbors? Between 2014 and 2019, BTM solar produced more than 8.6 million MWh of electricity in the six New England states. Using hourly BTM solar data published by ISO New England, the nonprofit regional electric grid operator Synapse Energy Economics estimated what demand and prices for electricity would have been without this resource. Between 2014 and 2019, BTM solar reduced wholesale energy market costs in New England by $1.1 billion (see Figure 1 below).

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Figure 1. Energy benefits from BTM solar.

Graph showing the annual energy benefits from local solar

To calculate solar savings, we need to know (a) how much electricity was produced from BTM solar each hour and (b) how the electricity market's hourly prices and loads would have changed if not for this BTM solar. This methodology involves analyzing over 52,500 hourly data points, but we can break it down into four simple steps:

  1. First, we assembled hourly, electricity price, and demand data for 2014 through 2019. We created over 300 predictive equations which approximate the relationship between prices and electricity demand during each week of the analysis period. We multiplied prices by the need for each hour to calculate total hourly energy costs.

  2. Second, we assembled hourly BTM solar data from ISO New England and added it to each hourly electricity demand data point. This "but-for" hypothetical describes what demand would have been if not for BTM solar.

  3. Third, we used predictive equations to estimate the hourly prices in this "but-for" case. As in the first step, we multiplied the newly calculated prices by the "but-for" demand to calculate hourly energy costs.

  4. Finally, we subtracted the total costs calculated in step one from the "but for" costs calculated in step three to estimate the energy benefits of BTM solar.

Figure 2 below shows the theory behind these steps and one example predictive equation.

Figure 2. Predictive equation theory (A) and example (B).

The calculated energy benefits can be split into "load effects" and "price effects." Load effects refer to the benefits of reducing the amount of electricity purchased. "Price effects" are due to the impact of reduced demand on the market-clearing price of electricity. Over the six years analyzed, load effects provide about $317 million in benefits (30 percent of the total), while price effects provide about $743 million in benefits (70 percent). Price effects—a category of solar benefits often ignored in solar cost-benefit analysis—comprise most of the benefits.

It's important to note that these benefits are not evenly distributed across New England. Some states have greater electricity demand than others. Other states have more BTM solar than the rest. For example, in 2019, 1.1 million MWh of electricity was produced from BTM solar in Massachusetts, while BTM solar installations in Rhode Island produced 51 thousand MWh of electricity (note that in all six states, some electricity is also produced from other kinds of solar). Figure 3 below shows how benefits are allocated across the six states—states with larger quantities of BTM solar and more significant amounts of electricity demand accrue more benefits.

Figure 3. Total energy savings from BTM solar accrued in each state from 2014 through 2019.

Our analysis suggests that traditional approaches to analyzing BTM solar may substantially undercount the price benefits of this resource. Although we focused on the 2014–2019 period in New England, price benefits can be analyzed for any period and region as long as data is available. These real-world benefits lead to reduced electricity bills for consumers, regardless of whether they own a BTM solar system.

BTM solar provides other benefits as well. More BTM solar means fewer harmful emissions of sulfur dioxide, nitrogen dioxide, and particulate matter, which can lead to adverse health impacts such as asthma, heart attacks, and early death. More BTM solar also avoids climate-damaging emissions of carbon dioxide. Over the six years in our analysis, we estimate that BTM solar avoided 4.6 million metric tons of carbon dioxide in New England, equal to the emissions from 1 million cars driving for a year.

If you want to know how your rooftop solar benefits you and your neighbors (and everyone in your state, for that matter), you'll want to examine much more than the amount of energy your system produces.

Community solar is a great way to support clean energy jobs in your area. Community solar allows you to subscribe to local solar projects and receive credits on your electricity bill. If you reside in Maine, Massachusetts, Rhode Island, New Hampshire, Maine, or Vermont, you can visit our marketplace to find solar farms near you.

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