• Alison Brown

NEM 2.0 – The 1 MW Threshold

Project Summary

Recently we designed a solar photovoltaic project on a building with two electric meters. Each meter has its own electric bill and is connected to a separate SCE transformer. Since our client wanted to offset the loads of both meters, we designed and built a project with two points of interconnection. On one meter we installed a net energy metered 750 kW system, which we will refer to as “MSB1.” The other meter had a larger load, so we installed a net energy metered 1.250 MW photovoltaic system, “MSB2.”

Before July 1, 2017, SCE’s tariff prohibited the net energy metering of projects greater than 1 MW, but under the new Net Energy Metering 2.0 tariff (NEM 2.0), these larger projects are now allowed. The Grid Interconnection Group is responsible for the review, which includes a different set of technical requirements. Identical in all aspects except for project size, MSB1 and MSB2 became a perfect case study to compare the interconnection process for projects greater than and less than 1 MW under SCE’s Rule 21 NEM 2.0.

MSB1: Less than 1 MW Interconnection Process

The interconnection application process for the MSB1 was straightforward and predictable, especially because the project did not fail any screens that would require Supplemental Engineering Review (a more thorough engineering study of the grid). SCE’s online documentation clearly defined the process, and even the interconnection agreement matched the samples on SCE’s website. MSB1 was completed and operational on schedule.

MSB2: Greater than 1 MW Interconnection Process

The application process for MSB2 was less straightforward. We anticipated some of this based on our review of SCE’s published NEM Handbook. For instance, we expected additional costs related to telemetry requirements, so we proactively inquired with the assigned engineers about the design criteria. Upon completion of the Supplemental Engineering Review, we were notified that all projects greater than 1MW require the installation of a remotely operable switch that can disconnect the generator from the grid. Since NEM 1.0 did not allow projects greater than 1 MW, the requirement for this switch had not been included in the Handbook, so we could not identify the requirement at the outset of the project. Compounding the issue, SCE’s Interconnections Group only works on projects greater than 1 MW, so they had not been trained to mention this distinction either. The combination of these two factors meant that, despite our questions up front about the potential for interconnection upgrades, the requirement for the switch still came as a surprise.

SCE gave us three configurations for the 3-way switch shown in Figures 2 through 4. The first option, shown in Figure 2, required the addition of a 12 kV remote-operating switch between the utility transformer and the grid. This was the cheapest option, but it allows SCE to disconnect the host facility (and the solar) in the event of any grid abnormality. At other facilities, this would be an intolerable condition for operation, but this particular facility was well equipped to tolerate additional outages given existing back-up generation.

The second option required the addition of another transformer, a 12 kV switchgear, and Primary Metering. This was a more expensive option than what we ultimately selected, but the remote switch would only disconnect the solar project and would not impact the building’s operation.

The third option, shown in Figure 4, also required the addition of a 12 kV Switchgear and a new transformer, but there would be two meters. Billing would be Totalized Metering NEM, and the facility could operate even if the switch were engaged.


As we worked our way through the MSB2 interconnection process, we noted drastically different costs and schedules compared to those for MSB1. Of course, unanticipated utility requirements result in added cost and delays on a project, so we have summarized the differences between MSB1 and MSB2 below and in Appendix 2.

Schedule: Since MSB2 had more than 1 MW of solar, it was automatically funneled into Supplementary Engineering Review, which triggered the requirement for a 3-way gas switch. As shown in the example in Figure 4, this requirement added 61 weeks to the best-case project’s timeline.

Cost: Designing and installing a Medium Voltage Switch is not cheap, so the new 3-way gas switch added approximately $150,000 to the project costs (inclusive of the equipment, construction labor, engineering, and utility fees).

Contracts: Since SCE was building new “Interconnection Facilities,” the host customer needed to sign an Interconnection Facilities Financing and Ownership Agreement (“IFFOA”). This agreement defines how the host customer and utility share risks, costs, and ownership for the lifetime of the new equipment. Unlike the Generating Facilities Interconnection Agreement (“GFIA”), this contract is not available on PowerClerk early in the process, so legal review can only begin late in the project.

Outages: Unless an entirely new, parallel service is built (adding another $100,000 to project cost), this new switch would disconnect the host building as well as the solar system. Our project happened to have existing on-site backup generators and a Kirk-Key tie between the two services, which minimized the impact of extended outages. However, on a typical site lacking this infrastructure redundancy, we would have been forced to build a parallel service and aggregate the solar and site metering – a far more expensive proposal. Many customers cannot risk the additional outages at their facility and would have had to absorb these costs or cancel the solar installation.

Figure 5. Process flow for NEM Projects


The added requirement of the disconnector switch on projects exceeding 1MW created some inevitable complications. The one issue that can be prevented in the future is our lack of foreknowledge of this constraining requirement. SCE has been very open to discussing lessons learned and are currently updating their documentation to clearly define this switch as a requirement for the installation of a 1 MW project. While awaiting these documentation updates, the SCE Advisors have implemented a new policy of explaining this requirement at the beginning of new projects.

In short, installing a project that is larger than 1 MW AC has significant impacts to the project cost, schedule, risk, and contracts. With this summary, Project Managers can more carefully identify the cost impact and risks for increasing a generating facility size above 1 MW in capacity.

© 2019 by Flux Energy Systems.

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