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Solar Net Metering

The most recent development in large-scale solar has been the emergence of merchant-generator solar systems.

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Updated:

July 16, 2026

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These systems, in most cases, are limited to 3 MW in size, compared with grid-scale solar systems, which are usually 20 MW or more.

Over the past 5 years, we have seen a rapid increase in merchant-generator projects since the current legal framework was established in 2021. In 2022, only 38 requests were submitted to the public utility commission; in 2025, it reached a peak of 1026 projects. Though a sizable number of these projects won’t be completed, this still represents a significant solar energy capacity, with requests exceeding 2 GW.

So, what started this new trend of solar development? The initial legal framework was set by the Hommrich Case, which was settled in 2021. This case established that electric distribution companies (EDCs) were required to purchase electricity produced by merchant-generator systems at sized 3 MW or below at retail rates, and overturned EDC requirements on how much, if any, of the electricity produced needed to be used onsite to be allowed.

After these rules were set, a few factors made this a favorable alternative to traditional grid-scale solar development. The guaranteed retail rate for electricity was more lucrative than selling at the wholesale rate or entering into a power purchase agreement with specific organizations seeking to buy energy from solar developers. It is also no coincidence that we first began to see requests for these projects rise in 2023, when PJM, which manages interconnection for grid-scale solar developments, paused accepting new projects for 2 years. Since merchant generators are small enough to connect to the local distribution grid that serves homes and businesses rather than the high-voltage transmission grid managed by PJM, they could be built without going through the queue.

The impact of these developments on land differs in a few ways. With capacity constraints, they also have a size limit, with the largest site taking up about 30 acres at most. Given this size limit, they often work with landowners or farms that may have significantly more land than is needed for the project. This can allow some flexibility in where the project is cited. This can be advantageous to farmers who can possibly steer development to their most marginal land and help stabilize their farm with a consistent revenue stream. Merchant generators connect to the distribution grid, meaning the electrical infrastructure required to connect these smaller arrays has a smaller physical footprint than the high-voltage transmission infrastructure needed to connect grid-scale solar arrays.