Net metering
I was on another site and heard something. Now I dont know if it is true but I got to thinking.
What I heard is that in Michigan the utilities want the net metering customers to be charged full rate for all the electricity used and then be given a credit of 4 cents per KWH for what you produced. In effect you dont get to use what you produce but share it with the grid and are paid 4 cents per kwh, Then you have to buy all your electricity at the standard rate.
My question is has there been any studies to determine the value to the grid of having net metering customers and the cost to the grid for monitoring etc.
I would think that in the summer you would be dropping oeak demand while also supplying to the grid during times of peak demand. It would save the utilities from having to purchase electricity and using expensive to run equipment.
What are the true costs and benefits to the grid and how should the savings be divided up.
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Replies
Robert,
Many such studies have been conducted. Here is a link to a GBA article on the topic:
Maine Completes Value of Solar Study.
Robert,
Here is a link to the GBA article on the situation in Wisconsin -- the utility discussed in the article also supplies power to some customers in Michigan:
Wisconsin Utility Seeks New Fee for Renewables
I will accept the 13.8 cents that the utility benefits from and should be used as part of the process of setting net metering rates. The 19 cent portion shouldnt be paid to the net metering customer.
The other part of the equation is what should the customer pay for the grid being their battery so to speak.
Robert,
I think you have accurately stated what the utilities in Michigan want. A political process is underway to decide what they get. The state legislature is considering a bill that would set the rules for net metering and for many other things. In considering this bill, the legislators will consider studies like the ones cited by Martin along with a number of other factors. Some of those other factors will be publicly debated as the legislature deliberates. I am personally dubious whether the current legislators in the majority in Lansing will weigh the value of solar studies as heavily as most GBA readers would.
In almost all cases in the 48 contiguous states the value of distributed solar provided to the other ratepayers exceeds the residential retail rates, by any number of conservatively determined metrics. In Minnesota they have a legislated statewide methodology for determining that value, and when a new installation goes in the utilities have the option to either compensate at the value of solar tariff (VOST) or to net meter. As the penetration of distributed PV gets ever deeper the value to other ratepayers goes down, and will eventually become lower than standard retail rates. So far none of the MN utilities have opted to to pay the VOST, but many are considering it, since it's grandfathered in for 20 (or 25?) years, and if the residential retail rates are expected to increase over time, net-metering may end up being more costly to the utility than the VOST.
In WI and MI there is no legitimate rationale for NOT net metering at current PV levels, and the moves by the utilities & their regulators appear to be geared toward preserving the revenue streams of the utility companies, not protecting ratepayers from a cross-subsidies. If they were serious about cross subsidy issues related to the grid costs, residential ratepayers would all be paying demand charges based on the peak 15 minutes or half-hour of energy use every month, since it's the peak draws that determine the size, cost and aging of grid infrastructure. A house with a 2 ton modulating air conditioner and a heat pump water heater currently pays the same grid-costs as a house using the same total energy but has a 6 ton single stage AC and an 25 kw electric tankless hot water heater, even though the infrastructure required to support the latter is roughly an order of magnitude larger.
The value of solar varies by both location (even within a local grid) and over time as more distributed resourced get installed, and as loads shift. Under New York's ongoing regulatory reform utilities are now allowed to compensate distributed resources differently based on geographical/topographical location on the local grid. This is saving Con-Edison ratepayers about a billion USD on just the Brooklyn/Queens substation rebuild alone, since the most stressed feeders can be relieved more quickly & cheaply by distributed PV than by simply upgrading the grid capacity.
When more than 25% of all homes have PV there will be a clear case for assessing grid-use charges for distributed PV owners, but there needs to be a fair, transparent and equitable method for determining the true costs, not the crude protectionist kinds of moves that many utilities & states are digging in on this year. First Energy in Ohio is a prima facie case of outright protectionism, resorting to outright lies in their PR campaigns, and fighting tooth & nail against efficiency measures an demand-response programs, while at the same time pushing the regulators to allow them capacity payments even for some of their non-profitable barely used generation facilities that they would have to otherwise write off. Rather than a cross subsidy between ratepayers, they're demanding all ratepayers to subsidize their SHAREHOLDERS!
see:
http://www.utilitydive.com/news/ohio-puc-chair-rebukes-utilities-stop-trying-to-scare-ohioans/404288/
and...
https://www.greentechmedia.com/articles/read/as-utilities-embrace-change-firstenergys-strategy-is-resistance-and-protect
As Martin referred to, Maine recently published a value of solar study that is relevant to their local & regional grid demonstrating a value of 33 cents/kwh for distributed solar:
http://www.nrcm.org/news/nrcm-news-releases/maine-puc-solar-power-study/
Minnesota's current VOST is more like 14-15 cents/kwh under the legislated statewide methodology:
http://ilsr.org/wp-content/uploads/2014/04/MN-Value-of-Solar-from-ILSR.pdf
Austin Texas (which was first out the door with a VOST compensation method) was running something around 10-11 cents/kwh, last time I looked, still higher than the local residential retail.
The MI Public Services Commission did some preliminary VOST studies last year without making specific recommendations:
http://efile.mpsc.state.mi.us/efile/docs/17302/0106.pdf ( I haven't read that report- it's your PSC, not mine. YOU read it ! :-) )
See also: http://www.utilitydive.com/news/michigan-senate-bill-would-erode-the-value-of-net-metering-for-solar-owners/403524/
I haven't read Senate Bill 438 either, but you might want to wade into the minutae:
http://legislature.mi.gov/documents/2015-2016/billintroduced/Senate/htm/2015-SIB-0438.htm
The value and cost of distributed PV are in your neighborhood will vary, but it's highly unlikely that a 5-10kw system installed anywhere in MI right now would be taking more value from the other ratepayers than net metered retail without demand charges or additional fixed charges for covering the grid costs. Utilities like the cross-subsidy argument for the "divide & rule" aspects, but it's complete BS. If they really cared about cross subsidies demand charges and other fees would have long since been built into residential rate structures, and energy sippers would be rewarded for not taking it in big gulps during peak hours.