A growing number of homes and other buildings connected to the grid are using solar panels, without the hassles or expenses of a bank of batteries in the basement or a backup generator in a shed. Photo by Jodie van de Wetering.
A bill that would make it easier for more people to generate their own electricity received overwhelming approval in the Vermont House of Representatives Tuesday.
Net metering allows residential electric customers to generate their own power using small-scale renewable energy systems. Any excess power that customers produce goes back to their utilities, essentially running their electric meters backwards. Customers then get a credit on their electric bill.
The bill allows a simple 10-day registration process for systems with capacities up to 10 kilowatts. Last year, that process was only available for systems half that size. Typical home solar systems are around 7 kilowatts. This bill also clarifies how utilities should calculate the extra six cents per kilowatt hour that people with solar net metering systems receive for the excess energy they produce.
Rep. Margaret Cheney, D-Norwich, who is vice chair of the House Committee on Natural Resources and Energy, said the bill will help clarify the benefits of net metering and simplify the process for slightly larger systems. It will also promote more renewable energy generation, she said.
“It is having real results,” Cheney said. “More small renewable energy systems are going up as a result of net metering laws.”
Vermont has allowed net metering since 1998, when it passed the first law allowing the practice.
The current law also addresses a controversy over net metering that has persisted over the years. It requires the Department of Public Service to issue a report analyzing whether and to what extent net metering systems are subsidized by other retail electric customers. The report is due Jan. 15, 2013.
Utilities and some ratepayers have raised concerns that customers with net metering systems are being subsidized by other customers.
Eric Werner, general manager of Hardwick Electric Department, said the small utilities in particular have concerns with net metering and the costs that are shifted to standard ratepayers.
The issue, Werner said, is when net metered customers provide power back to the grid because they produce more than they use, they receive retail rates for it. For example, a retail rate for electricity could be 18 cents per kilowatt-hour, but the utility pays 10 cents. The gap between retail and what the utility pays the generators of large-scale electricity is what pays for things like infrastructure upgrades and running the utility. Net metered customers, Werner said, can then use the grid but not contribute to the costs to maintain it.
“A lot of the issue is that net metered customers are getting an advantage, and costs are shifted to other customers,” Werner said.
Another issue, Werner said, is that installing things like solar systems generally requires a few thousand dollars, so the people who are getting the advantage generally have more money. For smaller utilities in particular, he said, net metering requires a large amount of time for staff to calculate the billing for customers with these renewable energy systems.
Cheney said the counter-argument to the subsidy argument is that all the small distributive generation provides a benefit to the entire state by alleviating utilities from having to make more capital investments. She said the study required in the new bill will hopefully put the debate to rest.
“If there does turn out to be a cost to ratepayers, we’ll do something about it,” Cheney said.
The bill still needs to go through a third reading and pass through the Senate.
Correction: This story originally stated that this year’s net metering bill will give people with solar net metering systems six cents more per kilowatt hour of excess solar energy. It will actually clarify how utilities calculate that extra six cents.
Electric bills of households and businesses show two charges; one is for energy and the other is for distribution systems.
Because solar system owners benefit from the distribution system and any modifications made to accommodate their energy fed into the grid, they should not be exempt from any distribution charge.
Therefore, the basis to which the six cents is added should be the energy charge, not the total retail price.
Also the quantity of energy fed into the grid should be capped at a fixed kWh per year per system to minimize adverse rate impacts on households and businesses without solar systems.
Mr. Werner makes an excellent point. Net metering makes good sense, but subsidies to the ‘net meterers’ from the majority of ratepayers don’t.
This is a symptom of the larger problem the Legislature created by prescribing excessive prices (Feed-in Tariffs)that utilities must may for larger scale wind and solar, driving up the Vermont’s energy costs for all customers.
Prices two or three times higher for solar and wind than electricity available from other sources creates similar subsidies and drives up the costs for all other consumers.
Represenative Cheney’s counter argument to the subsidy argument, I believe is not correct, as an utility still has to purchase enough energy to be able to provide power to those customers who have enough money to purchase solar powered units. Those people are attached to the utility, and will depend on the utility for power when their unit is shut down for repair, not enough sun light during winter months and night time periods throughout the year. I agree with Mr. Werner.
Folks that posted here on the issue of net metering are correct. There is a fundamental doctrine in ratemaking that “cost causer pays”. The discipline is to assess to the greatest degree possible what groups of customers are driving what portion of the utility’s overall cost and having those costs recovered from them.
The utility does have to maintain a distribution system for everyone and sufficient power supply to serve even net metering customers because those systems (solar and wind usually) are generating electricity a fraction of the time. Also, utilities pay the wholesale price for power, say 4 or 5 cents per kwhr these days, so when they pay the full retail rate to the net metering customers they are paying a hefty premium that has to be picked up by all,the other customers. Not exactly fair. This is further exacerbated by the issue of who can afford these small systems, no offense but mostly wealthy folks.
For these sort of equity reasons and because of traditional ratemaking based on cost causer pays, I was not supportive of net metering. To put things in perspective in the first 10 years of net metering in VT the cumulative output tallied about one megawatt in comparison to the state’s approx peak demand of 1,100 MW. So with a redoubled effort we could get to say,,, 2 MW? Still the tiniest fraction of our collective need. Not the best value for consumers’ resources.
David,
Thank you for your more-nuanced explanation for having a more rational energy approach to “energy cost fairness”
Rep. Cheney’s measure is just another example of a few legislators making feel-good energy decisions, without doing an economic energy-cost-fairness analysis as to who pays and who benefits.
Households with solar systems typically are in the top 5% income wise. Why subsidize them even more?
Would not the money be better spent on energy efficiency which, according to Efficiency Vermont reduces energy consumption at a cost of about 2.5c/kWh
If Vermonters would have to endure more of such lawmaking, their standard of living will soon be lowered even more.
Net Metering is one of the most successful state renewable energy policies and the Vermont legislature deserves credit for the positive changes they have made in this program in recent years. There are many benefits provided by small scale net metered renewable systems including solar and wind. First small scale distributed systems are the cleanest form of energy with little or no environmental impact. Because net metered systems are located close to load in addition to providing clean energy they also help to reduce the need for new distribution and transmission systems. Additionally because the individual customer directly finances a good chunk of the costs of purchase and installation it takes some of the cost and risk for financing long-term power supply away from the utility and other customers. Given that the individual customer is in control of this energy purchase there is a great opportunity to make sure that your investment in clean energy also has a positive impact on the American economy by choosing to purchase solar equipment manufactured in the US and hiring a local company to design and install your system. While David O’Brien is correct that it accounts for a small part of our energy supply today, that just suggests that there is a significant opportunity for growth for this low impact clean source of local energy production. Should we instead burn a lot of polluting coal just because it accounts for about half of US energy production today? Supporting net metered renewable energy is good public policy and will result in growth in our cleanest and most local form of energy.
Rep. Cheney,
VT PSB docket 7880 aims to RAISE the SPEED program solar feed-in tariff from 24 to 27 c/kWh.
This is an unwarranted additional subsidy for the top 5% of households that have solar systems, because since the 24c/kWh was set, panel prices have decreased.
It is incredible to me that such proposals even get started, considering the poor state of Vermont’s economy, the deficits in the budgets of households, businesses, and government, and the lack of high-paying/good-benefits job creation.
Are bureaucrats, with steady, nearly risk-free incomes, on auto-pilot? There is a Great Recession out there!
The priority should be to invest in measures that make Vermont’s economy more efficient in all areas, including energy efficiency.
Investing more in PV solar is exactly the opposite, i.e., investing in measures that make Vermont’s economy less efficient.
Mr. Post, the SPEED program is completely decoupled from the net metering program so why assert that the top 5% of households would get the benefits? The programs are not even the same.
Your assertions about the solar industry creating no new jobs, efficiency Vermont being completely ineffective and the top 5% taking advantage of the net metering program completely belies my own experience. I am working in Vermont’s solar industry, taking advantage of net metering with my own solar system and also utilizing efficiency vermont incentives to insulate my 150 year old home and I am most certainly not in the top 5% of households in vermont.
Mr. Post, I’m anything but top 5% but I did put my money where my mouth is 3.5 years ago and put a solar array in my back yard. It is also a net-metering array. Until about 4 months ago I was feeding the 20% of my 120% that is made to the grid for NOTHING, I never asked for anything but the laws evolve and now I get credits for the extra 20%. How is that not fair. I can’t use the credits for food or any other thing except if I somehow don’t make enough electricity (then I use the credits)?
Because I feel strongly that we need to get away from coal, oil, and nuclear energy I made the choice to go solar. I have zero regrets. I put the array in the back yard because the roof doesn’t face true south. Sense they are on steel poles they are adjustable and I move them four times a year for max efficiency. Here in Vermont they are more efficient in winter from cold and reflection off the snow.
This morning we had about 2inches of snow, it easily slid off when I reached up with my (homemade) long handled squeegee.
I’m NOT rich, and am on Social Security. Please don’t make generalizations about we who put solar arrays as being top 5%.
Mike,
Rep. Cheney’s pet project is renewable energy. Her committee proposed a 55c monthly tax on the bills of households and businesses to provide funds for the Clean Energy Development Fund, CEDF, a slush fund for renewables vendors, to replace the $6 million/yr Vermont Yankee was forced to pay.
Do you think the 55c would have remained the same? Did the Efficiency Vermont charge on electric bills stay the same? It is now 5% of my electric bill.
Raising the solar system limit from 5 kW to 10 kW will mean more energy will be sold to utilities at about 20 c/kWh (most of these larger solar systems are owned by the top 5% of households), whereas the utility could have bought that energy from the grid at 5.5 c/kWh.
Utilities typically play nice to the state to get rate increases. As the state’s leaders have aligned their interests/electability with the state’s subsidized- renewables oligarchy, the utilities are playing nice accommodating renewables energy and the state awards them big rate increases to pass the costs unto rate payers; variable, intermittent, high-cost, somewhat-CO2-free energy, not 24/7/365.
I’m sorry Mr. Post but your argument makes little sense to me. You seem to have no problem subsidizing coal, oil, or nuclear, but you have a big problem with a subsidy a fraction of those for renewable energy sources. I’m confounded.
Do you have some interest in (financially) coal, oil, or nuclear energy? Or do you not care about the environment?
Maybe you do not care about future generations?
My best regards to you. I wish you good fortune.
A couple of technical points about utility costs:
Those big transformers you see at substations do 90% of their aging during 5% of their service life. They are generally slightly undersized for their peak loads and heat up during the day. They spend a few hours operating at high temperature and then cool down off-peak/overnight. Every solar array downstream of the substation helps to knock the top off the peak load, especially on hot, sunny summer days. This saves utilities money on replacement and maintenance costs.
Also, solar arrays produce most of their power during the hot summer months when spot market prices on the New England ISO often go far higher than $0.27/kWh. I think the record is $1.25/kWh, but it is often in the $0.30-$0.60 range when all the air conditioning in Boston metro is running. Solar power is a good deal then.
Why do you think GMP instituted an adder of $0.06 on its net metering program *without* state intervention? Crazy like a fox. Somebody there must have run the numbers and realized it was a net gain for GMP.
Having fire insurance on your house is more expensive than not having it. Having a car with seat belts and air bags and a crumple zone is more expensive than one without. But if you know that your house is going to burn down, if you know that you are going to run into a brick wall, you’d be insane not to pay extra for the protection. Non-renewable energy is non-renewable; we know we’ll have less and less as time goes on. If we wait for renewable energy to be competitive in the present distorted market, then we’ll be suffering for decades as we make the inevitable transition. Best to be on the right side of this sucker bet.
Hilton,
During my engineering career, I was often involved with the sizing of such substations. Regarding the transformer, the cost savings will be near zero, because summer peak demands may occur WITHOUT there being any significant solar energy, i.e., during very dark, cloudy weather events on hot summer afternoons.
My experience has been that no electrical engineer would choose a transformer rating without taking this in account.
Regarding summer electric rates, I advise you check with the ISO-NE site. The rates are significantly less than you mention AND they occur only a few hours of the year. Here is an article describing it all for your information.
http://theenergycollective.com/willem-post/50167/impact-pv-solar-peak-electric-demands
It is very likely GMP has its 6 c/kWh solar energy bonus for PV system owners (who tend to be wealthier than average) as a PR gimmick.
GMP is allowed to add the extra costs of the expensive, variable, intermittent solar energy to the rate base so households and businesses without solar systems get to pay more for energy; i.e., the program is at no financial cost to GMP, but GMP gets PR benefits for appearing “green”.
Also GMP is likely playing along with the state’s renewable energy programs to curry favor with the state to obtain speedier approvals and regulations relief for its environmentally-damaging, infrasound/low-frequency-noise emitting, Lowell Mountain type wind turbine facilities with 459-ft high turbines, with 373-ft diameter rotors; the complaints will come in as soon as they start up.
Mr. Post, what again does Lowell have to do with net metering? Also, why would GMP have any PR incentive in offering 6cents on the kwhr? Is that so their already captive audience of customers might buy more power? I am unconvinced by your argument.
Solar offsets peaker plants in the summer which are run at considerably more than “contracted rates”. One can argue what that rate is since it depends on the hour of the day, and distribution location. Essentially, I don’t think you can argue that only 5.5cents of a customer’s bill goes to the actual energy provided.
That would be the lowest possible rate if peakers were never operated. Since ISO-NE projects a much larger share of its’ generation being derived from gas fired turbines in the coming years, I would think that anything we could do to protect ourselves from gas price volatility would be considered to be the “conservative” approach.
Fortunately, our elected legislature has the foresight to recognize that fossil fuel prices are destined to increase and an investment in solar now, is an investment in price stability for the future.
Seth,
In the real world, utilities contract for almost all of their energy at a price. They RARELY buy from the grid at grid prices. If they do, it usually is in small quantities.
Because there are ample generating units and low-cost gas, average grid prices have been near 5.5 c/kWh for several years.
The gas price volatility issue is mute, as there are many suppliers with many wells in competition with each other.
Electric rates do go up in summer and usually in February- March when many plants perform their annual maintenance. Those increases consist of spikes in the 10-16 c/kWh range, according to ISO-NE. Only if a utility is short on energy will it buy from the gird at those prices.
GMP offering an extra 6 c/kWh is strictly a gimmick, because GMP also has contracts at which it buys almost all of its energy and the small quantity of solar energy bought is a mere blip in the overall picture.
Peaking plants have higher heat rates, but their energy is only a small percentage of all the energy on the grid during a day and does not significantly influence grid prices.
If a peaking plant has a 50% higher heat rate and its energy on the grid is just 10 percent, then the overall cost impact will be minor, as only that 10 percent will be more expensively produced.
I am aware some solar promotors make some of the same argument you make, but, as shown above, they are of minor import in the real world; they merely serve to “inform” the lay public.
Mr. Post,
I suppose we’ll have to agree to disagree. I see gas price volatility (and fossil fuel prices in general) as a major factor in coming years (as it was in 2008). Yes, shale gas is looking cheap right now, but since everyone is expecting to take advantage of that in their long term energy planning, I don’t expect those prices to stay low forever.
I’ll reiterate that I don’t see how you come to the conclusion that GMP’s 6 cent adder is a gimmick. What would be the point? If you could provide some actual evidence of this, that would be helpful.
Rep. Cheney,
“Cheney said the counter-argument to the subsidy argument is that all the small distributive generation provides a benefit to the entire state by alleviating utilities from having to make more capital investments.”
This statement is incorrect, because there are numerous instances during the year with high demand and almost no wind and almost no sun; as I write this, it is snowing which covers most panels and there is no wind.
Therefore, conventional generators would need to serve nearly 100% of the demand and the transmission and distribution systems would be sized accordingly.
Regarding substation transformer ratings being reduced because of wind and solar energy, that reduction will be near zero, because summer peak demands may occur WITHOUT there being any significant solar energy, i.e., during very dark, cloudy weather events on hot summer afternoons.
My experience has been that no electrical engineer would choose a transformer rating without taking this in account.
I am aware some solar promotors and some legislators make some of the same argument you make, but, as shown above, they are of minor import in the real world; they merely serve to “inform” the lay public , seek favor with certain voters, and to promote pet projects. The impact Vermont will make on global warming/climate change is so miniscule as to be unmeasurable.
Seth,
You wrote you are in the solar business, so it may not be so easy to see that GMP is using the 6c/kWh bonus as a PR gimmick. The quantities of energy involved are miniscule, the PR benefit to GMP is significant.
We differ regarding the stability of gas prices, but the low-cost domestic and Canadian supply of will be plentiful for at least 100 years, according to the US DOE.
Using gas in up to 550 MW, 60%+ efficient, low-capital-cost ($1,500/kW installed), combined-cycle gas turbines, produces about 1/3 the CO2 emissions/kWh of coal and almost no health-damaging particulates.
It is THE way to go forward for utility-scale energy production to replace coal.
Mr. Post, why don’t you tell us a little about your career?
You didn’t respond when I asked why you have no problem with subsidies for the coal, oil,and NUCLEAR industries but you seem to be against any subsidy for renewable energy. Why is that? Do you have some affiliation with coal, oil, or nuclear?
Seth offered that he is in the solar business, and I owned up to having a solar array. By the way we both said we are NOT top 5% income.
I read some of your other posts and I get the feeling you are biased against renewable energy and for nuclear and oil and coal. WHY?
Thanks in advance for your response.
Regards, Mike
Mike,
Go to THE ENERGY COLLECTIVE and you will see my about 22 articles and my bio.
In general, I am against all subsidies.
I would like to see the government get out of the subsidy business, because all it does is make energy more expensive, thereby raising the electric bills of households and businesses, and raising the prices of goods and services more than they would otherwise.
A higher percentage of households in the top 5% own subsidized $20,000-$40,000 solar systems than in the bottom 90%, the two of you are the exceptions to the rule.
As I write this, it is snowing which covers your panels and there is no wind, whereas conventional generators are producing steady energy 24/7/365, regardless of the weather, for my computer and lights, etc.
I am for reliable, 24/7/365 energy and solar and wind energy are not.
What Vermont does with regard to global warming/climate change is so miniscule as to be unmeasurable.
Even if all of the US instantly disappeared, its “CO2 hole” would be filled by other nations in about 5 years, at current rates of CO2 increase.
Mr. Post , thanks for responding. I guess you don’t care about the environment your grandchildren will live in. I do. I put my money where my mouth is and did something to help the situation.
If we do not do something , science tells us that our world will change , and not for the better. I see your point of view but choose to do what I can to set an example to others. Money is not the most important thing when it comes to energy.
My array has saved over 15 tons of CO2 from going into the atmosphere. I like that. My conscience is clear. I hope yours is, too.
Like the old lady who peed in the ocean said , “every little bit helps”.
A couple of points that seem to be lost in all the legislation and environmentalism:
There is no “renewable” energy besides the sun. A wind turbine or photovoltaic panel is not renewable. In fact, the energy and capital that goes in to manufacturing and erecting some of this infrastructure, combined with the hidden costs of reduced power quality, balancing the grid, and the health and environmental impact, far outweigh the returns in many cases. With subsidies, they appear to break even.
Also, as long as people are using 5000 watt clothes dryers and 1500 space heaters, plugging solar into the grid is absolute nonsense. Using PV to generate electricity which is then used for heat is as wasteful as it gets. Both solar and wind generate DC current, which is then converted to AC for the grid. You, or someone else plugs in their appliance or electroic device, which half the time converts that power back to DC. Care to guess how much power is wasted doing all this conversion and transmission, when it could be stored and used on site as DC?
Mike,
I spent about $4,000 extra to build a highly-insulated and sealed house in 1986; used a lot of insulation, spray foam and tape. Today that would be about $10,000, about the price of a 2 kW PV solar system.
During the past 25 years, I have saved at least 500 gallons of fuel oil per year.
Avoided CO2 emissions = 25 yr x 500 gal x 22.384 lb CO2/gal x 1 ton/2,000 lb = 139.9 tons of CO2 emissions avoided in 25 years.
http://www.earthlab.com/carbon-calculator.html
Life of house assumed at 150 years.
Lifecycle cost = $4,000/(150/25 x 139.9) = $4.77/ton of CO2
Lifecycle cost = $10,000/(150/25 x 139.9) = $11.10/ton of CO2
PV solar system production = 2 kW x 1,260 kWh/kW = 2,520 kWh/yr
Life of solar system assumed at 25 years.
CO2 intensity of New England grid =1.1 lb CO2/kWh; per ISO-NE
Avoided CO2 emissions = 25 yr x 2,520 kWh/yr x 1.1 lb CO2/kWh x 1 ton/2,000 lb = 34.65 tons of CO2 emissions avoided in 25 years.
Lifecycle cost = $10,000/34.65 = $288.60/ton of CO2
Conclusion: It is much smarter to spend the same amount of money on energy efficiency than on solar systems.
I care about my pocketbook AND the environment.
“Mr. Post, thanks for responding. I guess you don’t care about the environment your grandchildren will live in. I do.”
I love the way how anyone who doesn’t see things exactly as Mr. Kerin does are bad people.
Mr. Post, I did all that as well and traded my pickup after retiring from farming for a hybrid (42mpg).
Mr. Hudson , I’m making my point that someone has to care and it starts with me I guess.
Regards to both of you.