Net Metering the Sequel

Boone Guyton

 

 There has been a lot about our electric utility lately mostly in regards to the coal ash spills. I imagine that is enough of an issue that Duke is not wanting to confront the net metering cost and value discussion at the moment.

 They introduced a possible reduction in payouts that I talked about in my last blog Net Metering Fair Pay ( http://bit.ly/1fIVz17 ) . “At the center of the thrust is a desire to change the rules to pay residential solar homeowners wholesale rates of 5-7 cents/kWh, rather than retail rates of 11 cents/kWh. “Why are we paying more? Eventually customers pick up that tab,” said Randy Wheeless, PR manager for Duke Energy “

  We are installing a 4Kw system that will generate about 5,000 KWhours per year for around $15,000 before tax credits.   Assuming the house uses the sun directly for a third of that, 833 kwhours, and sells back the other two thirds, the reduction in income for the system is around $165 per year.   If that was maintained over the life of the system, 25 years, that would be a lost return on investment of  $4125.  So Duke wants to cut my income from my investment on claims that the cost to them is not covered.

The likelihood is that the price paid for electricity will go up from the current 11 cents a Kwh and so the avoided cost of the direct use by the system will actually go up.  That is using the solar production when it is produced will become more valuable and help keep the investment more valuable over its lifetime.

    Lets question the assumption that 11 cents per Kwh is to much to pay roof top solar producers for their generation that goes into the grid (the neighbors).  Duke’s contention is that they should pay wholesale for the power not used at the house that goes onto the grid like they pay all suppliers. That is an oversimplification of what is going on.  Roof top solar generated electricity is already at or close to the point of use. When it goes on the grid it does not have to go far to find a neighbor’s house or business that can use the electrons. There are also avoided costs due to less line loss, reduced demand for new transmission lines (they are already there),  and reduced environmental issues (ie coal ash pond problems, climate change),.There is also greater resilience from distributed generation in storms and stable fuel cost .

  Making a transparent accounting by a non-invested third party is the only way to get a clear picture the appropriate value of net-metered solar electricity that goes to the grid. Minnesota has recently had a similar study done for solar vs Natural gas and concluded that solar was the most cost effective option.   http://bit.ly/1d2w5zP  

Example Results

The economic value, load match, distributed loss savings, and distributed PV values are combined in the required VOS Levelized Calculation Chart. (VOS= value of solar )

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 The above example is not what would result from a study of North Carolina’s Value of Solar but it shows that there is a lot of avoided costs that should be accounted for when setting a price for net metered solar energy. I hope our Utilities commission sees the sunlight.