Beyond Net Metering

In the last two issues of Home Power Magazine there have been constructive critiques of current and pending net metering laws. In HP #63, Jeff Klein’s letter pointed out that most net metering laws were flawed because they did not include wind and hydro sources. Jeff also said that many grid connected PV systems were installed by homeowners who did it for environmental or hobbyist reasons, not economics. HP #64’s Power Politics column makes some of the same points and questions a pending change in California’s net metering law that gives away any net excess power to the utility or provider.

A Second Look

Though it seems galling to give power away to the utility, this is not such a bad deal. Let’s examine the economics. In addition to a zeroing out of net excess energy is a change from a monthly to a yearly accounting period. Monthly summer excess credit can be carried forward. Unless the array is oversized (unlikely), winter months will allow the excess credits to be used up. The customer-generator receives retail value for any monthly excess power produced. The annualization period for net metered PV systems would best be timed to start in the spring. Under the old method, monthly accounting of excess power would only yield avoided cost (wholesale, about 2 cents per kWh) and monthly settlement would, at best, be a couple of dollars. 

It’s Worth More

Should the RE generator get more than retail for clean power? IPP thinks so. In Europe, another approach called rate based incentives has been used, yielding owners of PV generated electricity around 40 cents per kWh. Some of those programs were discussed a couple of years ago in this column. Unfortunately, only one such program exists in this country: in Ashland, Oregon. The politics and energy consciousness of Europe and the United States are different. 

Pimples and All

Should hydro and wind be eligible for net metering treatment? IPP thinks so, yet net metering legislation that includes wind and hydro is often blocked by utility lobbyists. California’s proposed revised version contains important changes annualizing the netting period to improve the economics for the system owner. It can be used as a model in other states and for federal implementation. IPP thanks all members of the RE community for the tremendous amount of work expended to date. 

Where Do We Want To Go?

What does a “whole loaf” look like? Richard Perez’s vision of energy farming oft mentioned in this magazine is what IPP wants to see too: any renewable energy (RE) resource deployed locally. These “farms” (of all sizes) would produce excess energy that could be sold at a fair price in a truly competitive energy market. This is the vision of a fully developed system of distributed generation based on RE. To quote Amory Lovins, this is nothing less than the “withering away of the utility.” 

How Do We Get There?

Net metering is a first step. It establishes grid access for small scale customer-generators. Interconnection standards need to be uniform and fair. These standards must be established by independent agencies. Inspection and compliance certification must be conducted by independent local authorities. Equipment manufacturers must build safe equipment with proper protection features built in. System designers and installers must be qualified and understand the basics of electrical safety and trade practices. 

Let’s Get Weird

Imagine this twisted scenario of a hypothetical highway system. The road builders write the rules for using the road. Only large trucks belonging to approved companies are allowed to use the roadways. No cars or motorcycles are allowed. The road builders and maintenance crews also patrol and write tickets and remove “offending” vehicles from the road. The road builders collect huge amounts of money from the beneficiaries (users) of the road and spend it lobbying and advertising that this is the best and safest structure for all. The public buys it lock, stock, and barrel and if challenged, says, “You can’t buck the road builders.”

The highway system is, in fact, not like this. Safety, access, rule enforcement, building, and maintenance are all handled by independent entities for the benefit of the public. The highway system serves a common carrier function. The transportation system is open to all. Shouldn’t the distribution of electric energy be just as open? IPP thinks so. The public benefits of open commerce in energy will be just as important as they are for goods, services, information, and entertainment.

Buyers Wanted

Equally important is the development of a market for “green energy.” Consumers must be educated (sold) about the value of RE. James Udall’s article in HP #64 does a great job discussing the question of value versus cost. When people perceive value, they will pay for it. The low price for commodity or bulk power is a fiction based on hidden externalities. Part of marketing green power will be to expose those hidden externalities while demonstrating the value of RE.

Nuts and Bolts of Selling Power

How would RE farmers sell their excess power? In the past, the cost of meter reading, maintaining accounts, bookkeeping, and check writing have been impediments to small energy producers (to say nothing of miserable “avoided cost” pricing). In the near future, a natural alliance between RE farmers and green marketers will develop. It is reasonable to assume that RE farmers will want to purchase power when they need it from other renewable sources. The marketers will act as brokers. The key here is that the transaction costs must be low. The use of the Internet and electronic metering will keep those costs very low. Expect electronic meters to become cheap. Each meter will be programmed with the equivalent of a Personal Identification Number (PIN). The marketer handling an account can pole the PIN on a real time basis. Consumption and production can easily be accounted for on a real time basis. The RE farmer could shift loads to favorable times while making excess power available for sale at times of peak rate. Buy low, sell high! Price signals are available in real time too, and the whole process could be handled by almost any personal computer. Renewable energy has now gone beyond net metering. 

Will We Get There?

IPP thinks so. It will take both technological change (lower costs, etc.) and political change (maybe consciousness is a better term). Phasing out the burning of carbon will also happen. Carbon is much more valuable as a building material than as a fuel. Are we still arguing about climate change? Remember the Carboniferous Age? Is that the Pacific Ocean coming in your window?

Californians Strike Back

Californians Against Utility Taxes (CUT) have completed the final stages of a petition drive to place an “anti-nuke bailout” initiative on the next ballot. Among the goals is an attempt to reverse the $28 billion nuclear bailout that is contained in the state’s restructuring law. This “largest corporate welfare package in California history” will cost every California family $2,000. Hopefully Californians will join the citizens of Massachusetts in their success at getting an initiative on the ballot.

Interconnection Standards

The IEEE Working Group developing P929 (Recommended Practice for Utility Interface of
Photovoltaic [PV] Systems) was to meet in late April and hopefully reach a consensus. The remaining issue is what a “non-islanding inverter” must do (or not do). If that can be determined, then there is general agreement among the members that the “visible physical disconnect” presently mandated by many utilities would not be required.

Slow Learners or Just Don’t Care

Pacific Gas and Electric Company based in San Francisco, California, would rather spend money on advertising than get their act together. In May of 1996, The San Jose Mercury newspaper did an extensive series of articles detailing how PG&E had cut tree trimming and other preventive maintenance budgets while simultaneously giving big bonuses to top execs. The series was prompted by a high number of power outages throughout northern California. The PUC attributed the outages to poor maintenance. During the summer of 1997, a number of fires were attributed to a lack of tree trimming. In one case, a fire near the town of Rough and Ready was determined to be due to criminal negligence on the part of PG&E. In the April 10 San Francisco Chronicle appears an item titled, GUILT BY ASSOCIATION: “Pacific Gas and Electric Co. will be fined for letting an affiliate use its name and logo in ads without clearly telling readers the company wasn’t the familiar PG&E, the state Public Utilities Commission said yesterday. The PUC said PG&E Energy Services, an unregulated energy provider and affiliate of the utility, broke the rules by writing illegible disclaimers—in small type, running vertically up the side of an ad, and in colors that did not stand out from the rest of the ad— in several newspaper ads.” This is a blatant abuse of market power by the utility. Even if they completely market power by the utility. Even if they completely an abuse of market power since the ownership remains with the parent company. Remember, the parent company is receiving a massive bailout from the rate-taxpayers. These phony “competitive” affiliates shouldn’t fool anyone. So, watch out, they will be knocking on your door offering “green” energy and services.