|
What
happens when a home wind system produces more energy than the home needs ?
In most states Small Power Producers (the official federal government [FERC]
name for home power generators) operate through a double metering system that
allows utilities to sell power to the homeowner at retail rates and purchase power from the
homeowner at a lower "avoided cost." This arrangement conforms to
PURPA 210 (the governing federal legislation), but has two major
drawbacks. First, avoided costs are very difficult to determine and buy-back rates often
seem to be discriminatory. A number of rural electric cooperatives in Kansas, for example,
charge retail rates from $0.12 - $0.19/kWh (some of the highest rates in the country) and
yet have a buy-back rate of only $0.013/kWh, or as little as 7% of the retail price.
Most Public Utility Commissions allow utilities to use average avoided costs instead of the incremental costs
referenced in the FERC implementation rules and few provide any accounting for capacity
avoidance, line losses and other related savings. There is a definite dampening of the
market when customers feel cheated on the buy-back rate.
The second problem with double metering is that for the utilities, it results in
significant administrative costs associated with the manual processing of a few special
accounts. It may cost a utility $10-20 to read a second meter and process a monthly check
to an SPP, even if the payment is only a few cents. An owner of two 1 kW wind turbines in
Oklahoma City, for example, has a collection (he doesn't cash them) of over sixty checks
from Oklahoma Gas & Electric in amounts ranging from $0.02 - $0.37.
What is net metering?
“Net-metering” is a simplified method of metering the energy consumed
and produced at a home or business that has its own renewable energy generator,
such as a small wind turbine. Under
net metering excess electricity produced by the wind turbine will spin the
existing home or business electricity meter backwards, effectively banking the
electricity until it is needed by the customer.
This provides the customer with full retail value for all the electricity
produced. Without net metering the
excess production is sold to the utility at a much lower price.
Under existing federal law (PURPA, Section 210) utility customers can use the
electricity they generate with a wind turbine to supply their own lights and
appliances, offsetting electricity they would otherwise have to purchase from
the utility at the retail price. But
if the customer produces any excess electricity (beyond what is needed to meet
the customer’s own needs), the utility purchases that excess electricity at
the wholesale or ‘avoided cost’ price, which is much lower than the retail
price. The excess energy is metered
using an additional meter that must be installed at the customer’s expense.
Net metering simplifies this arrangement by allowing the customer to use
any excess electricity to offset electricity used at other times during the
billing period. In other words, the
customer is billed only for the net energy consumed during the billing period.
Why
is net metering important?
There
are three reasons net metering is important.
First, because wind energy is an intermittent resource, customers may not
be using power as it is being generated, and net metering allows them to receive
full value for the electricity they produce without installing expensive battery
storage systems. This is important
because it directly affects the economics and pay-back period for the
investment. Second, net-metering
reduces the installation costs for the customer by eliminating the need for a
second energy meter. Third, net
metering provides a simple, inexpensive, and easily-administered mechanism for
encouraging the use of small-scale wind energy systems, which provide important
local, national, and global benefits to the environment and the economy.
What
are the benefits and costs of net metering?
Net
metering provides a variety of benefits for both utilities and consumers.
Utilities benefit by avoiding the administrative and accounting costs of
metering and purchasing the small amounts of excess electricity produced by
small-scale wind energy facilities. Consumers
benefit by getting greater value for some of the electricity they generate and
by being able to interconnect with the utility using their existing meter.
The
only cost associated with net metering is indirect: the customer is buying less electricity from the utility,
which means the utility is collecting less revenue from the customer.
That’s because any excess electricity that would have been sold to the
utility at the wholesale or ‘avoided cost’ price is instead being used to
offset electricity the customer would have purchased at the retail price.
In most cases, the revenue loss is comparable to having the customer
reducing electricity use by investing in energy efficiency measures, such as
compact fluorescent lighting, efficient heating and cooling equipment, or other
highly-efficient appliances.
The
bill savings for the customer (and corresponding revenue loss to the utility)
will depend on a variety of factors, particularly the difference between the
‘avoided cost’ and retail prices and the amount of excess electricity
produced. In general, however, the
difference will be between $10-40 a month for a 10 kilowatt residential
wind energy system.
Moreover,
any utility revenue losses associated with net metering are at least partially
offset by administrative and accounting savings, which are not included in the
above figures. These savings can
exceed $25 a month because, absent net metering, utilities have to separately
process the accounts of customers with wind turbines and issue the monthly
checks. In practice, these checks
can be for as little as 5 cents.
Can
I really use my existing meter to take advantage of net metering?
The
standard kilowatt-hour meter used for most residential and small commercial
customers accurately registers the flow of electricity in either direction.
This means the ‘netting’ process associated with net metering happens
automatically — the meter spins forward (in the normal direction) when the
customer needs more electricity than is being produced, and spins backward when
the customer is producing more electricity than is needed in the home or
building. The meter registers the
net amount of energy produced or consumed during the billing period.
What
is the current status of net metering?
Currently,
28 states require at least some utilities to offer net metering for small wind
systems, although the requirements vary from state to state.
Most state net metering rules were enacted by state utility regulators,
and these rules apply only to utilities whose rates and services are regulated
at the state level. In recent years
many states have enacted net metering laws legislatively, including California,
Connecticut, Massachusetts, Montana, Nevada, New Hampshire, New Jersey, Oregon,
Vermont, Virginia, and Washington. In
most of the states with net metering statutes, all utilities are required to
offer net metering for small wind systems. For detailed and up-to-date
information on specific state net metering policies, please use the following
references:
Bergey
Windpower Co., 2200 Industrial Blvd., Norman, OK 73069 USA T: 405-364-4212, F:
405-364-2078 BWC was formed in 1977 and has been manufacturing small wind turbines
since 1980. BWC wind turbines have been installed in all 50 states and approximately
90
countries. |
