Originally published on LinkedIn.
Net metering is a compromise accounting method to accurately track
electricity sent back to the grid. It allows utility customers who
generate electricity on-site, usually from a solar PV rooftop system, to
run their meter backward by sending the excess electricity generated
back to the grid, or utility company. In turn, the utility company must
pay the retail rate for the electricity sent back to the grid. This was
done because it is the easiest way for the utilities to accommodate
solar with their old meters and antiquated billing systems.
Simple. Right?
Well, not so simple. The complexity of the issues were completely
oversimplified in a May 17th, op-ed by a utility lawyer in the Wall Street Journal, entitled “The Hole in the Rooftop Solar-Panel Craze.” Another article, in CleanTechnica.com on May 21, 2012 by John Farrell, entitled “Net Metering A Cost to Utilities Or A Benefit?,” depicts more of the cost/benefit of net metering to the utility.
The Wall Street Journal advertorial suggests that if we
continue “net metering,” the power companies will lose so much revenue
that they will need to spike rates. The losers: low-income customers who
cannot afford to get a solar power system. Seriously, what a load of
self-righteous crap.
On the other hand, the CleanTechnica.com article suggested
that net metering was a benefit to utilities. In fact, the real-life
example used in New Mexico revealed that consumer on-site electricity
generation helped the utility “avoid energy costs, line losses, capacity
upgrades, and transmission costs worth over 15 cents per kWh.” In the
end, the utility had a net benefit of 7.8 cents per kWh. This probably
won’t hold true when solar is 5% of the grid.
In looking at the cost/benefit of net metering, it is complicated.
But, we do need to consider the full array of costs and benefits to the
retail customer and the utility. Net metering was really created as a compromise to utility companies
to account for energy sent back to the grid. As I said earlier: a
compromise accounting method. It just assumed that the costs = benefits.
It was never considered a subsidy as the utilities are claiming now.
The reason we have this compromise of net metering is that utilities
have antiquated billing systems. In fact, much of their bill systems are
programmed with Cobol-based software systems and then augmented with
hand tabulations. Cobol systems originated in 1960. No wonder utility lawyers and the Wall Street Journal depict such a simplistic analysis of the cost/benefit analysis.
If the utility lawyers want to start charging solar PV real-time
pricing, they first have to upgrade their clients’ billing systems to
handle the data. At that point, I would be happy to appoint an
independent consultant to account for the full benefits and costs of net
metering — offsetting any lost revenues to the overall system costs
with cost savings on system upgrades and reduced operation costs — we
can then get a more precise assessment of how this net metering nets
out.
The bottom line: once the utilities actually enter the 21st century
for real, I would be happy to move away from net metering. If net
metering truly costs the utility companies more, the solar producers
(and others) should pick up the tab. If net metering is a bonus to the
utility companies, they should pay the renewable energy producers the
real value for their solar electricity. Deal?
Life seems so much easier without the facts.
http://cleantechnica.com/2015/06/01/true-costsbenefits-of-solar-net-metering-will-require-updated-accounting-methods/