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Net-metering participation is increasing sharply

The number of residential and commercial investors who are producing clean energy by means of photovoltaic technologies is growing sharply year after year favored from utilities’ net-metering programs, as depicts the graph below. You can find further figures on the US Energy information blog.

graph of Number of net-metered customers, as described in the article text

Source: U.S. Energy Information Administration, Electric Power Annual

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Categories: business, renewables, solar Tags: ,

Some California’s PV figures

California is one of the most promising markets for photovoltaics’ investors due to its sunny days and large feed-in tariffs. In order to understand how it works, Naïm Darghouth, Galen Barbose and Ryan Wiser from the Ernest Orlando Lawrence Berkeley National Laboratory wrote an interesting analysis about the “Impact of rate design and net metering on the bill savings from distributed PV for residential customers in California” (full paper here).

Net metering allows customers to reduce their electric bill by offsetting their consumption with PV generation, independently of the timing of generation and consumption. The two larger utilities, Pacific Gas and Electric and Southern California Edison, bill the energy consumption by means of two different tariffs, an inclining block rate with five usage tiers or a Time-of-use rate (TOU) which includes usage tiers too.

The California’s small renewable generator feed-in tariff program is available to certain solar and other renewable generation projects smaller and provides an alternative to net metering, provides customers with the option to either sell all electricity generated by their system under an MPR-based feed-in tariff, or to use their renewable generator to first meet on-site load and sell only the excess generation to the utility under the feed-in tariff. The Market Price Referement (MPR) is a price established by the California Public Utilities Commission that is updated annually and is intended to represent the long-term market price of electricity.

The MPR is used as a benchmark for assessing the above-market costs of contracts with renewable generators signed by the state’s investor-owned utilities for complying with California’s renewables portfolio standard (RPS). More recently, it has also become the basis for setting the contract price under California’s small renewable generator feed-in tariff program. To establish the MPR price for a specific renewable energy generator or contract, the MPR price is adjusted according to the time-of-delivery (TOD) period within which electricity is produced and the corresponding, utility-specific TOD adjustment factor.

The key points erased from the analysis are which follow:

  1. Bill savings under net metering are significantly greater for high-usage customers than for low-usage customers. This variation is attributable primarily to differences in customer usage level – where bill savings are greatest for high-usage customers who are able to offset consumption in high-priced usage tiers.
  2. Under net metering, the bill savings per kWh produced by the PV system decline with PV system size. This phenomenon is also a consequence of the inclining usage tiers used within the utilities’ residential retail tariffs; as PV generation increases, the customer faces a progressively lower marginal price for its net consumption, and thus receives progressively lower incremental bill savings. The drop in per-kWh bill savings with increasing PV system size is greater for high-usage customers – especially for high-usage PG&E customers.
  3. The utilities’ time-of-use rates become increasingly more attractive for net metered PV customers as the size of the PV system increases. With an increasing PV-to-load ratio, the increased PV generation disproportionately displaces consumption during the summer peak TOU period, causing the TOU rate to become progressively more attractive.
  4. Sub-optimal rate selection by customers generally leads to a reduction in bill savings of less than 10%, but can have a much greater impact for some customers at a low PV-to-load ratio.
  5. The per-kWh value of bill savings generally varies by less than 5% across the range of PV panel orientations considered, while the amount of electricity generated varies by 10-11%. Assuming that PV systems are oriented south-facing at a 25° tilt, In the median case, the west-southwest orientation results in 11% less PV electricity production than the base south-facing orientation, and the flat PV orientation results in 10% less electricity production.
  6. Under existing net metering rules and retail rate options, most customers would exhaust their annual bill savings with a PV system sized to meet less than 100% of their annual load. Under existing net metering rules, customers are able to roll-over any excess bill credits from one month to the next, but at the end of the year, any remaining bill credits are forfeited by the customer. Within our sample, 86% of PG&E customers and 97% of SCE customers would exhaust their bill savings with PV systems sized to meet less than 100% of their annual usage. In the median case, the PG&E customers exhaust their bill savings at a PV-to-load ratio of 93%, and the SCE customers do so at a PV-to-load ratio of 92%.
  7. Bill savings for PV customers would be substantially lower under the MPR-based feed-in tariff than under net metering. Under the full MPR-based feed-in tariff considered in our analysis, the median pre-tax bill savings is approximately $0.12/kWh for the PG&E customers in the sample, and $0.13/kWh for the SCE customers.  Across the PV-to-load ratios examined, this equates to a median reduction in bill savings, relative to net metering, of $0.08-$0.13/kWh (or 40%-54%) for the PG&E customers in the sample, and $0.07- $0.11/kWh (34%-46%) for the SCE.
  8. Bill savings under the MPR-based hourly netting option would be modestly less than under net metering. Under the hourly netting option, in which PV production can offset up to 100% of customer usage within each hour, but any excess hourly production is credited at the applicable MPR rate, customers of both utilities would also generally experience a reduction in bill savings relative to net metering.
  9. Bill savings under the monthly netting option would be effectively indistinguishable from the savings under net metering.
  10. Incorporating avoided T&D costs and reduced line losses into the alternative compensation mechanisms would increase the value of the bill savings, though the bill savings would still likely be less than under net metering.

Many California-based companies can help commercial and residential customers to reduce their electric bill by installing solar panels, offering a wide range of products and solutions including credit facilities for no upfront costs. Soltec America is one of them, you can visit its web and get a personal quote for free.

Soltec-Energies America sample