Should Utilities be allowed to collect money from 'self consumption'

[nwdiver]

I've tried a few poles like this before but I think there's been too much confusion. I'm gonna try to break this down as simple as it gets.

The Definition of 'Self-Consumption' is simple. If your roof is producing 5kW and your AC is on consuming 3kW then you are exporting 2kW and 'Self-Consuming' 3kW. Should utilities be allowed to charge you a fee (any fee) for those 3 kW that you produced and immediately consumed?

If a kWh comes off your roof and goes into your car... should your utility be permitted to charge you for that kWh. A kWh that is NEVER exported. NEVER imported. NEVER 'touches' anything they own. Should utilities be allowed to collect fees from electricity that people generate and immediately consume?

If the argument is that they need to recover lost revenue to keep generation capacity available on the winter when I need it... then charge Solar PV owners $1/kWh in the winter. Just stop collecting revenue for energy produced from equipment you don't own... that never 'touches' any transmission infrastructure you own.

 

[AB4EJ]

How this works depends on how your solar inverter is connected to the grid - on your side of the meter or on the power company's side of the meter. I have a grid tied system like you describe, but my inverter is on "my" side of the power meter - so the electric company does not charge me for (and indeed, has no way of knowing how much) power I generate and use in my house (which includes my EV charging system).

In fact, I think this is how is has to be done, otherwise there is no way to compute how much power is pushed to the grid (that the power company has to pay for). That power has to go through the meter (in reverse direction as compared to consumption).

 

[nwdiver]

How this works depends on how your solar inverter is connected to the grid - on your side of the meter or on the power company's side of the meter. I have a grid tied system like you describe, but my inverter is on "my" side of the power meter - so the electric company does not charge me for (and indeed, has no way of knowing how much) power I generate and use in my house (which includes my EV charging system).

That IS the setup I'm describing. I don't know of any residential Solar setups where the inverter doesn't connect to the main Distribution panel... or a sub panel if there isn't room. BUT... some utilities will require a production meter installed between the inverter and the main panel. This allows them to charge you for every kWh you produce... wether it's consumed on-site or exported.

 

[AB4EJ]

Wow, I didn't know that;my utility does it differently - Alabama Power charges a "capacity reserve fee" of $5 per nameplate KW of the inverter per month; so I have to pay (for my 10 kw nameplate inverter) $50/month for the privilege of connecting it, regardless of how much power I produce. In this case, even though the nameplate power of the inverter (maximum theoretical output) is 10 kw, the most my system ever really produces is about 7.1 kw, so I am subsidizing other users of the grid. (This make the breakeven period on my system about 25 years, assuming zero maintenance is required). Not surprising that there have only been something like 3 solar systems installed in AL since this policy was put into place. Maybe we ought to have legislation to fix this also (while we're dreaming)...

 

[Sharkbait]

It wouldn't surprise me if the utilities start claiming they own the sun but crazier things have happened. "Insane & Ludicrous"!

 

[daxz]

Wow, I didn't know that;my utility does it differently - Alabama Power charges a "capacity reserve fee" of $5 per nameplate KW of the inverter per month; so I have to pay (for my 10 kw nameplate inverter) $50/month for the privilege of connecting it, regardless of how much power I produce. In this case, even though the nameplate power of the inverter (maximum theoretical output) is 10 kw, the most my system ever really produces is about 7.1 kw, so I am subsidizing other users of the grid. (This make the breakeven period on my system about 25 years, assuming zero maintenance is required). Not surprising that there have only been something like 3 solar systems installed in AL since this policy was put into place. Maybe we ought to have legislation to fix this also (while we're dreaming)...

So based on PVWatts Calculator estimate of average hours you are paying around $.04 to .06 /kWh to produce your own electricity.

This article: With potential solar energy boom on the horizon, Alabama lags behind
states Alabama also credits excess production at $.03 to .04 /kWh so you still may have to pay 3 cents per kWh to put back power into the grid - what a great deal .... for Alabama power, they are paid to take your power and sell it to your neighbor...

 

[TexasEV]

Charging for "self-consumption" may be ok if the utility pays a " value of solar" rate for all electricity generated. In Austin the value of solar rate this year is 10.9 cents/kWh.

 

[SageBrush]

My POV is that self generation and consumption is no different than conservation.

My home consumes ~ 150 kWh a month. If the utility can get the PUC to agree to a higher rate for the first X kWh for everybody then bully for them and time to replace the PUC. Anything else is discriminatory. Similarly, I pay a high average per kWh charge of ~ 30 cents because my fixed costs are high -- but they are the same as everybody else in my local residential grid so I accept the charges.

PV credits for self-consumption of on-site generated clean energy is another thing entirely and should not be part of this discussion.

 

[SageBrush]

Alabama Power charges a "capacity reserve fee" of $5 per nameplate KW of the inverter per month; so I have to pay (for my 10 kw nameplate inverter) $50/month for the privilege of connecting it

That is complete bullshit.

 

[aesculus]

Currently Calif utilities get a fixed fee for any panel connected to the grid, no matter what the net energy flow is. They also cannot see beyond the meter so they have no idea what you are consuming.

But ...

Get ready for NEM 2.0 (new inverter standard) where they can see beyond the meter and see what your solar potential is. Then they will start lobbying to be able to influence your system and your costs based on their (the grids) needs. It's going to get a whole lot worse in the future.

 

[nwdiver]

Charging for "self-consumption" may be ok if the utility pays a " value of solar" rate for all electricity generated. In Austin the value of solar rate this year is 10.9 cents/kWh.

Can you give a specific example there? I don't understand how the 'value of solar' can ever be where you pay the utility for never using the grid. Even if they pay you $0.10/kWh exported what sense would it make you charge you anything for what you produce? If the value of solar is lower then pay less for exports. I'm even ok with a fee for exports... negative electricity prices are a thing.

 

[SageBrush]

I'm even ok with a fee for exports... negative electricity prices are a thing

In cases where it is cheaper to pay someone to take the electricity than to turn the generation off. Does that ever apply to home PV ?

 

[nwdiver]

In cases where it is cheaper to pay someone to take the electricity than to turn the generation off. Does that ever apply to home PV ?

Not yet but it has happened to the wholesale market. The equipment required to curtail production when there's an excess isn't free... if these events only occurred a few times a year it likely would be cheaper for a home owner to occasionally pay to export power than invest in a 'smarter' inverter than knows when to reduce its output. And having that fee there would create an incentives for homeowners to make that investment.

IMO that's the most insidious part of this idiotic 'self-generation' fee... instead of placing grid fees where there is an actual cost to the utility they're placing a broad fee on generation. They need to place the fees where the costs exist to create a market solution for those problems. If they increased rates from 4pm - 9pm then that would create a market incentive for storage. But the utilities have a perverse incentive to maintain the status quo... 'Problems' are their business model. The more 'Problems' the grid has that only they can solve the more money they can get approved from the utility commissions.

 

[TexasEV]

Can you give a specific example there? I don't understand how the 'value of solar' can ever be where you pay the utility for never using the grid. Even if they pay you $0.10/kWh exported what sense would it make you charge you anything for what you produce? If the value of solar is lower then pay less for exports. I'm even ok with a fee for exports... negative electricity prices are a thing.

Value of solar is an alternative to net metering. It's not tied to retail electricity rates, rather it is a calculation of avoided costs in capital expenses, fuel, transmission and distribution, plus environmental benefits. Austin Energy is one if the few utilities using this system.
http://www.nrel.gov/docs/fy15osti/62361.pdf
http://www.austintexas.gov/edims/document.cfm?id=210805
The second document says the credit does not roll over to the next year but that was changed recently so it does roll over.

 

[miimura]

What you describe is mind bogglingly stupid. The worst justifiable case I can imagine is where the utility forces you to connect your solar to a production meter which connects to the grid outside your consumption meter. They pay you wholesale for your solar generation and you have to pay retail for your usage. That is the worst situation that any reasonable person would allow through a PUC review. Yours is so much worse that I have to wonder how many people were bribed to get that passed.

 

[AB4EJ]

That is complete bullshit.

Well, for a grid-connected system, I can understand that there has to be something paid to cover my cost of the grid. Look at it this way - (in AL, at least), the cost of the power itself is a very small part of the bill; i.e., I pay 11.7 cents per kWh, but only 3.5 cents of that is the power itself, the rest is grid cost (plus profit, of course). I just argue that the reserve capacity fee (or whatever we want to call it) should be based on my actual capacity. Specifically, I have a 10 kW inverter, but even under perfect illumination, my system only produces about 7.1 kW; and that for only 30 minutes per day (between 12:45 and 1:15 PM). Therefore, I am subsidizing other users of the grid (plus the profits of Southern Company). Any reserve capacity fees should be based on actual, historical total production (in my case, about 40 kWh per day). I am implementing (when possible) a couple of mitigators:

- I bought a bunch of Southern Company stock, which pays a hefty dividend, so I get a little of my money back!

- I plan to add a Tesla Powerwall as soon as the kit is available to connect my inverter to it (Solar Edge says they are working on this).
Alabama Power says that there is another rate schedule I can get that eliminates the reserve capacity fee by assigning a high cost (70 cents per kWh) during peak hours (3-5 PM in summer, and 6-8 AM in winter). By discharging the battery enough to cover most of my consumption during peak, I can avoid the high per-kWh cost, and eliminate the reserve capacity fee. (One might also say that this is simply throwing good money after bad, but it's starting to become sort of a hobby).

Another possibility would be that this reserve capacity fee might be reduced; but that would require action by the Public Utilities Commission, which is a group of politicians who are not swayed by logic or science (one might speculate that they would be swayed by economics, i.e., large campaign contributions; but you would need help from more than the dozen or so of us in this state that care anything about energy efficiency and global warming).

 

[AB4EJ]

What you describe is mind bogglingly stupid. The worst justifiable case I can imagine is where the utility forces you to connect your solar to a production meter which connects to the grid outside your consumption meter. They pay you wholesale for your solar generation and you have to pay retail for your usage. That is the worst situation that any reasonable person would allow through a PUC review. Yours is so much worse that I have to wonder how many people were bribed to get that passed.

I look at it this way: wide public adoption of solar production is very threatening to a large base of folks with a big vested interest in the status quo; they (politically) can't outlaw it entirely, but they can make it more expensive than simply buying the power from them.

It is possible to go off the grid entirely, but you will have to make do with much less power & conveniences than you have now.

For most people, cost is the only deciding factor here. This, combined with the active discouragement efforts by the utilities & their friends, makes me less than optimistic about Elon's plunge into Solar City. I'm afraid he is seeing things through California-colored lenses; the progressive attitudes that people on the west cost have about energy seem to be way out of step with most of the rest of the country. Only federal legislation that forces best practices into place will be of any help.

 

[nwdiver]

Well, for a grid-connected system, I can understand that there has to be something paid to cover my cost of the grid.

Correct... but what you pay for the grid should be based on your use of the grid. I accept that net metering is a subsidy that will need to be phased out. The best way for utilities to collect revenue to maintain the grid is through arbitrage. Charge you X for your imports and credit you Y for your exports. Y might even be a negative number at some point. This provide a financial incentive to rate payers to improve the grid from their end. Need more generation at ~5pm? Ok. imports cost $0.30/kWh, Exports are worth $0.10. Too much generation at 1pm? Ok. exports cost $0.05/kWh and Imports cost $0.02/kWh. A flat capacity fee or no incentive for self-consumption removes this mechanism.

The free market works... but only if it's allowed to work. Right now there's a perverse incentive for the grid to be INEFFICIENT. If the utility can show the commission that it needs to invest $300M in new infrastructure then they get to increase their rates and their profits. A demand response regime might accomplish the same thing at 1/10th the cost but they would also make 1/10th the profit so why would they do that?

Value of solar is an alternative to net metering. It's not tied to retail electricity rates, rather it is a calculation of avoided costs in capital expenses, fuel, transmission and distribution, plus environmental benefits. Austin Energy is one if the few utilities using this system.

That method is typically only applied to VERY VERY large systems where production is expected to VASTLY exceed consumption. I don't mind a value of solar calculation for residential systems but to be fair it needs to be applied to EXPORTS. Paying someone wholesale for energy that they produce then forcing them to pay retail to consume the same energy they just produced a few feet away is theft.

 

[miimura]

In addition, residential rates that are purely based on kWh consumed are not sustainable. Fixed monthly connection fees or minimum monthly charge and/or demand charges based on the peak kW in or out would better reflect the cost to provide service. In that respect, the minimum monthly fee of ~$10 implemented in California is entirely reasonable. Sure, net metering customers that previously had ~$4.50/mo minimums are complaining, but really, another $70/year is not breaking the bank.

 

[nwdiver]

In addition, residential rates that are purely based on kWh consumed are not sustainable.

I once thought that too... Two things changed my mind;
- There is so much opposition from the Solar Industry that it would be a non starter.

- Time of Use TOU metering can accomplish the same thing with less controversy and be more effective. A good TOU rate would basically aggregate the demand fee across the rate base which makes much more sense when you really think about it. You can easily double or triple your electric bill with poor timing even though your neighbors are unlikely to do the same thing at the same time so with a demand fee you're really not adding much cost to the utility but you're paying A LOT more. TOU metering would increase your rate when your neighbors ARE doing the same thing and there IS an extra cost to the utility.