The Need for a Federal Net Metering Law

Should the US have a Federal Net Metering Law? In this month’s Ozonal Notes Home Power’s Richard Perez argues in favor of passing such legislation. Read why he thinks it makes sense. You may be surprised.

Renewable energy (RE) is derived from solar, wind, small-scale hydroelectric, and sustainable biomass generation sources. Net metering laws allow RE producers to interconnect with utility grids, and to place their surplus RE on the grid. In essence, these laws allow RE producers to spin their electric meters backwards and receive a credit for the energy they place on the grid. With net metering, the RE we place on grid is credited to our utility accounts at retail electric power rates. The utility credits us at the same value they charge us – retail energy cost. Net metering is best characterized as a demand side management tool. Like purchasing energy efficient appliances, RE generation enables consumers to reduce their grid-supplied electrical energy consumption and their utility bill. Net Metering Laws Benefit Everyone The benefits of both renewable energy and net metering are fairly obvious for owners of small RE systems. The system owners get high quality, uninterruptible, and environmentally clean electricity. They also may get a large reduction in their monthly utility bill, even down to zero in some cases. And they get to share their surplus RE with their neighbors. The utility also benefits by net metering RE resources. Perhaps the most obvious benefit to the utility is immediate load reduction – a relief to overburdened utility grids. The utility gains a small distributed generator, without having to spend a cent of its own capital. The user is paying for all the RE equipment, and the energy is supplied free by nature. Utilities also have the option of selling renewably generated electricity to consumers at premium rates via optional Ògreen billingÓ programs. The utility gets the finest and cleanest form of electric power, without having to invest anything in generating it. Since most net metering is done with solar electricity, the utilityÕs load is reduced during peak consumption hours – during the day. Because the RE is locally produced and consumed, it reduces the loading of the utilityÕs power distribution system, and lessens the need for more expensive power lines. Society as a whole also benefits from net metering small RE systems. Each of these systems is a non-centralized generating source that bolsters the reliability and power quality of the nationÕs electrical grids. The energy inputs to these RE systems are sunshine, wind, and water – all locally supplied and free fuel sources. RE reduces U.S. dependence on imported energy. The state of Montana reportedly has enough wind resource to power the entire nation. The sunlight falling in the southwestern states has enough energy to power the nation. With natural, free resources such as these, it makes little sense to import our energy from overseas. Developing domestic RE resources will make the United States a stronger, more self-sufficient nation. Developing our RE resources will make it unnecessary for us to go to war to secure our energy supplies. Developing distributed renewable energy just makes good economic and political sense. Since renewable energy is produced using sunshine, wind, and water, it has minimal environmental pollution. A single 1,000 watt solar electric array will displace one metric ton (2,200 pounds) of carbon dioxide each year. These small RE systems can help to clean up our environment. State Net Metering Laws The benefits of net metering have been realized in many states. Currently, 34 states have passed state net metering laws, and 4 more are considering them. The following states have net metering laws: Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Virginia, Washington, Wisconsin, and Wyoming. Nebraska, Kansas, North Carolina, and the District of Columbia have pending legislation. While all these state laws allow interconnection with the utility grid, each law is different. In some states, if a system produces more energy than it consumes and shows a yearly surplus, the systemÕs owner receives payment for this surplus at avoided generating cost, usually around 2 cents per kilowatt-hour. In other states, any yearly energy surplus is donated to the utility. In some areas, a premium is paid to the system owner for surplus RE, and the local utility resells it as Ògreen power.Ó Technical interconnection standards also vary from state to state. Net metering periods vary from a month in some states to a year in others. Maximum system size varies from 10 KW to no limit. If we had a federal net metering law, all of these details could become standardized. A Federal Net Metering Law If the U.S. were to adopt a national net metering law, it would join Japan, Germany, and Switzerland – countries that already have such laws in place. These are nations that are converting to clean renewable energy many times faster than the U.S. They are not experiencing energy shortages and blackouts. A federal law will streamline the net metering process and encourage more new RE systems. Actually connecting a net metered system to the grid can be legally difficult. Each state and each utility have different technical standards for the equipment, especially the safety and metering gear. A federal law will standardize this. The equipment used in RE systems is UL listed for safety, like every other home appliance. In addition, utility approved inverters that interface RE generation with the utility grid have received IEEE certification. A federal law will also standardize the net metering period in all states. This would help financially with the seasonally variable RE resources of sun, wind, and water. A federal law will standardize system size, preferably at levels much higher than the 10 KW and 25 KW limits now common in most state laws. California recently raised its limit on net metered system size from 10 KW to 1,000 KW, in light of their recent energy crisis. A federal net metering law could take the very best points from the various state laws. Some of these state laws have been in effect since the early 1980s, and weÕve learned much from their application. Here are some of the features we need in a federal net metering law. 1. It should apply to all utilities regardless of type – investor owned utilities, municipal utilities, and rural electric cooperatives. 2. Eligible fuels should be solar, wind, hydro, and sustainable biomass. 3. All utility customer classes (residential, commercial, agricultural, and industrial) should be eligible to net meter. 4. There should be no limit on system size. The U.S. needs all the energy it can get, especially clean, sustainable energy. 5. The net metered time period should be one year. 6. The net excess generation produced by the system during the net metered period should be credited to the systemÕs owner at a minimum of the retail price and ideally at a higher than retail price. This energy could then be resold to utility customers at a premium price through optional utility Ògreen powerÓ programs. 7. Net metering should be allowed in addition to other utility programs, such as time of use metering. 8. Utilities not complying with the federal net metering law should be denied federal subsidies. Considering the stressed-out state of the U.S. electrical grid, distributed RE production offers some immediate relief. Considering the mature nature of small-scale RE systems, their production can be relied on – itÕs as dependable as the sunrise. Considering the snailÕs pace at which utilities are developing RE resources, having RE net metered systems that are privately funded will help green-up utility power more quickly. Considering the net metering experiences in other countries and in the majority of the states in the U.S., isnÕt it time we had a federal net metering law? Author Access Richard Perez Home Power PO Box 520 Ashland, OR97520
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