• Wrong direction for net metering
    August 12,2014
     

    The Washington Electric Cooperative recently requested permission to impose fees on its net metering members in order to assure that the net metering program would be fair to all co-op members.

    Renewable Energy Vermont, the trade association that represents solar panel and wind turbine installers, criticized WEC because the fees would be bad for business. REV went on to suggest that WEC should address the fairness issue not by imposing a fee, but by doing more to encourage net metering with wind turbines. This is a terrible idea.

    Vermont has had an electricity net metering program since 1998. The current version of the program allows Vermonters to generate electricity (with solar panels, wind, methane or small hydro) and sell it to their utility. The sale results in a reduction of the net metering customer’s bill, not a cash payment. It is possible for a customer to zero out the bill.

    The reduction of the customer’s bill reduces revenue to the utility. The utility would have used some of that revenue to pay for its distribution infrastructure (poles and wires). These costs must then be borne by other ratepayers. To visualize why this poses a danger to the utility and its ratepayers, imagine an extreme case where everybody net metered and everybody zeroed out their bills. Now ask yourself who will pay for the utility’s poles, wires, trucks, buildings and employees.

    The Legislature directed the Public Service Department to study this issue, so the department assembled a year’s worth of detailed wind and solar production data and incorporated it into a spreadsheet model. It used the model to determine whether the benefits of net metering outweighed its costs.

    The department identified a number of benefits from net metering that could help utilities recover some of the money that the program costs them. Some of the benefits were real and had actual dollar values (like avoided costs for electricity, reserve capacity, and regional transmission). Other benefits were real but had estimated dollar values (like avoided costs for distribution system upgrades).

    The department built a variety of assumptions into its analysis. Under the set of assumptions it thought most likely, it found that over a lifetime of 20 years, solar trackers (i.e., solar panels that track the sun across the sky) would provide a small net benefit to a utility and its ratepayers; fixed solar installations (those that don’t track) would impose some cost; and wind turbines would impose a substantial cost.

    When the department ascribed a hypothetical dollar value to greenhouse gas avoidance, it found that both fixed solar and solar trackers would provide considerable benefit. But, even with the hypothetical payment, wind would remain a loser.

    Why do solar panels provide more benefit than wind turbines? The department data shows that solar panels produce electricity when we need it most, and wind turbines produce when we need it least. That means that solar panels help utilities avoid buying electricity when it is most expensive.

    It also means that solar panels help reduce the load on the grid when the grid is most stressed, thereby reducing the need for expensive upgrades to the transmission and distribution systems.

    The Public Service Department analyzed the impact of net metering on a statewide basis, so some of the differences among the state’s electric utilities were not considered. Vermont’s statewide demand for electricity peaks in the summer. Some of Vermont’s northern utilities (like WEC) may experience their peak demand in the winter.

    The PSD report acknowledges the high cost of net-metered wind but concludes that it isn’t a problem because there are so few wind turbines in the net metering program. Apparently, Renewable Energy Vermont would like to change this by encouraging more wind net metering at WEC.

    It may be that this suggestion is based upon a belief that wind complements solar — that if the sun isn’t shining, the wind must be blowing. This is not supported by the department’s data.

    Renewable Energy Vermont is not alone in wanting more net-metered wind turbines. Green Mountain Power spent over $500,000 to install a 100-kilowatt turbine at the Northlands Job Corps in Vergennes. GMP CEO Mary Powell said, “This is just the first of what we hope to be many Vermont-made community-scale wind turbines in our state.”

    Not only was the installation of the Vergennes turbine costly, the Public Service Department study says that enrolling it in the net metering program will cost GMP’s ratepayers an additional $58,000 over its projected 20-year life. Oh, well, it could be worse — net metering a 350-kilowatt turbine would cost over $200,000.

    GMP ratepayers should be pleased that the roll-out of these turbines has been so unsuccessful.

    While GMP can spread the costs of its Vergennes boondoggle over lots of ratepayers, Washington Electric cannot. WEC is so small that it wouldn’t take many turbines to swamp its members. That’s why we are anxious to hear more details about REV’s plan to achieve fairness at WEC with more net-metered wind.



    Mark Whitworth is executive director of Energize Vermont, which advocates for forms of renewable energy it considers to be in harmony with Vermont’s character.

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