Net-metering not “self-reliant”

Over the past month, Craig Morris has commented on the debate surrounding net-metering (NEM) versus feed-in tariffs (FITs) several times in this blog. Today, he signs out of the discussion by pointing out that neither constitute going off-grid.

Going off grid

Producing as much electricity over a month as you consume doesn’t automatically mean you are self-reliant. (Photo by Transition Heathrow, CC BY 2.0)


As an American living in the EU, I sometimes marvel at the ability of Europeans to adopt best practices from each other. Likewise, I marvel at the tendency of Americans to label foreign best practices un-American.

When a representative of solar organization TASC recently rejoiced on PV Tech at the demise of FITs in Gainesville, he mistakenly described the policy as forcing you “to sell all your energy [he means ‘electricity’] to the utility.” I’ve already talked about why that description is wrong, so let’s focus on the next two sentences:

That’s not an American way of doing business. We have a long history of self-reliance and that’s why net metering is the American Way.

Apparently, Germans are not self-reliant, and their dependence on the nanny state even reaches into energy policy – except that the claim makes no sense. NEM is no more self-reliant than FITs.

NEM is such a bad policy that not even this TASC video can praise it. Here, we learn that net-metering is when “utilities get paid” for the excess electricity to export to your neighbor “even though they didn’t produce it.” The next sentence does not follow, however: “so the solar customer gets fair credit for contributing to local energy supply.” And when the video says that “utilities are monopolies,” it is speaking of the US market. Germany has competition. So if competition is good, the TASC must love Germany.

 

Take a look at the “solar PV” curves in this chart created by energy expert Bernard Chabot on power production data from March 2013 in California (PDF):

Renewable Energy Production California in March 2013

Now compare that curve to data on Germany, you can also visit inverter manufacturer SMA’s website, Agora’s website, and from the EEX power exchange. (Note that the curve for California is available from a French energy expert, not from any official state website.)

In all cases, you will find that solar power production unsurprisingly starts when the sun goes up, stops when the sun goes down, and peaks for a few hours around noon time. Keep in mind that California and Germany have different policies to support solar, but the different laws do not affect the time of solar power production. That depends on the weather, not on the law.

Now let’s apply this to an average household. The parents get up and go to work, and the kids go to school. The kids come home in the afternoon, and the parents are probably also home by suppertime. There is almost no power consumption during the day, when your solar roof produces the most. Whether you use net-metering or feed-in tariffs, you depend on the grid to the same extent.

If you want to be truly self-reliant, you have to go off-grid. Net-metering is a course way of calculating independence; if you produce and consume the same amount, NEM misleads you into thinking you are independent, when in reality you still export almost all of the power you make to the grid and buy most of what you consume back from it – because consumption and production do not take place simultaneously.

By completely uncoupling consumption and production, FITs avoid this confusion. But most of all, they provide true independence – the freedom not only to make your own power, but to receive proper compensation for it. If only more people outside Germany realized the energy freedoms (PDF) that Germans enjoy…

Craig Morris (@PPchef) is the lead author of German Energy Transition. He directs Petite Planète and writes every workday for Renewables International.

by

Craig Morris

Craig Morris (@PPchef) is the lead author of Global Energy Transition. He is co-author of Energy Democracy, the first history of Germany’s Energiewende, and is currently Senior Fellow at the IASS.

8 Comments

  1. Mike Nelson says

    This piece is less than clear about the nature of net metering. The language of many state laws were written specifically to NOT treat net metering as a “buying and selling” transaction. As such it would be a sale, hence subject to sales tax, income tax, etc., but more importantly such “sales” would come under the perview of PURPA and payment would be limited to the utilities avoided costs. Net metering is better thought of as an “electron exchange” interestingly as such, in a community with high winter rates and low summer rates (the Pacific NW) the exchange is in the consumer’s favor. and of course, in Washington state, the consumer gets paid 54 cents per KWH for ALL electricity produced, weather they use it themselves or send it out into the grid. The 54 cents is only available using locally manufactured systems. out of state hardware gets $0.15 per kWh. This is as good a deal as there is out there, at least for the customer. Self reliance is for toll-kings. Local interdependency is something that builds communities….just my opinions

  2. Daniel Ferra says

    Alliance for Solar Choice is a group of Solar Leasing Companies that with Net-Metering enable One Utility to Replace Another SLC, Why should a Hard Working, Tax Paying, Voting, Home Owning Citizen not be able to participate in the State mandated 33% Renewable Energy by 2020 ? We need a Ca Residential Feed in Tariff.

    Globally we are emitting 40-44 Billion tons of Green House Gases annually, here in California we emit 446 million tons of Carbon Dioxide a year, 1,222,000 Toxic Tons a Day.

    The California Public Utility Commission is thinking of replacing San Onofre and Hydro losses to generating with Natural Gas Power Plants condemning our kids and our planet to Heating UP and Burning UP, unless We start Changing and Fighting for real Sustainable Energy Policies.

    The state currently produces about 71% of the electricity it consumes, while it imports 8% from the Pacific Northwest and 21% from the Southwest.

    This is how we generate our electricity in 2011, natural gas was burned to make 45.3% of electrical power generated in-state. Nuclear power from Diablo Canyon in San Luis Obispo County accounted for 9.15%, large hydropower 18.3%, Renewable 16.6% and coal 1.6%.

    There is 9% missing from San Onofre and with the current South Western drought, how long before the 18.3% hydro will be effected?

    We have to change how we generate our electricity, with are current drought conditions and using our clean water for Fracking, there has to be a better way to generate electricity, and there is, a proven stimulating policy.

    The Feed in Tariff is a policy mechanism designed to accelerate investment in Renewable Energy, the California FiT allows eligible customers generators to enter into 10- 15- 20- year contracts with their utility company to sell the electricity produced by renewable energy, and guarantees that anyone who generates electricity from R E source, whether Homeowner, small business, or large utility, is able to sell that electricity. It is mandated by the State to produce 33% R E by 2020.

    FIT policies can be implemented to support all renewable technologies including:
    Wind
    Photovoltaics (PV)
    Solar thermal
    Geothermal
    Biogas
    Biomass
    Fuel cells
    Tidal and wave power.

    There is currently 3 utilities using a Commercial Feed in Tariff in California Counties, Los Angeles, Palo Alto, and Sacramento, are paying their businesses 17 cents per kilowatt hour for the Renewable Energy they generate. We can get our Law makers and Regulators to implement a Residential Feed in Tariff, to help us weather Global Warming, insulate our communities from grid failures, generate a fair revenue stream for the Homeowners and protect our Water.

    The 17 cents per kilowatt hour allows the Commercial Business owner and the Utility to make a profit.

    Commercial Ca. rates are 17 – 24 cents per kilowatt hour.

    Implementing a Residential Feed in Tariff at 13 cents per kilowatt hour for the first 2,300 MW, and then allow no more than 3-5 cents reduction in kilowatt per hour, for the first tier Residential rate in you area and for the remaining capacity of Residential Solar, there is a built in Fee for the Utility for using the Grid. A game changer for the Hard Working, Voting, Tax Paying, Home Owner and a Fair Profit for The Utility, a win for our Children, Utilities, and Our Planet.

    We also need to change a current law, California law does not allow Homeowners to oversize their Renewable Energy systems.

    Campaign to allow Californian residents to sell electricity obtained by renewable energy for a fair pro-business market price. Will you read, sign, and share this petition?

    http://signon.org/sign/let-california-home-owners

    Roof top Solar is the new mantra for Solar Leasing Companies with Net-Metering which allows them to replace One Utility with Another, we need to change this policy with a Residential Feed in Tariff that will level the playing field and allow all of us to participate in the State mandated 33% Renewable Energy by 2020.

    This petition will ask the California Regulators and Law makers to allocate Renewable Portfolio Standards to Ca. Home Owners for a Residential Feed in Tariff, the RPS is the allocation method that is used to set aside a certain percentage of electrical generation for Renewable Energy in the the State.

    Do not exchange One Utility for Another (Solar Leasing Companies) “Solar is absolutely great as long as you stay away from leases and PPAs. Prices for solar have dropped so dramatically in the past year, that leasing a solar system makes absolutely no sense in today’s market.

    The typical household system is rated at about 4.75 kW. After subtracting the 30% federal tax credit, the cost would be $9,642 to own this system. The typical cost to lease that same 4.75 kW system would be $35,205 once you totaled up the 20 years worth of lease payments and the 30% federal tax credit that you’ll have to forfeit when you lease a system. $9,642 to own or $35,205 to lease. Which would you rather choose?

    If you need $0 down financing then there are much better options than a lease or PPA. FHA is offering through participating lenders, a $0 down solar loan with tax deductible interest and only a 650 credit score to qualify. Property Assessed Clean Energy loans are available throughout the state that require no FICO score checks, with tax deductible interest that allow you to make your payments through your property tax bill with no payment due until November 2014. Both of these programs allow you to keep the 30% federal tax credit as well as any applicable cash rebate. With a lease or PPA you’ll have to forfeit the 30% tax credit and any cash rebate, and lease or PPA payments are not tax deductible.

    Solar leases and PPA served their purpose two years ago when no other viable form of financing was available, but today solar leases and PPAs are two of the most expensive ways to keep a solar system on your roof.” Ray Boggs.

  3. Greg says

    “But most of all, they provide true independence – the freedom not only to make your own power, but to receive proper compensation for it. If only more people outside Germany realized the energy freedoms (PDF) that Germans enjoy…”

    What do you specifically mean by “proper compensation”.

    Do you mean to say that in Germany if you want to install solar and sell electricity, you always can, and in any amount.

    Where as under NEM systems in the US, you won’t be paid for electricity generated in excess of what you use. Also the utility only has to buy electricity if it wants to, and can change the rules, i.e. the restrictions on installing solar in Hawaii.

    Perhaps you could clarify the article.

    • Craig Morris
      Craig Morris says

      Greg, that is exactly what I mean, but I have said it in a number of previous articles, and I don’t want to repeat myself every time.

  4. Craig Morris
    Craig Morris says

    Mike, first, thanks for your work in Washington State. The article does not talk about prices at all. I am merely pointing out that there is no difference between feed-in tariffs and net-metering when it comes to “self-reliance.” You need the grid to the exact same extent in both cases.

  5. Christophe says

    I think I have a solution for that: Residential Energy Storage
    I have been working on it over the last 2,5 years and came up with a working solution for home. Google DIY ESS to find out more

  6. Dennis Heidner says

    Craig,

    I would take issue that NEM misleads you into thinking you are energy independent. That is the common argument that the opponents of solarPV in the US commonly use. 🙁 !!

    It is very important to remember that the US has 50 states, in which each state has different net-metering rules. In some states whether or not net-metering is allowed – is decided by the local utility. In Washington State, as referenced by Mike Nelson, the net-metering account is reset to zero on April 30th each year. The common design goal therefore is to produce what can be consumed within the year. There is no pay out for the excess generation. Still even with the reset and rainy weather in the Seattle area – solarPV is thriving and the local investor owned and public utilities have been quite supportive. In Washington the utilities are allowed to cap the residential generation, typically at 10kW peak capacity. The 10kW instead of the higher limits in Germany is a result of the single phase low voltage distribution system we use , while Germany typically uses a three phase low voltage distribution system.

    PURPA while still on the books, is nearly never quoted as a reason. PURPA was put in place now nearly 40 years ago as part of the liberalization process for the US grid. Shortly after the US began the limited liberalization – Germany also decided to go down the same path of open access.

    FiT works in Germany because of the smaller geographic location, the fewer regional differences, and far fewer utility companies. Net-metering in the US allows each state to implement a solution which works for the needs of each state. In some cases (California for example), the capacity for net-metering customers is quite high. The higher limit – allows for large businesses to take advantage of net-metering – as large producers. The battles over net-metering in the US, while referencing residential net-metering, is in part a result of the larger retail customers taking advantage of the large roof area for solarPV production.

    A German FiT would not work in the US! It simply would never make it through the legislative process and be dictated down to the 50 states and the 3500+ utilities. But net-metering certainly does work – and it’s success is seen as a threat by some of the investor owned utilities that are seeing a potential loss of revenue stream. The same utilities would FIGHT to the death a FiT requirement because it also means the same loss of revenue. The reason they would fight – is that the US only implemented a limited liberalization of the electrical grid. In the US the utilities generally still own and operate the generators, transmission and distribution networks. Reducing electrical consumption either by energy efficiency improvements or solarPV is a significant threat to their revenue streams. A FiT is also a threat.

    • Craig Morris
      Craig Morris says

      Dennis, you may be right that FITs “would not work in the US” because they “simply would never make it through the legislative process.” But Germany has won the fourth of the population, 1/8 the power consumption, and one third the number of utilities (if your estimate of 3,500+) is accurate. The density of utilities is thus greater in Germany per capita and per unit of electricity consumed.

      The reason why FITs can’t get through the legislative process in the US is because Americans don’t have a democratic government that gives them what they want (nor do we have media providing us with the information we need to decide what we want). You see this from the energy sector to healthcare – corporations decide what gets done in the US.

      The German government is more responsive to the will of the majority, and when popular will clashes with corporate interests, there is no foregone conclusion about who wins – see FITs, fracking, the nuclear phaseout, and probably any number of issues outside the energy sector (but I am not an expert in such matters).

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