Why should I care about Net Metering of electricity? Answer: It is your lifeline to competition in electrical energy. Net metering is not a thing so much as it is a process, and in the middle of that process is a smart meter that measures and records electricity flows in two directions ….. into your business from the host utility, and out of your business to the host utility. Without a smart meter you don’t have “net metering” because any power you produce at your plant and send out to the utility to use on its distribution system won’t get measured and credited to your account ….. and why would you want to do that? There are lots and lots of places to learn about net metering (just click on any of the links), but we are better off talking about why net metering matters to your business today.
I alluded to some of the value of self generation in Vol 1, especially as it pertains to lowering your high energy demand curve that your utility charges you for 365 days a year ……. and that is HUGE for commercial and industrial rate payers. However, you could also do that without being a net metering customer if your internal use always exceeded your self generation, you wouldn’t care about net metering so much. But……… most plants don’t operate 7 days a week, and on the days you aren’t running a shift or occupying your building, you may still be generating power with solar panels or a CHP system……… and you will want to get credited for the power you make and send out to the grid. Additionally, your optimal power plant sizing (solar PV panels, CHP, etc …whatever you have) may in fact exceed your internal use at times during the day ….. and you will want to get credited for the power you make and send to the grid during those times. Basically, if you are going to generate some of your own power, there is no reason not to sign up as a net metering customer to make sure you see the most value (ROI) from your installed system.
What else happens when you self generate and net meter? Your own generating asset (with a life cycle in the 25+/- yr range or much more) provides you with increased stability for your total cost of power on an annual basis for a long period of time. Your own generating asset also creates “price competition” on the energy supply side of the utility industry because they now have to compete with the costs of your self generation, not just other utility scale generating plants. Your own self generation can also augment your “stand-by” or “back-up” generator capability when the grid goes down. Your own self generation as a “distributed energy resource (DER)” aids in “grid stability” and “grid reliability”, as well as “grid security” ………its much harder to take down an electrical grid when it is composed of hundreds or thousands of of DERs. We’ll get deeper into this last topic in later Vols.
In your own line of business, changes in technology results in “changes in the game” for you all the time. The same is true for power and power systems. Twenty five years ago everyone would simply laugh at you if you talked about adding a PV system to your plant or office building because they cost so much ……..pretty soon they may laugh at you if you haven’t, that’s how much and how fast technology is changing the game in solar energy supply. The next frontier will be energy storage, both on the grid itself and at your own location (Vol 12). I’m sure you have heard or read about the new Tesla storage batteries, but they are not alone. The power of the sun is not the only game in town, but it has seen the biggest and fastest changes on an applications level over the past 10 years. I have been net metering for over 5 years, and just during that time alone the KW output/sf of solar PV panels has increased 50%. CHP use is projected to grow as well, with more and more equipment suppliers entering the market to offer newer packaged products at a lower price point. Although not as simple and easy as popping PV panels on your roof or clearing trees for a solar PV farm, CHP can be very attractive for plant operations that can take advantage of the thermal (heat) by-product for process or central heating and cooling. Net metering is important to maximize the value of your self generation investment.
ISO-NE’s 2017 forward capacity auction was just completed (FCA#11) and system resources needed for 2020-2021 not only were easily filled, but the resulting system wide clearing price of $5.30 per kilowatt-month was lower than the previous year’s auction (FCA#10 @ of $7.03/kw-month), which is the lowest clearing price since the floor price was eliminated in the 2013 auction. Just remember, those lower prices don’t start until sometime in 2020. ISO-NE reported that their forecast for 2020-2021 includes 720 MW of behind-the-meter self generation in New England from solar PV growth alone.
A recent study by the Retail Industry Leaders Association (RILA) and the Information Technology Industry Council (ITI) concludes that “U.S. states that are investing in clean domestic energy production are also the most likely to attract major businesses, creating thousands of jobs in their communities” and that “retail and tech companies, such as Amazon, Apple, Facebook, Google, Microsoft, Target and Walmart, are among nearly half of the Fortune 500 companies seeking to locate operations in states with clean energy production due to fossil-fuel price volatility and pollution concerns“.
Self generation and Net Metering is not for everyone. If fuel and electricity costs are a very small part of your cost of operations, you may have better things to do with your time and money. However, for those of you who worry about these costs or want to shave costs wherever you can, this is a great place to look because of the high prices for fuel and electricity in the ISO-NE region. You can’t do much about commodity prices, but you can find was to use less of their products by either by taking efficiency measures or using your own generation in the mix.