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Tam Hunt: Renewable Energy Field’s Net Metering Grows Some Muscles

By Tam Hunt |

The renewable energy field is like a floppy Labrador pup growing into its adult frame. Renewables like solar and wind are becoming a significant player in energy markets, but there are still some growing pains and a lack of coordination.

Due to some improvements in state policy, however, landowners with agricultural or farming operations can now really take advantage of the renewables revolution. Specifically, landowners can now devote the part of their land that is most suitable to wind or solar to power generation and will be able to credit the production from the wind or solar to their most expensive meters in many circumstances. This is a powerful new tool for going green and saving some serious green by avoiding utility electricity purchases.

In many cases today, behind the meter solar or wind power projects can pay for themselves in just a few years, though the details vary a lot site to site and customer to customer.

A key part of the policy landscape that has brought renewables to where they are today is known as “net metering.” Net metering is essentially a way for landowners to use the utility grid as a battery for their on-site renewable energy projects — generally solar or wind power, but sometimes biomass or small hydro.

Net metering your project allows you to send excess power to the grid when production from your onsite solar or wind power project is good and then to take power from the grid when production is reduced. This energy flow is trued up annually so it allows solar projects to produce more in the summertime, for example, than is required on-site but not have that power go to waste.

Net metering has become a bit of a battle in California, with the utilities and some other entities claiming that net metering is a subsidy that is costing regular ratepayers too much, and pushing to roll back net metering at least in part. This is a complex debate, but my feeling is that in the medium-term to long-term we’ll know with more certainty whether the deferred upgrades to the grid, made possible by net metered energy projects, will pay for themselves.

More importantly for this article, we’re about to see a very powerful new tool go into place here in California. Various expansions of net metering have taken place in the last few years. The latest expansion, about to be finalized by the California Public Utilities Commission, was made possible by SB 594. This new version of net metering, known as “meter aggregation,” allows landowners to choose the best location for solar or wind on their property and then use the power generated to offset their bills from any of their electricity meters on the same or contiguous properties. Contiguous properties must be owned, leased, or rented by the same owner as the property where the energy facility is located. (This new tool is sometimes also referred to as “virtual net metering.”)

Hunt figure
Figure 1 compares traditional net metering, left, and meter aggregation.

Traditionally, you can only offset one meter from one project located on the same property. So the new rule is a large expansion of net metering. This is a bit confusing, so a diagram is helpful; see Figure 1.

This new metering aggregation option is limited to energy facilities of one megawatt or less, but this can be comprised of a number of different systems on the same property as long as the combined size doesn’t exceed one megawatt.

Each meter that is aggregated is offset by power produced from the renewable energy facility in proportion to the whole. For example, if three meters are aggregated to draw power from a one megawatt solar facility and the first two constitute 25 percent each of the total of the three meters, and the third 50 percent, then the solar power produced will be used to offset the utility-provided electricity from each of these meters in the same proportions.

The full details of this program will be made public in a few weeks, once the utilities make their advice letter filings, which are required within 14 days of final approval of resolution E-4610. That final approval should come later in September or early October. It will take a few months for final approval of the utility advice letter filings so we can expect the program to be open for business later in 2013 or in early 2014.

Combining metering aggregation with state incentives that are available still for many kinds of renewable energy projects makes going solar or going for wind an even more viable proposition than it has already been in the last few years.

— Tam Hunt is owner of Community Renewable Solutions, a consultancy and law firm specializing in community-scale renewables. Community Renewable Solutions can help developers navigate this complicated field and provide other development advice relating to interconnection, net metering, procurement and land use. Click here to read previous columns. The opinions expressed are his own.

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