California Supports PV with Net Energy Metering

In the past, homes that both produced solar electricity and used grid power had to pay retail prices for energy they bought from the utility, but were paid the lowest wholesale rates for energy they sold back. Home PV systems produce most of their energy between 10 am and 3 pm, but homes use most of their electricity in the early morning and evening. This required the PV systems to include expensive batteries, laden with heavy metals, to store the energy for later use.

Under net energy metering, home producers will no longer be paid low rates for putting energy into the grid. Instead, when they provide electricity to the utility, their meter will run backward. By putting electricity into the grid when it's produced and using it when it's needed, home producers can effectively store their energy in the grid, eliminating the need for battery systems. Michael Welch of Home Power magazine cites Public Citizen's Renewable Energy Sourcebook, which shows batteries making up 10%-15% of the first cost of typical home solar systems. CalSEIA's Murnighan adds that batteries must be replaced every seven years, so savings are even greater over the life of the system. Under the law, home producers can produce and use as much electricity as they want, though to qualify for the program, they can have no more than 10 kW of installed photovoltaic capacity. (A typical residential system is 3 kW.)

Utilities, too, will save with the new system. They used to install separate meters for outgoing and incoming electricity, requiring extra meter readings and extra accounting to buy energy from each small producer. Under net energy metering, they will install only one meter, which will run backward when users are sending power into the grid. Customers will be billed monthly for the net energy they have used-thus, "net energy metering." Home producers who put more energy into the grid than they take out will still be paid the low "avoided cost" wholesale rate for the surplus. (This amount is credited to the homeowner's account each month, so the utility has to write a check to the producer only once a year, if at all.)

An additional benefit for utilities is that they receive home solar electricity during their peak midday hours, when they need it to fulfill business and air conditioning demands. Even a modest capacity increase during these hours reduces the need for new production and distribution facilities. According to studies by CalSEIA, the various benefits combine to make electric utilities money, even though they are paying high retail rates for home solar electricity.

California joins ten other states-including Pennsylvania, Minnesota, and Texas-where residential power producers receive net energy metering for renewable energy production. California's law, unlike many others, does not provide net metering for wind or hydroelectric energy, since these are less reliably produced during peak demand periods.

Additional customers will be able to sign up for net energy metering with a utility only until grid-connected PV production capacity is one one-thousandth (0.1%) of the utility's peak electric demand forecast for 1996. Statewide this would be about 53 megawatts (MW), a dramatic increase from the current home PV capacity in California of 11 MW.

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