Net metering a victim of its own success for some rural utilities

first_imgby Andrew Stein June 12, 2013 The success of a subsidy for small renewable energy projects is proving costly for some Vermont utilities.Two of the state’s smallest electric utilities have surpassed a threshold that no longer compels them to subsidize power generated by renewable energy systems. While the Washington Electric Cooperative is still subsidizing what are known as ‘net metering systems,’Hardwick Electric Department has stopped accepting new projects.Butterworks Farm wind turbine in Westfield (Orleans County).Leadership at both utilities said they are concerned about the financial viability of the state’s current law, as the subsidies undercut the fixed costs of maintaining the grid in these rural regions.Washington Electric Co-op General Manager Avram Patt. VTD/Josh Larkin‘We aren’t anxious to pull the plug,’said Avram Patt, general manager of Washington Electric, who is a strong proponent of renewable energy. ‘But if nothing happens, we will either do that or do what some other utilities (in other states) are doing, which is we could come up with a tariff on any new applications, since we are not required to accept them.’Top energy lawmakers say that the situation shows the success of the state’s renewable energy proliferation in recent years, but they acknowledge that the financial sustainability of the net metering program must be dealt with.‘We have to address this immediately,’said Rep. Tony Klein, who chairs the House Natural Resources and Energy Commission. ‘When you grow at this rate, you run into problems that maybe you hadn’t anticipated. I think that’s what’s happening now, and I don’t think they are insurmountable.’Rep. Tony Klein. Photo by Roger CrowleyKlein said utilities could expect remedial legislation next session.Net metering, subsidies and how they affect different utilitiesNet metering is defined by Vermont law as the difference between the electricity supplied to a customer and the electricity that a customer’s renewable energy system feeds back to the grid.In 2011, Klein spearheaded a bill that expanded the state’s net metering programs. The way net metering in Vermont works is that for each kilowatt-hour (kWh) a customer produces, the utility must provide the customer with a 20-cent credit, minus the utility’s highest residential rate per kWh. For example, if a utility’s power rate is 14 cents per kWh, then the net credit to the customer would be 6 cents. The law also increased the maximum capacity of net metering projects to 500 kilowatts (kW).Under the law, utilities are required to take on net metering customers until the total capacity of those systems equals 4 percent of the utility’s peak demand during 1996 or the previous calendar year. Due to the intermittent nature of renewable energy, such as with solar and wind-based systems, the actual energy output of a given system is a fraction of its capacity.Washington Electric and its more than 10,500 customers surpassed the 4 percent cap at the end of 2012, with 138 net metering installations, totaling 683.4 kW. Four percent of the utility’s 2011 peak was 635 kW, according to a letter Patt sent to the Public Service Board, the quasi-judicial body that regulates Vermont utilities.In recent months, Hardwick Electric and its roughly 4,200 customers hit the 4-percent mark on the utility’s 2012 peak, with a total of 258 kW in net metering.Both utilities have low system peaks, when compared to many other utilities across the state. Eric Werner, general manager of Hardwick Electric, explained why this puts his utility at a disadvantage.‘Stowe has the same number of customers, but a peak that is twice as high,’Werner said. ‘They have twice as much opportunity. Retail customers are taking on solar units because their commercial, industrial customers are subsidizing a lot of it. We reached the peak a lot sooner than many of these other utilities.’In his letter to the board, Patt hinted that a one-size-fits-all policy for net metering might not be the most effective solution for the state.‘This raises equity issues between utilities, potentially causing differences in net metering opportunities for ratepayers based on how rural their utility is,’Patt wrote.Green Mountain Power (GMP), the state’s largest utility, currently has a net metering capacity of 16.4 megawatts. That accounts for roughly 2 percent of the utility’s peak energy load and is more than 63 times higher than Hardwick’s cap.GMP spokeswoman Dotty Schnure said her company has not encountered any financial issues related to the net metering program, but GMP is part of this discussion.‘Everyone is looking at how can we have good incentives to build renewable energy, but to do it in a way that does not have a negative effect on those customers who cannot afford those installations,’she said. ‘That’s a constant battle, particularly as net metering increases.’The problems and the possible solutionsOne of the advantages of net metering for many utilities is that it helps them cushion summer peaks in energy demand because many net metering systems are solar.When the sun is at its height in the summer, and air conditioners are blasting, many utilities experience peak demand, and many solar systems are pumping out high rates of power. Schnure said net metering helps cut into GMP’s summer peak by 1 percent to 1.5 percent.But Washington Electric and Hardwick Electric serve mainly residential customers, and their peak demand times are winter evenings when their customers are at home.‘The solar units are shut down on December nights when we peak,’Werner said. ‘The credits we give for solar units on the other hours of the day don’t contribute to reducing our peak as much as other utilities â ¦ It doesn’t contribute when we need it the most, which is Sunday night at 6 p.m. when it’s pitch black.’The other issue for Werner, Patt and others is that net-metering customers can use their credits to pay off efficiency and customer charges. Efficiency charges are leveraged by volume and fund the state’s energy efficiency utility program, Efficiency Vermont. Customer charges pay for a utility’s fixed costs, such as infrastructure and administration. Regardless of how much power a customer uses, a utility must have infrastructure in place to supply the customer’s needs.‘The success of renewable energy, both small scale on this level and on a large scale, depends on having a robust and sufficient grid system,’Patt said. ‘If people who are net metering aren’t paying their fair share of that cost, then they’re really kind of taking advantage of the system without contributing.’Werner estimates that an extra 1 percent of Hardwick’s overall rate is passed on from net metering customers, who don’t pay these charges. He said that amounts to about $50,000 a year.Klein said that an easy remedy to the problem would be to use net metering to zero out a customer’s kilowatt usage, but still require him or her to pay the customer and efficiency charges.‘We expanded (the net metering law) to cover customer charge and efficiency charges, and I think that we did that at the time to really encourage more and more people to get into net metering,’he said. ‘I now think maybe we went a little too far, too fast.’Chris Recchia, commissioner of the Public Service Department, said these issues should be addressed, but that net-metering systems should continue to proliferate. He argues that having more energy generators closer to where energy is used is making the grid more efficient, reliable and could bring down the cost of grid maintenance in the future.‘There are different options that we should evaluate and consider, but our goal would be to continue to encourage net metering. It’s having tremendous benefits to grid reliability,’Recchia said. ‘It’s enabling us to make better use of the lines and poles we have. But as we become more efficient and more distributed, we need to figure out a different financial model to support the infrastructure we have.’last_img read more

Baumann expands crane fleet

first_imgThe new crane will be used to support the company’s two existing Demag City cranes in machine assembly and relocation projects.”With a total length of just 8.69 m and a height of just 3.16 m, the AC 45 City is the most compact crane in its class and therefore ideally suited to working indoors,” said Viktor Baumann’s managing director Sabine Baumann-Duvenbeck.www.viktor-baumann.dewww.demag.comlast_img