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Saturday, June 1, 2013

Net metering

I've put this information on a number of blogs and below there is a list of the URL's of essays on renewable energy.  However, I want to try to make the situation clear in one place and hopefully with the title "Net Metering" it will be found by people who are hoping to put solar panels on their roves.

Net metering is a system in which the amount of power you export to the grid and the amount you import from the grid are simply subtracted from one another and you are charged or paid depending on whether your balance is positive or negative.  It is automatic if you have a meter that turns backwards when you export power.  The old analogue meters with the horizontal rotating disks that you could see, through the glass do this automatically.  Digital meters can be built that do this too.  Net metering, when you have two meters or a single meter with two read outs is a different kettle of fish. In fact it should have a different name.  It may be net metering when you sign up but enjoy it while it lasts.  They can change the rules any time they want or when any contract you have with them runs out.  They may hook you in by saying that they simply subtract one meter from the other to determine whether to charge you or pay you but this will change and surprisingly quickly.

In either type of net metering, you use your own power but export any excess or import any needed make up power through your meter.  One read-out records when you export power, the other when you import.  From now on, let's call the type of net metering where your meter turns backwards "real net metering".

Real net metering is necessary if you are actually going to get a reasonable return for your investment in solar, a small wind turbine or home hydro scheme.  If you have the two meter system which many jurisdictions insist on, whether it is so called net metering or the even more insidious German Gross metering system,  it will not be worth your while to install solar or other home renewable generating system.   Let's look first at the most benign two meter system.

The company or the government gives you some plausible reason for having two meters.  One will measure the net power you export and the other one the net power you import.  Furthermore they tell you that they will simply subtract the reading of one meter from the other and pay you or charge you accordingly.  They will say that you have to have a smart meter that will talk to your devices in your home.    If you are a very trusting person, you may go along with this story and install your system.  Ask yourself why they want to go to the expense of installing a new meter if this is what they intend*.  Your present meter will do this automatically.  Ask yourself what is to stop the government or the power company from changing the rules.  They both do it all the time.

* One of the reasons they will give is that they want to install a smart meter.  These are meters that will interact with smart devices which are in the pipeline, such as your dish washer or hot water tank.  It is equally easy to build a smart meter with a single read out and marginally less expensive than the two read-out meter.

After they have lots of people hooked on the system, they will simply start to charge you according to your import meter and pay you according to your export meter.  Sounds OK doesn't it.  Guess what.  The rate will not be the same and even if you are generating as much  power as you are using over the year, you will be paying for you power at the differential between the two rates.  Neither metre turns backwards.  One turns forward whenever you are exporting power and the other turns forward whenever you are importing power.

Worse still, even though you are generating as much power as you use over the year, or even more than you use, besides paying the differential tariff to the power company, you will be paying GST (Value Added Tax) on every kWh on your import meter and Income tax on every kWh on your export meter (at your marginal tax rate).

Now you have probably spotted the obvious flaw in this plea for single read-out net metering.  The power company has to maintain the lines and they can't afford to buy your power for the same rate that they sell it to other users.  They have to make a profit to pay their workers and maintain the lines.  You are getting a benefit from being connected to their grid; the benefit being that you don't have to expend large sums on expensive batteries and renew them every six years or so.  The simple, honest and most straight forward way is to have a line charge.  This is a charge that every user, whether a simple user or a user generator pays for the privilege of being connected to the grid.  Just one proviso here.

The line charge must be the same for the simple power user and the user/generator.  The power company like any company will want to maximize their profit by charging the user/generator a large line charge and a small power charge (and hence a small payment for excess power).  For the simple user, they will charge a small line charge and a large per kWh charge.  They must be allowed to set up the payment system as they deem fit but with the proviso that the line charge is the same for anyone connected to the grid.  This will keep them honest.

And don't feel to sorry for the power company.  They are getting a pretty good deal.
*If you have solar panels, the power company is receiving the power during the day when power is being used by factories and businesses and when they charge the highest rate for their power.
*They are  getting power from a source which is far closer to the user than when they import it from a distant power station.  The line losses are less. Further more, with a large input of power from a whole array of small generators, someone else (you or Yous as seems to becoming popular) has/have paid the capital costs.  The power company doesn't have the expense of paying the interest on the loan to build more generating capacity.  You have paid for their new generating capacity.

Assume that you get true net metering in your jurisdiction.   Congratulations.  But you aren't out of the woods yet.  Now we have to look at the reconciliation period.  That is to say, the period over which the company calculates how much to pay or charge you according to how much net power you have sent to them or imported from them.  And note that even if they say that the amount per kWh is the same in both directions, this will change.  You will pay more for any make up you need than for any power you export to them.  Let's look at a one day reconciliation period.  They only bill you, say, once every two months but they do the calculation on what you have used or supplied each day.  Suppose in a given month you use exactly what you produce but half of the days you are exporting and half the days you are importing.  If they do the calculation each day and tote up the results, you will show a import of power and an export of power and will pay at the differential rate.  Oh, and by the by, pay income tax on your earnings and GST on the power you exported.  If the reconciliation period is one month, your bill will be zero.  Even better if the reconciliation period is one year.  Then cloudy seasons will balance sunny seasons, summer will balance winter and so forth.  It hardly matters if they pay you nothing for the net power you send them or charge you a large rate for the power you import.

Here are some links to other essays on renewable energy in chronological order.


Yokara said...

Recently i came to know about net metering and also i have written about in my blog. However, i would like to know, How much amount of power should i generate in order to have this facility


William Hughes-Games said...

Hi Yokara
The whole problem is quite complicated. If you put in a small unit in relation to your over all need, you are likely to be using more of your own power rather than sending it to the grid. Even if the power company gives you a great deal when you install the system, they can change it any time they want. In addition, you will be paying tax on your imports and exports even if they are equal. The trick is to export as little power to the grid as possible and to be using it yourself. I am just about to put in solar so I can't tell you yet about my results but the company I am going with has developed a "feed in fighter" which is said to match your generation to your use much more closely by prioritizing and managing the power users in your house or business. This is the only reason I have finally decided to install solar. When I have been operating my system for a year, I will be able to tell you how effective it has been. In the mean time, if you want to look them up, their web site is under s4solar.