NET METERING

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NET METERING

• Policy Recommendations for Indiana
• Prepared by
• Eric Cotton, ECI Wind and Solar and
• Laura Ann Arnold, The Arnold Group
• Prepared for
• Indiana Distributed Energy Advocates, Inc. (IDEA)

Revised December 29, 2009
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Authors of this Report

• Eric Cotton, Partner, ECI Wind and Solar (765)
  702-0231, eric_at_eciwindandsolar.com
• Laura Ann Arnold, Owner, The Arnold Group (317)
  635-1701, laura.arnold_at_thearnoldgroup.biz

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What is Net Metering?

• A billing arrangement between a utility company
  and a customer - with a grid-tied, renewable
  energy system - where 1 kilowatt hour generated
  by the customer has the same value as 1 kilowatt
  hour consumed by the customer.
• Basically, the meter rolls backward and forward
  recording the energy flowing between a customers
  renewable energy system and the utilitys power
  grid. The utility company then allows the
  customer to receive credit for excess energy
  produced.
• Without net metering, a customers net excess
  generation is essentially donated to the utility
  company, or sold for pennies on the dollar.
• In the following few slides, 9 key points of any
  net metering policy will be described.

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Interconnection vs. Net Metering

• Interconnection the technical rules and
  procedures for customers to plug in to the
  grid.
• Net Metering the billing arrangement by which
  customers realize savings from their systems
  where 1 kWh generated by the customer has the
  same value as 1 kWh consumed by the customer.

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1. Individual System Size

• Customer load and demand should determine system
  size specifications.
• There is no need for arbitrary system limits.
• In an ideal net metering policy, the individual
  system size limit would be 2 MW or greater.

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System Size Limits for State Interconnection
Policies
Connecting to the Grid, October 2009, Vol. 12,
No. 10, Interstate Renewable Energy Council
(IREC), p. 2.
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System Size Limitations
Connecting to the Grid, September 2009, Vol.
12, No. 9, Interstate Renewable Energy Council
(IREC), p. 2.
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2. Total Program Size Limits

• Having a total capacity limit (e.g. a percentage
  of a utilitys peak demand) jeopardizes the
  expansion of on-site renewable generation,
• The unknown factor of when that arbitrary limit
  will be met prohibits customers from effectively
  planning for future renewable installations.
• An ideal net metering policy would have no limit
  on total program size.

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3. Treatment of Net Excess Generation

• A successful program should facilitate
  indefinite rollover, at retail rates, so
  customers receive full credit for excess
  generation during seasons when renewable output
  is highest, and apply it toward their consumption
  when output is the lowest.
• Why indefinite rollover? Why not an annual
  payout for net excess generation?
• Annual payouts could encourage over sizing
  systems in an effort to make money from the
  utility company. This would be in the best
  interest of no one.
• An ideal net metering policy would allow for
  indefinite rollover at retail rates of net
  excess generation.

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4. Eligible Renewables

• There is no reason to exclude any type of
  renewable energy source.
• In an ideal policy, all types of renewable energy
  would be eligible for participation in net
  metering.

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Technology Eligibility
Connecting to the Grid, September 2009, Vol.
12, No. 9, Interstate Renewable Energy Council
(IREC), p. 2.
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5. Eligible Customers

• No customer class should be excluded from net
  metering.
• Utilities may argue for the exclusion of
  commercial customers because of the significant
  revenue loss from that customer. Conversely, net
  metering plays an important role for commercial
  customers who invest a substantial amount for
  renewable energy generation. It is
  counterproductive to protect the economic
  interests of one sector while harming the
  economic interests of another.

• In an ideal net metering policy all customer
  classes would be eligible to participate.

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6. Utilities Required to Participate

• Some states only require certain utilities to
  offer net metering.
• The most common example is states only requiring
  investor-owned utilities (IOUs) to participate.
• In an ideal policy, all utilities would be
  required to offer net metering.

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7. Metering

• Customers may be required to pay for additional
  meters, adding no value to the customer-generator
  or the utility.
• There may be a requirement to switch to a
  time-of-use rate, where the customer pays
  differing rates depending on the time of day.
  This can be a disadvantage to customers and
  discourage renewable energy generation.

• In an ideal net metering policy there would be
  no requirement for additional meters or
  time-of-use rate.

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8. Ownership of Renewable Energy Credits (RECs)

• Frequently, customer-generators qualify for
  renewable energy credits (RECs) that can be used
  for marketing purposes or to meet legal renewable
  energy targets.
• An ideal net metering policy would not allow
  utilities to take these credits without paying
  for them.

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States on REC Ownership
Connecting to the Grid, September 2009, Vol.
12, No. 9, Interstate Renewable Energy Council
(IREC), p. 3.
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9. Standby Charges or Other Fees

• A pay-to-play model has been adopted by some
  utilities.
• Fees can be so costly that they diminish the
  economic incentive net metering is intended to
  offer.
• Example An REMC in Indiana charges net metering
  customers a monthly Delivery Charge of 38.50,
  but their regular residential electric rate
  customers are only charged a monthly Facilities
  Charge of 30.00. Over-all there is a 8.50
  fee per month to net meter.
• An ideal net metering policy would not permit
  utility companies to impose standby charges, or
  other fees, on participating customers.

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Ideal Policy vs. Minimum Needed Changes Now

• Goal Show SOME progress towards invigorating
  Indianas net metering policy in 2010, by doing
  the following
• System Size 100 kW
• Utility Types IOUs only
• Customer Classes All
• Eligible technologies Expand
• Maximum Enrollment 1 of Sum. Peak
• approx. 200 MW

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Alternative Minimum System Sizes by
Installation Type

• 50 kW for residential customers
• 100 kW for commercial customers
• 2 MW for industrial agricultural customers
• 5 MW for governmental entities including state
  local government, K-12, school corporations
  higher education

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Understanding System Sizes

• 10 kW 1,000 kW hours/month The power consumed
  by a 1000 1500 square foot home. (higher if
  all electric)
• Approximately an 800 square-foot solar array made
  up of about 45 solar modules.
• Approximately an 800 pound wind turbine (12 foot
  blades) on a 60 120 foot tower.

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Understanding System Sizes

• 50 kW 5,000 kW hours/month The power consumed
  by a 5000 6000 square foot home. (higher if
  all electric)
• Approximately a 3,900 square-foot solar array
  made up of about 215 solar modules.
• Approximately a 6,000 pound wind turbine (30 foot
  blade) on a 100 120 foot tower.

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Understanding System Sizes

• 100 kW 12,000 kW hours/month The power
  consumed by a 6,000 square foot office building.
  (higher if all electric)
• Approximately a 7,800 square-foot solar array
  made up of about 430 solar modules.
• Approximately a 15,000 pound wind turbine (69
  foot blade) on a 120 140 foot tower.

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Understanding System Sizes

• 1,000 kW 120,000 kW hours/month About 1/3 the
  power used by a small school. (higher if all
  electric)
• Approximately a 78,000 square-foot solar array
  made up of about 4,300 solar modules.
• Approximately a 150,000 pound wind turbine (125
  foot blade) on a 150 200 foot tower.

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Net Billing vs. Net Metering

• Intentional Deceptive Marketing Campaign Wolf
  in sheeps clothing.
• Customers often confuse it with true net
  metering.
• Some REMCs have adopted this phrase.
• Nothing NET about it.
• Uses Avoided Cost!

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Net Metering or Feed-in Tariff

• Net-metering is designed to create incentives to
  install systems that generate power equal to or
  less than the predicted on-site load.
• Feed-in tariff (FiT) is designed so that systems
  can be installed at sites with no load, and
  generate electricity that is purchased, under
  contract, by the local utility.

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Net metering vs. Feed-in Tariff

• Net metering and Feed-in Tariffs (FiT) can
  co-exist and are not mutually exclusive.
• Net metering and FiT programs in place
  simultaneously can deliver great options to a
  wide group of potential renewable energy system
  owners.
• They can exist together, and consumers will send
  clear messages to policy makers about their
  preferences.

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Advantages of a Strong Net Metering Policy

• Provides a market-based incentive that encourages
  renewable energy production.
• Facilitates growth of consumer participation and
  cumulative capacity of renewable energy systems.
• Gives consumers incentive to size their system to
  provide for their entire load.
• Encourages clean energy production and energy
  independence.

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What is Indianas Net Metering Policy?
Eligible Renewables Customers Size Limit Overall Enrollment Limit Utilities Required to Net Meter Handling of Excess
Indianas Policy - Photovoltaic Wind Small Hydroelectric - Residential K-12 Schools 10 kW 0.1 of utilitys most recent peak summer load Investor-owned utilities Credited to customers next bill
An Ideal Policy All All 2 MW and above None All utilities Indefinite rollover to customers next bill at retail rates

• In Indiana, utilities may not charge customers
  any fees for additional metering for single-phase
  configurations, for customers request to net
  meter, or for an initial net metering facility
  inspection.
• While net excess generation is credited to
  customers next bill, Indianas rules do not
  address the rollover of net excess generation for
  continuous customers.
• There are some positive points to Indianas
  existing net metering policy, but there is
  enormous opportunity for improvement.

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Indiana IOU 2007 Net Metering Summary
Investor Owned Utility (IOU) Total Number of Net Metering Customers and Facilities Number, Size and Type of Net Metering Facilities
Duke Energy Indiana 30 29 solar ranging from 1.0 to 28.8 kW 1 9.0 kW wind
Indiana Michigan Power 1 1 1.1 kW solar
IPL 5 Total capacity of 6.86 kW solar
NIPSCO 4 1 2.5 kW solar 1 1.36 kW solar 1 640 W solar 1 10.0 kW wind
SIGECO/Vectren 1 1 5.0 kW solar
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IURC IOU 2008 Net Metering Summary Data1
Investor Owned Utility (IOU) Total Number of Net Metering Customers and Facilities Number, Size and Type of Net Metering Facilities
Duke Energy Indiana 44 42 solar ranging from 1.0 to 19.8 kW2 2 wind ranging from 9.0 - 10 kW
Indiana Michigan Power 4 2 - Solar ranging from 1.1 2.8 kW 2 Wind ranging from 1.9 5.5 KW
IPL 5 5 Solar with total capacity of 5.75 kW
NIPSCO 7 5 Solar ranging from 0.2 KW to 3 KW3 3 Wind ranging from 0.4 KW to 10KW
SIGECO/Vectren 4 3 Solar ranging from 5.0 16 kW2 1 Wind at 1.8 KW
1 Represents bets available data from IURC as
of 12/28/09 2 Corrected Data 3 NIPSCO
recorded 8 systems from 7 customers. One
customer has 2 systems.
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How Do We Measure Up?

• 42 states and D.C. have adopted net metering
  policies.
• Below are statistics comparing Indiana to the
  other net metering states
• Have More Eligible Renewables 37 States
• Have More Eligible Customers 40 States
• Have Greater Size Limit 40 States
• Have Greater Overall Limit 36 States
• The following map is from the Database of State
  Incentives for Renewables Efficiency (DSIRE).
  This map highlights individual system limits
  across the United States.
• DSIRE indicates 44 states (including D.C.) have
  net metering available. Three states offer net
  metering voluntarily, and those 3 states are not
  included in the above statistics.

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Net Metering
www.dsireusa.org / December 2009
ME 660co-ops munis 100
WA 100
MT 50
ND 100
VT 250
NH 100
MN 40
MI 150
OR 25/2,000
MA 60/1,000/2,000
WY 25
WI 20
RI 1,650/2,250/3,500
IA 500
IN 10
CT 2,000
NV 1,000
CO no limitco-ops munis 10/25
NE 25
NY 25/500/2,000
OH no limit
IL 40
PA 50/3,000/5,000
WV 25
UT 25/2,000
KS 25/200
NJ 2,000
MO 100
KY 30
CA 1,000
NC 1,000
DE 25/500/2,000
NM 80,000
OK 100
MD 2,000
AZ no limit
AR 25/300
DC 1,000
GA 10/100
VA 20/500
AK 25
LA 25/300
FL 2,000
42 states DC have adopted a net metering
policy
HI 100KIUC 50
State policy
Voluntary utility program(s) only

PR 25/1,000
State policy applies to certain utility types
only (e.g., investor-owned utilities)
Note Numbers indicate individual system capacity
limit in kW. Some limits vary by customer type,
technology and/or application. Other limits might
also apply.
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Net Metering Grades 2007
www.freeingthegrid.org / November 2009
DC F
No Statewide policy
Grade A
Grade F
Grade B
Grade C
Grade D
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Net Metering Grades 2008
www.freeingthegrid.org / November 2009
DC C
No Statewide policy
Grade A
Grade F
Grade B
Grade C
Grade D
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Net Metering Grades 2009
www.freeingthegrid.org / November 2009
DC B
No Statewide policy
Grade A
Grade F
Grade B
Grade C
Grade D
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Vectren and Duke Energy

• Interestingly, two utility companies in Indiana
  have voluntarily expanded their net metering
  tariff.
• Vectren allows Municipal Corporations to net
  meter. This is in addition to the residential
  customers and K-12 schools, which are required by
  the state of Indiana.
• Duke Energy permits small commercial customers to
  net meter. Again, this is along with residential
  customers and K-12 schools, which are required in
  Indiana.
• Compared to Indiana, all states with net metering
  policies have a larger number of eligible
  customer classes, and some utilities in Indiana
  are opening eligibility to additional customers.
  
• Now is the time for Indiana to catch up with (or
  surpass) other states, and to align with what
  utility companies in this state are offering.

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Tipmont REMC

• Since it is not an investor-owed utility, Tipmont
  REMC is not required to offer net metering.
  However, they have done so voluntarily. Their
  policy is superior to that of the current Indiana
  rule in the following ways
• Tipmont REMC allows renewable energy produced by
  wind, solar, water and various types of biomass
  to net meter. Biomass is not an eligible
  renewable energy source in Indianas policy.
• Tipmont allows residences, small businesses and
  governmental accounts to net meter. Small
  businesses and government offices are left out of
  the eligible customer classes in the current
  Indiana rule.

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Hopes for the Future of Net Metering

• Indiana will improve its net metering policy,
  encouraging utilization of the states abundant
  resources to generate renewable energy.
• More states will adopt a net metering policy.
• Ideally, a national renewable energy policy will
  be implemented at the federal level.

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Want to Learn More?

• Interstate Renewable Energy Council
  www.irecusa.org
• Database of State Incentives for Renewables
  Efficiency www.dsireusa.org
• Network for New Energy Choices www.newenergychoice
  s.org
• Freeing the Grid 2009 Edition Best and Worst
  Practices in State Net Metering Policies and
  Interconnection
• Indiana Renewable Energy Association
  www.indianarenew.org

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What Can You Do?

• Contact your State Legislators and urge they
  support legislation to change net metering in
  2010.
• Send a Letter to the Editor of your local
  newspaper urging changes in net metering this
  year.

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Additional Slides
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Interconnection of Renewable Energy Systems -
SAFETY

• Renewable Energy and Distributed generation
  systems have well defined safety standards.
• IEEE 1547 defines the standards for
  interconnection devices.
• Tighter standards than the utility company.
• Dictates when a device may interconnect, and when
  it must disconnect.
• UL 1741 is standard for inverters
  (interconnection devices).
• Certifies that device meets the standards of IEEE
  1547
• Virtually all devices on the market have UL 1741
  certification
• Virtually all utilities already SPECIFY UL 1741
  devices.

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Interconnection of Renewable Energy Systems -
SAFETY

• BOTTOM LINE
• Grid inter-tied renewable energy systems have
• been installed in the United States since the
  enactment of the
• federal PURPA law in 1978. These systems
  cumulatively
• have over half a billion operating hours,
  apparently without
• any reported personal injury or property damage
  claims
• attributed to their interconnection and
  operation.1"

1Allocating Risks An Analysis of Insurance
Requirements for Small-Scale PV Systems, American
Solar Energy Society Annual Conference, June
2000, Madison WI, pg. 6.