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Net Metering: Adding Renewable Energy to the Grid

February 4, 2011 by Amy Bowman in Solar Stories with 2 Comments

Leigh Seddon, a renewable energy industry pioneer, addresses concerns about the impacts of net metering on utility prices in Vermont.

Electricity meterUnder Vermont’s net metering laws, first adopted by the Legislature in 1998, residential and commercial utility customers are allowed to build their own renewable power systems (up to a 250 kilowatt size limit) to offset their annual energy use, up to a hundred percent but not more. Because these systems produce power when the sun shines or wind blows, there are times when they produce more energy than the customer’s building needs. At these times, excess energy is allowed to flow back to the grid and “spin” the utility meter backward. But utilities don’t have to pay for this energy; it is just “banked” on the grid until the customer needs it.

From a utility’s perspective (and that of other customers), net metering systems reduce the utility’s overall annual energy load and help utilities meet growing electrical use from existing power plants, such as low-cost, in-state hydro facilities. Thus, expansion of net metering will reduce the need to buy expensive new power and help keep electrical rates in Vermont more affordable. This is especially true of solar energy net metering systems, where energy is produced at times of peak demand (our sunniest, hottest days) when the spot price of electricity can soar to forty cents per kilowatt-hour (kWh) or more. Equally important, these systems derive their energy from renewable sources that don’t cause pollution, use fossil fuels or lead to climate change.

All this adds up to long-term savings for utilities, ratepayers and our environment. This led Green Mountain Power (GMP) to launch their solar program two years ago that pays solar net metering customers an extra six cents for every solar kWh produced regardless of whether that energy is used on-site or exported back to the grid. GMP’s program was designed to have no rate impact on other customers. In two years, GMP’s solar program has quadrupled the number of solar net metering systems on their grid and led to the installation of over 5 megawatts (MW) of new solar generation.

The fact that GMP could bring on 5 MW of new solar generation at a cost of 6 cents per kWh has led legislators to look at expanding such a program to all utilities statewide. If such a program were approved this year by the Legislature, Vermont could more than double its solar generation in a just a few years, all financed and maintained by homeowners and businesses. Expansion of net metering is not a panacea that will solve all our energy issues, but it is a cost-effective way to encourage the installation of new renewable energy systems without raising rates.

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