Re-printed with permission from Metering International:

Recently I was asked to present on net metering and net billing utility efforts in the United States (US). I was to present to a group of Caribbean utilities that were interested in the topic. Of course I had to accept this burdensome task as I was heading from a utility in snowy Canada.

Utilities in the US are beginning to incent consumers to generate power and either use it or sell it back to the utility. According to the DSIRE database maintained by the U.S. Department of Energy, the Interstate Renewable Energy Council, and NC Solar Center, 43 states plus the District of Columbia and Puerto Rico have adopted a net metering policy and 3 states have adopted a voluntary utility program around net metering. In fact, I learned that in the state where I reside I could put solar panels on my roof and net meter those panels whether my homeowners association likes it or not due to the policy in the state. There is no limit to the amount of power I am able to generate and use or sell back to the utility.

Not only are the states beginning to implement these policies for customers, but they are also starting to experiment with how they might improve reliability. For instance, SDG&E has received $10 million from the US Department of Energy and the California Commission to experiment with a microgrid project. Called the Borrego Springs project, the southern California desert community effort will tie rooftop solar to battery storage units that are designed to survive a system wide outage. In theory it should be able to run on its own. If proven, it will be a step towards making the grid more resilient.

SDG&E has one of the highest penetration rates for solar rooftops. On January 17th, 2012 SDG&E filed with the CPUC for approval of a new innovative proposal called connected…..to the sun. The proposal is intended to complement rooftop solar and includes two different pilot programs that would give all SDG&E customers options to buy solar power even if they do not own a home, cannot afford a solar investment, or do not have the ability to put photovoltaic panels on their roof. Customers could choose to buy all or some of their energy from solar projects located in SDG&Es service territory or negotiate directly with a local solar provider.

Couple this with recent research that Desert Sky Group has conducted on new functionality that utilities in the US are preparing to deliver around dynamic pricing of electricity, distributed generation, and rooftop solar, and one begins to see a world where net metering and the associated net billing that must accompany it are becoming a reality. What is the end result that the industry is trying to achieve? The industry is trying to incent consumers to generate renewable energy and by doing so, helping to reduce peak demand. Can there be multiple ways to achieve the same desired result? This is what I found when presenting to a group of Caribbean utilities.

Despite the movement of US utilities towards net metering and net billing, many Caribbean utilities are encouraging something called the renewable energy rider (RER) instead. During a presentation by the Barbados Light & Power Company, I learned that net metering does not necessarily have to be the tool to encourage consumer generated renewable energy. Barbados is a Caribbean island with approximately 123,000 customers, a peak demand of 167.5 MW on sales of 934 GWh (in 2011). All generation is oil based (mostly diesel). The utility has a fuel clause adjustment (FCA) that is a direct pass through of all fuel costs used in production of electricity. Since the FCA has increased from less than 10 cents/kWh (USD) to over 20 cents/kWh (USD) over the last 3 years, the FCA now makes up approximately 60 percent of the consumers bill. Several of the consumers on the island have installed off grid PV and micro-wind systems. Some have installed and others are considering grid connected systems.

Have you ever heard of a FCA making up 60 percent of the bill? This got my attention. With this data as a background, Barbados Light & Power presented its case for the RER as opposed to net metering. The utility introduced the RER on a pilot basis in June of 2010 and it was limited to 200 consumers. Systems were limited to 5kW for residential consumers and 50-150 kW for commercial consumers and are available for PV and wind systems. The RER is calculated based on avoided cost of fuel. The RER pays participating customers a credit of 1.8 times the FCA for a minimum of 15.75 cents/kWh (USD). The money paid to consumers through the RER is included in the calculation of FCA. A meter is placed on the output of the renewable generator to measure energy produced so the full generation requirement for the island would be known (even though Barbados Light & Power may not be purchasing all).

Barbados Light & Power went on to demonstrate why the RER is preferable to them and other island communities as opposed to net metering. To summarize, the benefits to the utility included the utility getting full base revenue from all energy delivered, the utility benefits from avoided demand and avoided maintenance costs, there is no impact of payments to customers on the utilitys revenue, reduces reliance on oil, and it helps to achieve the renewable objectives set by the government and regulator. The downside included an additional meter being set as opposed to a bi-directional net meter.

For the consumers the benefits would include payments going to the renewable generator no impacting the price others pay for electricity since the payment is based on avoided cost. There was much concern over raising base rates for all on the island to implement a renewable energy architecture that only a few could afford. Other benefits included reduced reliance on oil and a reduction in the carbon footprint for society. In the future Barbados Light & Power will begin to implement time-of-use rates for consumers which will incent usage behaviors during certain times of the day.

So when you go to turn on your light, do you know if the electricity is coming from coal, gas, diesel, nuclear, solar, or a wind source? Probably not but the end result is the same – the lights come on. The point being to achieve a goal of consumers generating electricity via renewable resources, there can be multiple ways to achieve that goal. Some are going the net metering/net billing route and some are going the renewable energy rider route. I continue to learn from others in this ever-changing and evolving industry.