Net metering analysis: When utilities attack, go big

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The main lobbying group representing the electric utility industry, the Edison Electric Institute (EEI), initially thought that net metering wasn’t something to worry about. In recent times EEI “is happy to come to any state at any time” to battle and has stated that it is currently fighting this policy in a dozens of states. On pv magazine USA, the topic is a regular.

In an effort to quantitatively understand how changes to net metering policies and billing structures would affect the return on investment earned by residential solar power owners, Aurora has conducted a “large parametric study” that analyzed over 45 million scenarios. The resulting white paper, Analysis of U.S. Net Metering Policy Changes, found that there was a slight diminishment in returns due to policy changes, and that – ironically – these changes should lead to larger installation sizes.

The group analyzed the above most popular policy changes  across the nation. For instance, they noted that when when policy was adjusted to make net metering credits expire at a certain time (below), the choice of month, as well as the size of the system, had effects. For instance, North Carolina’s Duke Energy had reset credits at the end of May to align with seasonal rate changes.

The data shows that the smaller the system size, the less revenue loss occurred, but that as long as your credit expiration month was in March, you were most optimized. This of course, precedes increasing generation and low electricity use months of April and May.

 

Combing the data from these various tools, the group then made recommendations on system sizing to allow customers to gain the highest returns on investments on a market-by-market basis.

The table below outlines specific markets that had major changes in their net metering policies. For instance, you see a recommendation in California to increase system sizing to cover 100-110% of a customer’s bill, instead of 95-100%.

Whereas in Hawaii, who has an over abundance of solar electricity on its small power grid, the analysis suggests under-sizing the solar power system to 60% of a user’s electric bill to minimize any electricity export. Of course, this can be offset with a battery.

Broadly speaking, the group found that most updated net metering policies did lead a slight reduction in revenue going to home owners. However, as Aurora found that 40-80% of electricity in most systems was being consumed at time of generation, the effects were blunted.

This analysis was published to help show off that Aurora’s online design tools recognize these state-level nuances within our 50 markets, and can describe them aptly when delivering financial models to end users.