Home editor's blog on going solar Solar tip: Roll over extra electricity you produce

Solar tip: Roll over extra electricity you produce

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editors-blog-entry3If you're about to go solar and are thinking seriously about charging a future electric car with some of the electricity your solar system produces, pay close attenton -- very close attention -- to the different options your utility offers in terms of what you can do with any excess electricity your system generates.

Depending on the electricity rate structure where you live, banking any excess kilowatt hours (kWh) your system produces from now until that electric car is actually parked in your garage could generate far more value than what you would net if your utility pays you directly for the extra electricity you produce.

That's certainly the case for us here in Colorado with Xcel Energy -- and how!

But before we get to that, a bit of background about Xcel Energy and the Colorado Solar Rewards program.

In Colorado, Xcel offers its Solar Rewards customers three options in terms of what they can do with so-called NEG, or Net Excess Generation, on its Solar Rewards Reservation form.

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Xcel Energy pays Solar Rewards customers 4 cents per kWh for electricity they produce. Compare that to the approximately 80 cents each kWh is worth as a fuel for an EV and as a replaceent for gasoline!

Continuuos Rollover Credits
You can opt for "Continnous Rollover Credits", which means that any excess electricity your system produces will be banked on your account and will roll over indefinitely. You can choose a "Year-End Payout", according to which Xcel pays you the going wholesale rate for electricity for the year in which you've generated excess kWh (4 cents per kWh). Or, you can choose the "Waive Decision" option. This means you'll be defaulted into the Year-End Payout option until, or if, you ask Xcel to move your Solar Rewards account to Continnous Rollover status.

There are no do-overs on this decision. Once you choose to indefinitely roll over your NEG, you cannot switch to Year-End Payout. Nor can you go in the other direction. However, if you waive your decision when signing the Solar Rewards reservation form, you do have a chance to decide what your final decision will be at a later date.

Back in December of 2009, when we signed our Solar Rewards Reservation form, I chose the Waive Decision option.

Of course, as we discovered, Xcel does not remind you that you still have the option to indefintely roll over your kWh when you get your Welcome to Solar Rewards Packet in the mail about a month after your solar system has gone online.

At first glance, getting a check from your utility company rather than you cutting a check for them seems like a royal deal. But it's not -- at least not if you're going to solar-charge a future electric car and your utility does not offer Time of Use rates (TOU).

The paper work you receive gives the impression that you're locked into the Year-End Payout option -- even if you elected to waive your decision on the Solar Rewards Reservation form, which, chances are, you signed at least three, and possibly up to six months, before you get the Welcome to Solar Rewards packet.

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In many places -- Colorado is one -- banking any Net Excess Generation your solar system produces as a future replacement for gasoline in a future EV is far more lucrative than getting paid out for your excess kWh production by your utility.

Mini-panic attack
In fact, I had a mini-panic attack when I read language in the Welcome Packet that stated that Xcel is required by law to pay Solar Rewards customers out at the end of the year. I thought it meant that we were done in terms of being able to bank our excess kWh production until we get that electric car in our garage -- which is looking like it'll be at least 1 1/2 years from now here in Colorado.

Luckily, we weren't done with banking. I contacted Xcel Solar Rewards. A representative explained that, yes, we still had the option to roll over our kWh indefinitely. And I immediately excercised our one-time option for continnous rollover of any excess kWh our 5.59 kW system produces.

Why -- and how -- does this all matter? What's so bad about getting paid out by your utility at the end of the year for any NEG your solar system produces?

At first glance, getting a check from your utility company rather than you cutting a check for them seems like a royal deal.

But it's not -- at least not if you're going to solar-charge a future electric car and your utility does not offer Time of Use rates (TOU). (Basically, under TOU utilities charge more during peak hours of electric use, and pay solar customers with grid-tied systems more for the electricity their solar system produces during these peak hours).

No Time of Use structures in Colorado
Xcel does not offer Time of Use metering. But Xcel does Solar Rewards customers who produce NEG during the course of the year what currently amounts to about 4 cents per kWh. Taking our own example, in about six weeks with a 5.59 kW system we've generated about 750 excess kWh. For this, we'd receive a $30 check from Xcel. Xcel then sells the electricity it bought from us for about 4 cents per kWh for about 10 cents per kWh to our neighbors!

If you can -- and you live in an area without Time of Use rate structures -- choose the indefinite banking of kWh option over a year-end payout option. You'll be glad you did and your pocketbook will be even happier -- especially if you end up solar-charging an electric vehicle down the road.

Now let's compare the $30 we'd get from Xcel for our 750 kWh of NEG to the approximate gasoline savings the same number of kWh will generate. An electric car uses about 1 kWh for every four miles it travels, so 750 kWh = approximately 3,000 miles of driving. Yes, that's right, 3,000 miles!

Let's use the following figures to calcualte the approximate savings we are talking about here -- 20 m.p.g. and $3 per gallon of gasoline. Three thousand divided by 20 = 150 gallons x $3 per gallon = $450!

Let's put the totals for Xcel's "Year-End Payout" vs. "Gasoline savings" we'd generate from banked kWh used to power a future electric car next to each other:$30 vs. $450

Banking kWh clearly the better option
As you can see, we're talking about a truly astounding difference. In Colorado, without Time of Use, and with Xcel's wholesale electricity rate payout to Solar Rewards customers of 4 cents per kWh, banking your NEG is approximately 15 times more valuable than Year-End Payout.

There's no continuity to utility approaches to renewable energy in the U.S. So our example might not fit your situation. But if it does -- and there's a reasonable chance it does -- one thing is clear: If you're going to go solar and then buy an electric car (you might want to consider doing it in the other order) and you are going to generate some excess kWh between now and the time you park that EV in your garage for the first time, you very clearly need to:

a) choose a continnuous rollover of kWh option (if it's available);

b) pay extremely close attention to the boxes you check (or do not check) on your solar contract with your utility.

In short, you need to bank your excess kWh, not be paid out for them, because they are way more valuable as EV miles than as "pay-out" kWh from your utility.

In fact, I wonder whether future solar-charged drivers living in areas with utilities that offer Time of Use rate stuctures, might not also be better off banking any NEG rather than being paid out by their utility.

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Tapping the sun as a source of fuel for a future EV can produce potentially large savings.

100 percent rules
Granted, in many -- not all -- places in the U.S. it will be difficult for you to produce any excess kWh because utility rebates are tied to system size and maximum residential size is often capped at 100 percent of annual household electric use. In Colorado, with Xcel, you can receive a utility rebate for a system that produces up to 120 percent of your annual household use -- and our system pushes very close to the 120 percent maximum (plus, now that we have solar, we're cutting our electric use to bank more Sun Miles™ for our future EV).

Still, if you work hard to reduce your home electric use (turn down the AC and hang clothes out to dry rather than throwing them in the dryer!) after putting up a home solar system that covers 100 percent of your previous (higher) annual use, you could potentially bank a substantial number of kWh for use with a future EV -- and, I think, potentially see greater pay-off for banking these extra kWh than for being paid out for them, even in Time of Use areas.

I would love to hear from some experienced California solar-chargers regarding the following in the comments section after this entry:

a) does your utility allow indefinite kWh banking?

b) assuming indefinite banking of kWh is an option, what would you recommend to a future solar-charged driver who might potentially generate excess kWh between now and the time they first park an EV in their garage who lives in a TOU area?

Finally, it's worth pointing out that in Colorado, in Xcel territory (there are about 1.5 million Xcel customers in Colorado), choosing the Year-End Payout option makes little sense -- even if you have no intention of banking your NEG to drive a future electric car.

A four cent per kWh pay-out is already six cents lower than what Xcel customers pay per kWh today and that 10 cent per kWh rate will rise continually. Clearly 10 cents and 14 cents and 16 cents, etc. is more than four cents. If you think you'll never, ever use your banked kWh, then perhaps Year-End Payout makes sense, but only under these circumstances.

In sum, if you can -- and you live in an area without Time of Use rate structures -- choose the indefinite banking of kWh option over a year-end payout option. You'll be glad you did and your pocketbook will be even happier -- especially if you end up solar-charging an electric vehicle down the road.

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