Utilities encourage solar homeowner energy waste

utility-meter-w-suneditors-blog-entry3Our utility here in Aurora, Colo., Xcel Energy allows us to do something apparently very few other utilities allow their customers to do: It lets us bank extra kWh we produce with our home solar system and save them indefinitely for future use. Put slightly differently, for every extra kWh we produce we get a kWh credit that we can use later, whether that’s tomorrow, or three years from now.

This is a pretty damn great thing to have if you know you’re going to be using those banked kWh for a future or current electric car.

As we found out via a thread we created on utility policies toward extra solar production by grid-tied home solar owners on MyNissanLeaf.Com recently, too few other folks out there have the same option. However, as great as Xcel’s unlimited kWh banking option is, we’re not going to let them off the hook entirely as they, like many other utilities, radically underpay customers with home solar who choose to be paid out for their excess production, offering them about one-third of what they charge customers per kWh.

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Since we went online with our 5.59 kW solar system a little more than a year ago, we’ve banked 5,654 kWh with Xcel. That’s essentially 20,000 miles of electric driving at 3.5 miles per kWh.  It’s also about $3,000 worth of gasoline replacement at 25 mpg and $3.80 per gallon.

Hopefully, someday we’ll actually begin to start tapping into that fuel bank we’ve created with Xcel  (Hint to Nissan: Get those LEAFs to Colorado, pronto!).

Which utilities allow solar kWh banking?
I wanted to determine if others out there with solar are also allowed to bank extra kWh they produce with their utility.  So, I created a thread at MyNissanLeaf.Com – an online bulletin board dedicated to people who want to yap about the LEAF — asking who had this option.

Turns out, among the 17 different people who posted to that thread, only one was with a utility — Los Angeles DWP —  that offers unlimited banking of extra solar kWh produced.

In some cases, utilities required solar homeowners with grid-connected systems be paid out at the end of the year for any extra kWh they produced, usually at a paltry per kWh rate of something like 2 to 4 cents per kWh. In Colorado, for those who opt for the yearly payout option (not a good choice, actually) Xcel pays about 3 cents per kWh. Meanwhile, it charges customers 11 cents per kWh used!.

1st-week-solar-inverterUtilities pay little for extra kWh
The incredibly tiny amount that utilities pay for solar overproduction by customers is underscored in this post from “ERG4all” in Phoenix –>

We have a system that produces 6.7 kW at its peak. It was put on line on June 2, 2010. At June 2, 2011 it had produced almost 16,000 kWh. In March our electric utility (NEC) wrote us a check for $156 which was for over 6,000 kWh that we sent to them (only 2.3 cents/kWh).
–ERG4all, Phoenix, Ariz.

In other cases, MyNissanLeaf.Com posters indicated that they have to use all the extra kWh they produce within a year or lose them –>

Here, our utility pays around .03/kwh for any excess on April 30. We aren’t allowed to ‘bank’ them for more than a year. So my strategy is to use them all up before April 30 … SRP buys back any ‘banked’ Kwhs on April 30th every year at around .03/Kwh. That’s why I’m planning on using up any surplus before Apr. 30.
–LEAFfan, Phoenix, Ariz.

In one case, for years the utility did not pay the solar homeowner anything at all for over-producing until, finally, California law was changed to require some form of compensation for overproducing –>

We put as many panels as our roof would hold, 3.8kW worth several years ago, knowing we’d want an EV, and would need the extra power. We’re in Pacific Gas & Electric territory, on their E7 Time of Use rate, fairly favorable. But have been “donating” an excess of about 1,400 kWh/year since 2007. State law changed so that we are now supposed to get paid for the excess, not certain how much, just decided by the CPUC, I heard, some pitiful number.
–FosterDavy, Novato, Calif.

Wasteful  solar practices?
“FosterDavy’s” story prompted “hill” from Lake Forest, Calif. to criticize utilities and, in our view, rightly so –>

In CA, legislation was drafted forcing ALL CA electric utility companies to pay for surplus. Problem is/was that the wording is/was so vague (regarding a reasonable compensation), that utility companies are now dragging their feet deciding how LITTLE they can get away with paying. The legislative history shows that the reason the law is/was enacted was because grid tied systems would often just waste the excess, rather than let it ride … because many area utility companies would pay NOTHING … or not even allow the surplus count as a credit. CA grid tied PV system owners ought to be regularly attending PUC hearings to make certain their utility companies are not permitted to pay virtually nothing, which in essence, would defeat the legislation.
–hill, Lake Forest, Calif.

It sure seems to that many (most?) utilities are talking out two sides of their mouth here.

1-year-of-banked-kwhFrom one side, they’re encouraging customers to conserve energy and, of course, playing up their own energy conservation promotion efforts. Out of the other side – the one they don’t want people to pay attention to — they’re creating a huge incentive for solar homeowners in their territories to waste energy.

From a feel-good environmental perspective, you might say that solar homeowners who produce more electricity than they use annually will get the satisfaction of donating clean electricity so that their neighbors indirectly go green too.

However, from an economic perspective, paying solar customers nothing, or nearly nothing, for excess solar production  is simply an invitation to those customer to use all of the energy they produce and, on top of that, not to conserve energy.  

Why would you go out of your way to conserve energy only to end up with extra solar kWh for which you’ll get paid just 2 to 4 cents per kWh?

And, if you do not have a payout option at all and must use all extra kWh you produce within a year, why would you conserve, only to donate your kWh to your utility?

Washington State’s feed-in tariff
While the main moral of the story that emerged on this thread is that utilities are not treating solar customers respectfully in terms of the extra kWh they produce and, worse, are actually encouraging waste, there was a little bit of good news. It came from Dave in Olympia, Wash., who noted that in Washington, which has a feed-in tariff program, there’s actually good incentive to produce lots of solar electricity:  

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In WA State, if you use a WA State licensed solar installer with panels built in WA State you are paid at the rate of 54 cents/kwh.  Yeah, that would be $3240 if getting paid for that much power. Granted we ain’t got sun, but we do have some people making a killing on solar. I know a guy charging 2 EVs, getting all his electricity for free and still banking nearly $1,000 a year on the buyback program. He is smiling all the way to the bank!
— DaveinOlyWA

In fact, according to dsireusa.org,  the Washington State feed-in tariff ranges from $0.12/kWh to  $1.08/kWh, “depending on project type, technology type and where equipment was manufactured.”

Not too shabby, eh?

Of course, as Dave points out, there’s not a lot of sun in Washington, at least if you live west of the Cascades. But, if you live on the eastern side of the Cascades, you could be sitting pretty 🙂

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