The good news is that Madison has just passed a policy that will allow energetic residents who build home energy generation systems to sell their excess power back to the grid:
Any Madison resident who wants to set up a wind generator, solar panels or any other type of electricity-generating device on their property will find new rules in the municipal code that are especially applicable if they want to sell any surplus power back to the city.
In late September, Madison officials approved a contract with Heartland Consumers Power District, a wholesale provider of electricity to Madison, that gave HCPD the authority to handle any electricity purchases from “small power production facilities” [Chuck Clement, “Madison, HCPD Sign Electricity Agreement,” Madison Daily Leader, 2015.10.12].
Whoo-hoo! Here comes net metering… something already available to nearly every other photovoltaic power producer in America.
The bad news is the city and Heartland have adopted ALEC’s preferred policy of only paying wholesale for small-scale home-grown electricity:
During the discussion about the city-HCPD agreement, both [Mayor Roy] Lindsay and Steve Moses, Heartland’s customer relations manager, emphasized that small-scale electricity producers would receive payments based on the wholesale rate for electricity and not the retail payment rate.
“(The producers) are not going to get the same rate that they’re paying for electricity at the retail level…We will go ahead and take (the electricity) and pay whatever the price is,” Moses said [Clement, 2015.10.12].
You may think it’s fair to pay Joe on Center Street the same wholesale rate for electricity that Basin Electric or Otter Tail Power gets, but numerous studies show Joe’s clean, renewable energy adds more value than the retail cost of electricity.
Come on, Russ! Heartland can do better than wholesale for local renewable energy pioneers. Bump up that net-metering rate, and put Madison on the map as a do-it-yourself energy mecca!
At least they’ve put one foot forward.
The average electric customer pays about 11 cents/kwh. The local electricity provider will pay you about 3.5 cents/kwh for excess power that you put back onto the grid and then sell it to your next door neighbor for 11cents/kwh. There is no line loss for the company in a situation like this. Why wouldn’t Heartland be for a deal like this? Big whoop.
Paul, will Richard’s sentiment (something is better than nothing) be enough to encourage folks to install home power systems?
A percentage of something is better that all of nothing. Home generators do not provide enough reliable electricity to warrant a premium price from providers. If a home generator can provide a few dozen megawatts 24/7/365, then yes, by all means they deserve top dollar for their surplus. Until then, they get something for their leftovers.
Cory,
Just paying the wholesale price will not be the tipping point that gets people to install solar. If people install solar it will be because they believe in it and want to affect climate change.
Many states already have some form of net metering and will pay a buyback rate closer to the retail price. A renewable energy committee in Dakota Rural Action has lobbied the legislature for about three years to enact new laws concerning a fairer payback for power put back on the grid. They have not had much success. Paula Hawks has been the person sponsoring the bills.
One of the couples working to change the laws have built a large house near Nemo and their house is entirely powered by solar panels and a bank of batteries for storage. They are not even hooked onto the grid. I mention this to head off naysayers that may say solar will not work. It does work.
The paradigm for electricity generation and distribution is changing. In places there are smaller grids being developed. Places like, say, a large university where they can generate and distribute their own power. The current system such as Basin Electric building huge plants and selling to a large area might not be the system of the future. These mini-grids are already being developed in the states along the west coast.
It’s strange that this is even news, honestly. Heartland is legally required to accept power produced by independent generators. That’s been law for a long time. It may be that someone in Madison finally put up a system, but this is standard practice. Sad, they’re getting away with taking advantage of individual power producers, but standard practice.
Funny that retail buyback in other states hasn’t caused the utilities to collapse. Why can’t South Dakota get with that program?
Sabrina, that is strange. The law you cite, is that state or federal?
It has to make business sense for the power company, so I think paying wholesale is reasonable. The thing that folks seem to miss is that you are also *not paying* for energy you use off your solar, so you’re really saving 11.5 cents *and* being paid for excess, possibly at the same time. Yeehaw, I say.
Rachel,
Actually a person who installs solar panels is paying for power. You have to amortize the cost of the panels over time. If the power buyback by the power companies is set at a higher rate then the time to pay for the panels is shorter. In states such as California and Nevada different companies will install solar panels on your roof for free. The homeowner gets to use free electricity and whatever goes back on the grid is credited to the company that installed the panels. Suppose that South Dakota will ever go for anything like this or will we keep building coal fired power plants.
And before anyone says that South Dakota gets their electricity from the Missouri dams, they do not. South Dakota only gets 10-15% of its electricity from the dams. The rest has been spoken for by the big cities like Chicago years ago.
Cory, the link you provided shows an interesting bevy of studies, but doesn’t go into much detail on ~how~ net metering saves the grid money. I do enjoy the distribution of studies by utility company, PUC, and other; it shows how where you stand can influence the perspective.
My questions would be what all goes into the calculus to determine cost? If the proponents of net metering aren’t considering the costs of spooling up or down powerplants, and the great inefficiencies of doing so, or the maintenance cost of transmission lines baked into the retail cost of power, then they’re missing big pieces of the calculus.
I would love to be totally off the grid. It’d take a long time to recoup the 20k+ investment to get solar panels installed, though, and the additional ???k for house-capable batteries. If I knew I was going to stay in my house for the rest of my life, it would probably pencil out okay, assuming 20-30 year lifespans of technology. Otherwise… oofta.
What wholesale cost is being considered? The same utilities will say that they pay far more than the “wholesale” cost when they must buy such power from other utilities. Then they use their supply problem to jack up their retail charges to cover such costs or to build more capacity. It would seem that making home solar and wind generation part of the system and fair payment for the power would benefit all.
Regulators have to start considering this before they ever agree to allowing a utility to raise their retail rates.
I review the Heartland Policy III-2 written into ordinance by Madison (see the September 28 agenda packet). I notice that Heartland expects each power producer to “enter into a contract for a minimum original term of ten (10) years and thereafter until terminated by giving at least twenty-four (24) months previous notice….” I suppose there’s nothing wrong with being tied to that contract for ten years, even if after five years one decides to take down the solar panels… but such long terms seem unusual. Do they serve simply to allow more stable, predictable supply?
Wayne, if you were totally off the grid, you wouldn’t be able to get net-metering refunds. :-)
Paul, in California and Nevada, where the companies put in solar panels for free and then claim the credits for excess power, do those installers get the retail rate?
Cory, I am not real sure of the rate that the solar panel companies receive. I have a brother who has a winter home in Las Vegas and he is having panels installed on his house. The rate received by the companies is evidently high enough that they can install these panels at no cost to the homeowner.
Paul, I would imagine those installers could balance their books or turn a profit on a smaller reimbursement. They’re installing the same small power generators as consumers here, but they are doing it on a larger scale, meaning they get savings of scale that the individual homeowner couldn’t.
And that brings us back to a larger question: is small-scale, distributed power generation more economically feasible and efficient than industrial-scale power generation? Are a million little generators (turbine here, panel there) better than two or three big power plants?
Cory, one thing that doesn’t get mentioned is that solar is producing electricity during the daytime when the power demands are highest. This decreases the need to build extra power plants needed for this peak demand period. Power produced from solar panels on your home and returned to the grid as excess is routed next door to your neighbor, thus cutting down on line loss.
I’m sure that solar produced electricity might be more feasible in the cities than in rural areas but it is happening now and seems to be working.