Solar Power in NH Part 4 – Residential Solar Output and Net Metering

In a previous post, I pointed out that there are many reasons for installing solar in New Hampshire and that residents should be taking advantage of these and benefiting from energy delivered daily by the sun to our homes. In this post, I take a look at a typical NH home with an installed solar system and examine its electricity consumption profile and its generation of solar power.

Let’s consider a typical NH home that uses about 600 kWh/month (7200 kWh/year). Such a home uses approximately 20 kWh/day, but this is highly variable and depends on the season, the outside temperatures, the number and nature of the installed electrical devices, and whether there is someone at home during the day.

Let’s assume that this home has installed a 5 kW system solar system (about 17 panels), which would (according to the NREL PVWatts calculator) produce about 6500 kWh/year or about 18 kWh/day. On an annual basis, this is a close match between consumption and generation. However, solar electricity generation only occurs when the sun is up and, as pointed out in a previous post, is highly dependent on the time of day, temperatures, and the amount of cloud cover. As a result, there is a significant mismatch between the hourly solar power generation and the consumption profiles, as shown in the figures below for typical winter and summer days in NH. The hourly consumption data were generated from a smart meter at a NH home and the hourly generation data from the PVWatts calculator.

The daily electricity consumption profiles, shown in blue, are different in winter and summer. In winter, there is an early morning bump up in electricity use as the house is warmed up, showers are taken, and breakfast is made. It then it drops off until the evening, when the home is heated again, lights are turned on, cooking is done, and the TV is turned on. In the summertime, we don’t see as much of a bump in electricity use in the morning because home heating is not required, but towards the end of the afternoon, the air conditioner gets turned on, along with cooking, lights, and TV to produce a significant increase in electricity consumption. (For this particular home, the AC unit is clearly used very frugally because the late afternoon/evening AC bump up is typically larger.)

Overlaid on both charts is the generation of electricity from the solar panels. For both dates, a sunny day was chosen and it can be seen that, for a most of the daylight hours, the system generates more electricity than the home is using. In this case, the excess energy is fed back into the grid and is available to be used by someone else nearby who does not have an installed solar system. It is this excess electricity, produced from a multitude of solar systems in New England, that allows the coordinator of the electric grid, ISO-NE, to ratchet down the generation of electricity from large fossil-fuel generation plants during this period. However, as soon as the sun sets and solar electricity production plummets, these same plants need to be ready to turn on electricity production to keep on the lights in New England. This highly variable generation profile presents challenges for utility-scale electricity generation in these days of large-volume solar power generation.

This data is notable because it shows that approximately 15 kWh, ~70% of the solar electricity produced during the daylight hours, makes its way to grid because the home’s electricity consumption is low during the period of peak solar power production. Using generation data from the PVWatt calculator and residential load profiles for a NH residence from the Department of Energy, I did the same hourly analysis for a whole year and it turns out that more than 60% (!) of the generated solar power would be exported from the home and energy use profile I chose. For a home using more electricity, say 9500 kWh/yr, the exported amount drops to 51%. For homes with larger solar systems, the amount could increase to above 70%. It is not obvious, but it turns out that even if, on a daily (or monthly) basis, solar power production is short of a homeowner’s needs, most of the electricity generated by the solar system makes its way to the grid.

During the period of excess solar power production, the homeowner is delivering electricity into the grid and building up an electricity credit that can be used to offset their consumption during the nighttime hours. This, basically, is how the concept of net metering works – the homeowner gets credit for excess electricity generated and is only billed for their net consumption. In this example, the home consumed 20 kWh during the winter day but generated 19 kWh from their solar system, so the homeowner would only be billed for their net consumption of 1 kW (if it was done on a daily basis). For the summer day, the home used 22 kWh but produced 24 kWh, to earn the homeowner a credit of 2 kWh. Net metering is typically done over a month so the daily credits and debits are totaled and, at month end, the ratepayer is responsible for paying any shortfalls or enjoying any credits that they can then apply the following month’s electricity consumption.

However, net metering is changing. The approach of just netting the consumption and generation of kilowatt hours and being billed for the monthly difference at retail rates is being reconsidered. There has been a lot of pushback from utilities across the country because they are concerned that net metering customers do not pay their fair share of the transmission and distribution costs that are built into rates. Homeowners with larger solar systems, who generate more electricity than they consume, end up not paying for transmission and distribution(T&D) costs but enjoying the privilege of been connected to the T&D grid and of drawing on it when the sun sets. Net metering is under review across the country and in NH the Public Utilities Commission (PUC) recently decided that the matter was an important one, that an interim change was necessary and further study was warranted.

The PUC issued new net metering regulations in June 2017, and, as a result, homeowners installing new solar systems could see a reduced benefit from net metering. If a home imports electricity - calculated by the monthly netting of imported kWh and exported kWh - the home owner will pay the full retail rate for their net usage. This includes all components of their electrical bill which includes the energy service charge, transmission and distribution charges. Other charges such as the system benefits charge, stranded cost recovery charge, and the state electricity consumption tax (the so called non-bypassable charges) will be billed for every kWh imported and the homeowner will not receive any credit for these charges for their exported kWh. However if, on a monthly netting basis, a home exports electricity,  solar system owners will receive for the net exports the full retail rates for the energy service and transmission charges but only 25% of the distribution charges and no credit for the non-bypassable charges.

In the table below I have calculated the implications of these changes for a typical Eversource retail customer in NH. The second column shows the components of present retail rates for electricity which total up a retail cost of electricity of 18.1 cents/kWh. The last column shows what the homeowner would be paid if they export more than they use after the recent net metering changes. The export rates take into account full credit for energy services and transmission charges, 25% of the distribution charges and no credit for the non-bypassable charges. My calculations show that the homeowner with monthly exports would receive 14.5 cents/kilowatt hour for their net exports which is a 20% reduction off the retail rate for imported electricity. Of course, the exact reduction depends on the particular utility and their retail rates in effect at that time. These changes will largely impact homeowners who install larger solar systems that deliver net monthly exports of electricity and will extend the payback period for their solar investment.

It should be noted that these changes do not impact homeowners who already have installed solar systems. They will continue to benefit from the strict monthly netting of consumption and generation and they will receive the benefit of full retail rates for exported electricity until 2040.

In my next post, we will take a look at the same home and look at the financing of a solar system and the importance of the various incentives, including the net metering changes, in generating a return from a new solar installation in NH.

Until next time, remember to turn off the lights when you leave the room. 

Mike Mooiman
Franklin Pierce University

mooimanm@franklinpierce.edu

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