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Compensation for Energy Generation - Utah Solar Pilot

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Areg Bagdasarian's picture
Areg Bagdasarian
Program Manager and Research Analyst DataCapable

Areg Bagdasarian is an energy analyst and program manager covering the world of alternative energy vehicles, energy efficiency and technological change in the utility and smart grid world. He's...

  • Member since 2012
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  • Dec 17, 2019
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Proper compensation for the energy that's generated from renewable sources behind the meter (onsite) is an issue that seems to always be in flux. States have different approaches how best to compensate users per kilowatt hour and some are more generous than others. The state of Utah is no exception. Net metering as its known, provides end-users with compensation most often in the form of credits through your electric power utility. For the excess energy generated onsite and fed back onto the grid, Net Energy Metering customers (NEM) can be compensated at the full retail rate of energy, or less. Today, Utah and 41 states in addition to Washington D.C. and select U.S. territories, according to the National Renewable Energy Laboratory (NREL) offer some type of net metering compensation plans. Net energy metering is an important incentive for the use and adoption of distributed generation but certainly isn't the only one. Credits from net metering can also be accumulated and rolled over into future billing cycles when a user exports more power onto the grid than they import. 

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But like so many other initiatives in the renewable world, coming up with good compensation schemes on a per kilowatt-hour basis takes some experimentation through structured pilots. Utah is working through public surveys and studies to get better insights into how much users could be compensated for the excess power created behind the meter for solar. To that end, Utah Clean Energy Solar is working with 1,000 state residents who are customers of Rocky Mountain Power to understand their energy use and net imports / exports to the grid. The data will be used specifically where it matters the most; for presentation to the Utah Public Service Commission when it reviews a rate compensation case on net metering coming up to understand what rates should apply to customers beginning in 2021. Do distributed generation customers use and export energy to the grid in a fundamentally different way in Utah than in other states? These findings will be critical not just for one state but could help with compensation schemes nationwide. 

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Matt Chester's picture
Matt Chester on Dec 17, 2019

Credits from net metering can also be accumulated and rolled over into future billing cycles when a user exports more power onto the grid than they import.

Are there any downsides to this? I imagine there may be some issues if they are paid in full when the value of the kWh generated in the middle of the night is not equal to the value of the kWh used during the day and storage inefficiencies come into play, too. 

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Bob Meinetz on Dec 17, 2019

"I imagine there may be some issues if they are paid in full when the value of the kWh generated in the middle of the night is not equal to the value of the kWh used during the day and storage inefficiencies come into play, too."

Spot on, Matt. What you describe - the devaluing of availability - is not some issue, it's the issue with any source of non-dispatchable energy. To the extent it's non-dispatchable it limits nuclear's usefulness too, particularly in situations where supply is expected to follow demand.

That requirement is a holdover from oil and gas generation, however. A future grid might subtract energy as needed rather than add it, with nuclear plants generating max demand at all hours of the day, and diverting energy to hydrogen/liquid fuels production when necessary. It's only practical when emissions from a source are zero and fuel costs are next-to-zero.

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