Item 7- Net Energy Metering & Value of Solar Briefing — original pdf

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Net Energy Metering & Value of Solar Tim Harvey Customer Renewable Solutions Manager July 2024 © Austin Energy Net Energy Metering & Value of Solar Agenda • Net Energy Metering • Austin Energy’s History • Value of Solar • Issues and Improvements 2 Net Energy Metering How it Works Production Used Onsite Offsets highest consumption tier Kilowatt Cap If kW cap is exceeded, the utility only pays for energy used onsite Minimum Bill If minimum bill, solar credits cannot reduce bill below minimum Production Not Used Onsite Receives a bill credit, typically at wholesale but varies by utility 3 Net Energy Metering Complexity Scenario #1: Customer consumes 2500 kWh and produces 2500 kWh. 50% of production is used onsite. Excess production credited at wholesale (3 cents) • 500 kWh @ Tier 4 = $91.50 • 750 kWh @ Tier 3 = $112.50 • 1250 kWh @ WS = $37.50 • Total 2500 kWh = $241.50 • $/kWh for production= $.0960 Scenario #2: Customer consumes 900 kWh and produces 900 kWh. 50% of production is used onsite. Excess production credited at wholesale (3 cents) • 450 kWh @ Tier 2 = $56.70 • 450 kWh @ WS = $13.50 • Total 900 kWh = $70.20 • $/kWh for production= $.0780 4 Net Energy Metering Inefficiency/ Caps Inequity • Can send inappropriate • Can provide a production cost signals • kW caps create an artificial threshold and lead to smaller system installations credit to high consumption customers that exceeds it avoided cost value • Can provide a production credit for to low consumption customers that is less than avoided cost value Utility Under Recovery • Austin Energy is required to recover fixed costs to serve through volumetric charges • Customers avoid making fair contributions to fixed cost recovery • Costs money and causes cross subsidization 5 Austin Energy History Net Energy Metering & Value of Solar 2004 – 2012 Austin Energy employs Net Energy Metering with a 20kW cap 2006 Clean Power Research assesses the Value of Solar with future approach for Power Purchase Agreements 2011 Base Rate Case • Austin Energy proposes recovering fixed costs with fixed charges • Lower proposed volumetric base rates would negatively affect solar customers & adoption • Value of Solar proposed as solution 2012 Solar Electric Power Assoc. names Austin Energy Utility of the year for Value of Solar 2013 Fracking impacts Value of Solar assessment 2022 Austin Energy moves methodology from future based to historically based 6 Value of Solar (VoS) • Replaced Net Energy Metering in 2012 • Eliminated Net Energy Metering caps • Customers are charged at standard rates for total consumption • Provides customers credit for all production • Based on Austin Energy’s avoided costs • Adds value for Societal Benefits 7 Value of Solar Structure Components Description ERCOT Energy Savings Ancillary Services Savings Transmission Savings Societal Benefits The weighted average of the price of energy in the ERCOT market at the time that solar energy is produced The weighted average of the cost to make sure that the right number and type of power plants are running (to prevent an outage) Calculates savings based on the average generation at peak times, the sum of wholesale transmission service charges, and the total solar generation References the federal social cost of carbon report based on integrated assessment models and Texas-specific carbon per kWh A V O I D E D C O S T S 8 Value of Solar (VoS) Rate Adjustment Schedule Stakeholders negotiated a delayed and averaged schedule for VoS rollout • Rolling five-year average • Changes every three years • Always at least 2 ½ to 5 ½ years behind consumption rate Currently • Consumption rates have increased and can be adjusted monthly to reflect the market costs • VoS Rate, based on the FY21 assessment, is 9.91 cents 9 Potential Improvements Post annual VoS assessments, improves transparency, forecasts, improves marketability when rate is trending upward Re-explore a time differentiated Value of Solar rate Use incentives to drive the adoption of desired tech, instead of the consumption rate 10 ©Austin Energy. All rights reserved. Austin Energy and the Austin Energy logo and combinations thereof are trademarks of Austin Energy, the electric department of the City of Austin, Texas. Other names are for informational purposes only and may be trademarks of their respective owners.