The Role of Net Metering in the Evolving Electricity System (2023) / Chapter Skim
Currently Skimming:
1 Introduction
1 Introduction
Pages 9-25
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 9... ...
. Policymakers implemented NEM to help achieve clean energy resource diversity, financing assistance, carbon reduction goals, and in some instances to encourage economic development, increase resilience, and reduce system costs.1 For example, Rhode Island's net metering law states that its purpose is: to facilitate and promote installation of customer-sited, grid-connected generation of renewable energy; to support and encourage customer development of renewable generation systems; to reduce environmental impacts; to reduce carbon emissions that contribute to climate change by encouraging the local siting of renewable energy projects; to diversify the state's energy genera tion sources; to stimulate economic development; to improve distribution system resilience and reliability; and to reduce distribution system costs.2 Net metering is receiving increasing amounts of attention, support, and scrutiny today as greater quantities of distributed generation (DG)
|
From page 10... ...
The committee will provide an analysis of the opportunities and challenges relevant to net metering, including broad stakeholder acceptance and adoption of distributed renewable energy resources. The committee will assess net metering in the context of alternative transactional mechanisms and incentives, and evaluate its potential to contribute to a decarbonizing, equitable, and resilient electricity system.
|
From page 11... ...
As such, the discussion should be within the broader context of electric utility regula tory policies that impact equity, including access to distributed energy resources and designing successor tariffs to increase the adoption of distributed energy resources by customers from lower-income and marginalized communities. • How Net Metering and Alternatives May Affect the Evolution of the Electricity System.
|
From page 12... ...
. The shift to pricing based on avoided costs shown in Figure 1-1 has ranged from wholesale prices to estimates of the value of DER to the system, including externalities; Chapter 4 describes the elements involved in estimating that value.
|
From page 13... ...
similarly credits customers at the retail rate for electricity exported to the electricity grid. As initially implemented using a single, analog utility meter for each participating customer, a utility customer's billing meter ran backward as electricity was exported to the electricity grid, and forward as electricity was consumed from the grid.3 This definition of net metering refers to traditional net metering, where at the end of each billing period the net amount of energy (measured in kWh)
|
From page 14... ...
NET METERING VARIANTS Variants for Customers with On-Site Generation Prominent examples of net metering variants that largely rely on the underlying utility ratemaking or rate design structure include the following: • Net Billing: A tariff designed to compensate customers with distributed gen eration for exported production at a netting interval (a defined time period) that may be shorter than the usual monthly billing period (e.g., daily, hourly, time-of-use window, or even instantaneously)
|
From page 15... ...
• Inflow/Outflow Rates: A variation on net billing where a customer avoids pay ing for electricity at the retail rate when the customer's own generation is con sumed onsite and offsets that consumption, but outflow to the grid is credited at a rate different from the retail rate. • Buy-All, Sell-All Rates: Customers with distributed generation purchase elec tricity from the utility at the same rate as those without, and sell electricity back to the grid at a rate that could be administratively determined, set at avoided cost or wholesale market price.
|
From page 16... ...
PROMINENT NET METERING VARIANTS NET BILLING BUYALL/SELLALL RATES A tariff designed to compensate customers Customers with distributed generation purchase with distributed generation for exported electricity from the utility at the same rate as production at a netting interval (a defined those without, and sell electricity back to the grid time period) that may be shorter than the at a rate that could be administratively usual monthly billing period (e.g., daily, determined, set at avoided cost or wholesale hourly, time-of-use window, or even market price.
|
From page 17... ...
at the retail rate; (2) at an administratively determined rate (which can range from an avoided cost rate, a wholesale market price, or a VOS rate)
|
From page 18... ...
RATE DESIGN AND NET METERING As noted in the definition above, net metering is a billing mechanism intrinsically tied to the retail electricity rate structure. Compensation for BTM DG provided by net metering 6 Community solar owned by entities other than the utility can have similar impacts to individual roof top solar on the utility system and for other customers.
|
From page 19... ...
Refinements or changes to retail rate design will affect the level of the credits (or compensation) net metering provides to BTM DG customers, as well as impacts on other customers and the electricity system.
|
From page 20... ...
In rate designs without demand charges or customer charges reflecting only the costs to connect, energy charges have also typically included what may be considered fixed (capital) costs of generation, transmission, and distribu tion, which have been amortized over a period representative of the life of the investment.
|
From page 21... ...
Demand charges recover a portion of fixed charges associated with capacity costs (i.e., investments in generation, transmission, and distribution) to ensure that the utility has the capability to meet customers' peak demand even if that capacity is not used every hour.
|
From page 22... ...
With the increasing deployment of BTM DG under traditional net metering, customer consumption, and therefore utility revenues, have been declining.11 There are a number of rate design options to address declining (or increasing) cost recovery.
|
From page 23... ...
at a rate that differs from the retail rate. This rate could be administratively determined, based on avoided costs, wholesale market prices, or the value of solar.
|
From page 24... ...
Further Considerations Affecting Rate Design Setting rates to recover utility costs of service is a key principle guiding ratemaking. It can help to avoid negative impacts and inaccurate price signals for all customers.
|
From page 25... ...
With this background, the committee analyzed the economic, equity, technology, and regulatory considerations that policymakers should take into account as they develop and modify net metering and other policies to enable customer adoption of BTM DG and other distributed energy resources (DER)
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.