Duck Season…Rabbit Season…

Published: Mon 03 Nov 2014
A blog entry by Christine Hertzog

Contributed by:

Christine Hertzog
Managing Director
Smart Grid Library

Christine Hertzog's Blog

This week, the Smart Grid Library features a guest writer, Chris Kotting, a colleague with SGL Partners, the consulting group of the Smart Grid Library.  

I just took a look, and I haven't blogged since the first week of this year. Egad! That was one short-lived New Year's resolution! Now, here I am writing a blog entry, and it won't even see the light of day on my blog.  I'm “guest-blogging” while my buddy Christine goes gallivanting around Europe.

To borrow a line from Warren Zevon “Poor, poor, pitiful me...” (Yes, I know that Linda Ronstadt made the song famous, but Warren wrote it for pity's sake, so let's give credit where credit is due.)

Anyway, while I'm feeling sorry for myself (in the future tense, since I'm writing this while Christine is still in the States) I see that the Solar industry is facing some nasty integration issues, some of which relate to Net Metering.

Now I've talked about Net Metering before, and I'm not a big fan of it. It is intended to be a simple way of paying residential customers for their solar (or sometimes other) generation, while at the same time providing an incentive for that generation. It creates too good an incentive, in my opinion.

To recap my issues with Net Metering:

  • Net metering pays a retail customer the same amount for each kWh that they sell back into the grid (from their rooftop solar unit, for example) that the customer pays per kWh for power that they take from the grid. It seems simple and equitable, until you look into the details.
  • The market value of the power that the customer produces may be wildly different from the market value of the power they take, and of course neither relates to the cost of producing that power.
  • That difference between the value of “sold” kWh and “bought” kWh is going to generally be pretty consistent, since when a PV unit makes power, and when a residential customer takes power (a) don't tend to be the same time, and (b) tend to be pretty consistent day-to-day.
  • Therefore, on energy, the customer either wildly overpays, or wildly underpays.
  • In addition, that kWh rate includes load-balancing, frequency regulation, and a host of other ancillary services that a “prosumer” is still using, even as a producer of power, but they aren't paying for. In fact, they are getting paid for it. (This is more of an issue where the price for power doesn't disaggregate Transmission and Distribution services. However, even in states where the services are disaggregated, the use of the net metering model assumes that consumer generation somehow offsets the cost of ancillary services.)

That's just a capsule summary, and it misses a lot of the details, but you get the idea. To my mind, the worst thing about this scenario is that it leads to customer-owned rooftop solar being installed where it isn't really economic because the inherent subsidies mask the real economic costs. It may even lead to situations where solar is not being installed where it genuinely makes economic sense, because the inherent subsidies also mask the real economic benefits.

Similarly, it leads to customer-owned solar being operated inefficiently, at least as far as the efficiency of the grid is concerned, because solar generation under a net metering model is a “non-dispatchable” supplier. Whether the grid needs the power at that time or not, it has to take it and find a use for it.

But what does this have to do with the problem of grid integration of large quantities of renewables? This paragraph from the article points out the connection:

“The largest integration challenge that emerges,” E3 found, “is overgeneration.” That is when must-run generation (non-dispatchable renewables, combined-heat-and-power, nuclear generation, run-of-river hydro and thermal generation needed for grid stability) is greater than energy demand.”

Anyone familiar with renewable energy, particularly solar, is familiar with the “duck chart” which shows the need for generation to dispatch differently to accommodate solar energy. The biggest challenge is at the “neck” of the “duck” when a significant amount of generation has to come online in a short period of time to meet the demand that is placed on the grid when solar resources drop their output. (Utility folks refer to this as “ramp rate”, how fast generation has to “ramp up” to meet the load placed on it.) The lower the “back” of the duck, the more of a problem bringing enough generation online in time becomes (the higher the “ramp rate”.)

As I just mentioned, net metering generation is non-dispatchable. The more non-dispatchable generation you have to deal with, the steeper the neck becomes. One diagram shown in the executive summary of the report shows that at a 40% renewables level, power taken under net metering is more than half of the overgeneration problem. Under those conditions, the “duck diagram” gets positively swaybacked so that, in the study, the ramp rate in one scenario approaches twice what happens currently.

So, what can be done about it? Is there no way to solve the integration problem? Of course there are ways to resolve it, but that discussion will get picked up next week, back over on my blog.

After all, they say that the best way to make a resolution stick is to make it public.