One of the nice things about residential solar systems in Minnesota is that they’re eligible for net metering. You have an upstream meter and a downstream meter and are charged for electricity based on the net consumption. So, if your home uses $40 of electricity over a month but your panels produced $60, you’ll get money back from Xcel. Not $20 back, since there are base fees to cover, but you’ll still get a check.
A common beef from the pollution industry and their legislative allies against net metering goes something like this:
Residential solar users are freeloaders. They’re selling electricity to the grid at retail rates, yet benefit from being attached to the grid when they really need it.
Or, as Rep. Pat Garofalo puts it “solar is dumb“.
Granted, this argument makes sense at a high level. If the price a residential solar user receives for the energy they contribute to the grid is the same as what they take off the grid, that’s a pretty sweet deal.
But, it’s a bit more complicated than that, which is something the anti-solar crowd chooses to ignore.
Here are Xcel’s current rates for electricity (not counting base fees, taxes, etc.):
Energy Charge per kWh:
June through September…$0.08671
October through May…$0.07393
But, Xcel offers other pricing models, including Time of Day pricing where customers are charged far higher rates during peak grid times, then far less during off-peak times.
That’s a significant difference. They charge more than 2X as much for electricity during the day, and offer a whopping 70% discount on overnight power consumption.
Now, let’s look at what hours solar panels generate power. Here is data from the past three days from my home’s roof:
Looks like 6am – 6pm is the energy producing window. So, during those hours, my panels are a net-contributor to the grid of most of that energy. That’s when my power meter runs backwards (technically, there’s a separate upstream meter).
My family is generally out of the house well before 9am, so our morning electricity consumption would be considered off-peak by Xcel in their time of day pricing plan. We’re generally home by 5:30pm, so there is some on-peak consumption between 5:30 and 9pm, but generally nowhere near what was added to the grid throughout the day.
So, I’m selling around $3/day of electricity during peak-grid hours Xcel at $0.08671/kWh. They can then turn around and sell that electricity for more than twice what they pay me for it. Of, if time shifting makes more sense to you. They sell me back my own electricity overnight at a time when electricity is 70% cheaper than they paid me for what I generated.
I’m a net-contributor of electricity to the grid at times when the grid needs it most. I’m generating that electricity locally so it doesn’t need to be transmitted from polluting power plants or rural wind farms. I’m selling electricity for far below market rates, and I’m buying electricity for far above market rates. Yet, I’m the freeloader?
Oh, did I mention that Xcel doesn’t allow solar power generators to use Time of Day pricing? Net metering is only allowed when net metering allows Xcel to arbitrage the power they’re buying/selling to solar power generators.
My guess is that the return on my solar panel investment would be around twice as fast if I could net meter at rates available to others. Taking away this ban on market rate solar sales/purchases seems like a good way to stimulate private investments in locally produced power.