TOU Questions

[Mr.Hyde]

Hello Everyone,
I have a couple TOU questions as they pertain to energy storage and solar and could make a big difference in my ROI.

My utility (Penn Power) apparently has opt-in TOU rates:

PA Time-Of-Use Pricing

Super Off Peak: 0.5331x (11PM - 6AM, every day)
Off Peak: 0.7377x (All other times)
On Peak: 2.0140x (2PM - 9AM, M-F)

I'm not sure how these compare around the country, but it is interesting that the On-Peak hours are only in the afternoon/evening, not in the morning.

Question 1:
If I just add a battery (and a grid-tie inverter for it) that could power my loads during On-Peak, could I reduce my energy cost? I would charge it from the grid during Super-Off-Peak (which only costs 0.5x) and discharge it during On-Peak. The rest of my load would be during Off-Peak (0.7x).

Question 2:
If that battery was large enough to power my whole day's worth, wouldn't that halve my bill? I currently pay 1.0x all the time. If I only charge during Super-Off-Peak and discharge during the rest of the day, my new rate becomes 0.5331x of what it was before, right?

I'm not saying that either of those scenarios necessarily makes sense from an equipment cost / ROI standpoint, but just making sure I understand how this works.

Then, let's add Net-Metering.

I just signed a contract to add 15kW of solar panels to my house(!!). If I understand the paperwork for Penn Power correctly, they expect I may push up to 15kW (the rating of the Sol-Ark 15k) back to the grid.

Question 3:
Taking the battery from Question 2 and combining it with Solar and Net Metering, if I combine whatever sun is available, with whatever battery is available during On-Peak and dump 15kW back to the grid for those 7 hours, does my bill become massively negative? Whatever power I use during those hours I can sell at 4x the cost it takes me to charge the batteries... right? And if there's enough sun, I can sell any excess energy at a huge mark-up. In fact, if I had a ~110kWh battery just for this purpose and charged it during Super-Off-Peak and discharged it during On-Peak, wouldn't that net me hundreds of dollars a month (assuming my actual loads were handled by solar + more battery)?

Is this really how Net Metering works with TOU?

Thanks!

 

[Mike 134]

In Illinois with Com-ed I am not eligible for time of use pricing because I have solar. However, their net metering plan pays one for one, so I use the utility as my "battery". One power outage lasting more than 2 hours in 20 years so I just rely on my camping generator if the need should arise.

 

[Mr.Hyde]

In Illinois with Com-ed I am not eligible for time of use pricing because I have solar. However, their net metering plan pays one for one, so I use the utility as my "battery". One power outage lasting more than 2 hours in 20 years so I just rely on my camping generator if the need should arise.

Yes, I was worried about this, but the site seems to indicate that you can use TOU and Net Metering together:

Net metering customers are eligible; however virtual net metering customers are not eligible for TOU pricing. Customers enrolled in budget billing are not eligible for TOU pricing."

This further expanded on in the FAQ (that for some reason requires you to log in so I will screen shot it):

 

[stuffnjunk]

Yes, I was worried about this, but the site seems to indicate that you can use TOU and Net Metering together:

This further expanded on in the FAQ (that for some reason requires you to log in so I will screen shot it):
View attachment 180481

If you generating solar in PA, PA uses SREC's from what I have read. You might want to look at that. I don't know if you get 1 to 1 and SRECs or if they keep the SRECs for themselves. It will all be in the fine print, usually reduced in size. I don't have the same power company as you, but I can tell you they are some sneaky buggers.

I've read a lot of things on here and on the net about how crazy california's electric system is. You may want to look at california's stuff and see if it is applicable to you and your provider. From my understanding, they are storing power during the low period and selling excess capacity back during the high period.

 

[Mr.Hyde]

If you generating solar in PA, PA uses SREC's from what I have read. You might want to look at that. I don't know if you get 1 to 1 and SRECs or if they keep the SRECs for themselves. It will all be in the fine print, usually reduced in size. I don't have the same power company as you, but I can tell you they are some sneaky buggers.

I've briefly looked into SRECs. These seem to be a different category to Net Metering.
My understanding is that these are more like credits from the state to encourage renewable energy generation. PA has super low rates for SRECs, so I'm not expecting to get much for my SRECs.

Net metering is between me and my electricity supplier to pay me for energy I push back to the grid. My main unknown (as it relates to my Question 3) is whether the energy I push back into the grid is credited at TOU rates, or 1 to 1. It seems like reading the FAQ language that it is actually at the TOU rates.

 

[stuffnjunk]

I'm not a solar expert, I haven't installed a system yet, so I am not the best qualified person to ask these questions to. I will say about 15 years ago I looked into getting a very large wind turbine due to the high winds. Back then, they (the power company) was going to charge me distribution charges for every KW of electric I produced, and they were keeping the green credits for themselves. That was net metering. From my latest research, it doesn't appear that much has changed, the homeowner gets the srecs. Those are about $30 bucks each right now. I don't know about you, but an additional 30 bucks for each kw seems ok to me. I'm sure they still charge distribution charges. As they said to me on the phone "we aren't in the business of making homeowner's money". Each utility is different, so you have to read your stuff thoroughly.

Anyway, 15 years later, every single ridgeline around me has massive wind turbines on it. Back then they told me it wasn't feasible.

 

[Mr.Hyde]

I think my biggest concern is this piece of text in the agreement with Penn Power:

The Customer acknowledges and agrees that operation of Customer’s generation facility is intended primarily to offset part or all of Customer's electricity requirements in accordance with the Net Energy Metering Rider. Customer further acknowledges and agrees that excessive generation by the Customer’s generation facility, as determined solely by the Company, is cause for disqualification for service under the Net Energy Metering Rider.

So... if I push too much power back to the grid (and importantly, they won't tell me what "too much" is), then they can shut off my power.

 

[BentleyJ]

The paragraph above seems fairly straight forward. As a customer, you are not going to be allowed to become a NET generator (technically a competitor) which is a liability to the power company. The Sol-Ark inverter can be set up to limit total sell back so it somewhat matches up with what you will later consume at night and during cloudy conditions. In CA for example we still get a monthly bill that itemizes NET metering for the 30 day time period BUT we only have to settle up once every 12 months. Most years we have few hundred kWh of NET production for which we receive a dollar credit on our bill that can be used for next 12 months to offset fixed costs and taxes. SCE does NOT pay market value for excess electricity, we get wholesale value which is about 3 cents per kWh compared to the 35 to 60 cents per kWh we pay depending on time of day.

 

[Mr.Hyde]

The paragraph above seems fairly straight forward. As a customer, you are not going to be allowed to become a NET generator (technically a competitor) which is a liability to the power company. The Sol-Ark inverter can be set up to limit total sell back so it somewhat matches up with what you will later consume at night and during cloudy conditions. In CA for example we still get a monthly bill that itemizes NET metering for the 30 day time period BUT we only have to settle up once every 12 months. Most years we have few hundred kWh of NET production for which we receive a dollar credit on our bill that can be used for next 12 months to offset fixed costs and taxes. SCE does NOT pay market value for excess electricity, we get wholesale value which is about 3 cents per kWh compared to the 35 to 60 cents per kWh we pay depending on time of day.

Yeah, that was my concern. It isn't clear what threshold they use to determine "excessive" generation.

That said, it seems pretty clear that the PA law specifies that excess generation each month is credited to the next month, and then at the end of the year, the utility must compensate net-metered generators for their excess credits at the "price to compare" rate, which should be the retail price of the electricity (minus the distribution component).

So I should make good money for excess generation... assuming I don't hit whatever (secret) threshold Penn Power has.

 

[BentleyJ]

So I should make good money for excess generation... assuming I don't hit whatever (secret) threshold Penn Power has.

Keep us posted, I'm curious to see how much excess they will allow.

 

[zanydroid]

So I should make good money for excess generation... assuming I don't hit whatever (secret) threshold Penn Power has.

IMO it’s pretty unfair to expect to be compensated at retail for excess generation.

Retail compensation up to annual consumption and being allowed to bank energy credits in the grid across seasons is already quite generous of a subsidy.

 

[Ampster]

then they can shut off my power.

No , they will just stop crediting your for power you produce. That is what is meant by, "disqualifaction for service under the Net Metering Rider." You would continue to get normal service just not Net Metering.

 

[Mr.Hyde]

IMO it’s pretty unfair to expect to be compensated at retail for excess generation.

Retail compensation up to annual consumption and being allowed to bank energy credits in the grid across seasons is already quite generous of a subsidy.

To be clear, the only reason I "expect" to be compensated at retail rates is because it is PA law.

But that aside, I think its a bit odd that you think its "unfair" to think that the power flowing out of my house and into my neighbor's house should be worth the same as the power that flows from down the street into their house. Note that "retail" rates are only for generation, not distribution.

 

[Mr.Hyde]

No , they will just stop crediting your for power you produce. That is what is meant by, "disqualifaction for service under the Net Metering Rider." You would continue to get normal service just not Net Metering.

Thanks for that clarification. I just wish I knew what the threshold was.
Also with TOU rates, it is possible for me to generate net 0 kWh, but still have a sizeable credit.

 

[zanydroid]

To be clear, the only reason I "expect" to be compensated at retail rates is because it is PA law.

But that aside, I think its a bit odd that you think its "unfair" to think that the power flowing out of my house and into my neighbor's house should be worth the same as the power that flows from down the street into their house. Note that "retail" rates are only for generation, not distribution.

Not sure what you're trying to say. Are you trying to say that they should pay you some premium because they avoided distribution from a utility scale generator far away? They could also ask you to pay a premium for banking your energy, or for keeping load following generators ready to help out your solar... And yes there's a "avoided cost" concept to justify paying people more than wholesale but less than retail.

What I mean by unfair is that if the POCO can buy electricity from generators at wholesale to supply the neighbor, why should they be forced to buy from you at retail?

For net metering compensation up to your annual consumption, they are already being forced to do that. In fact they're also being forced to give you arbitrary buffer credits for short term imbalance between your demand and generation, which is not free for their infrastructure to support.

For new installs in California, customers no longer get net metering, and they're also required to heavily incentivized to buffer their own imbalances within hourly/daily usage with a battery.

 

[Mr.Hyde]

Not sure what you're trying to say. Are you trying to say that they should pay you some premium because they avoided distribution from a utility scale generator far away? They could also ask you to pay a premium for banking your energy, or for keeping load following generators ready to help out your solar... And yes there's a "avoided cost" concept to justify paying people more than wholesale but less than retail.

What I mean by unfair is that if the POCO can buy electricity from generators at wholesale to supply the neighbor, why should they be forced to buy from you at retail?

For net metering compensation up to your annual consumption, they are already being forced to do that. In fact they're also being forced to give you arbitrary buffer credits for short term imbalance between your demand and generation, which is not free for their infrastructure to support.

For new installs in California, customers no longer get net metering, and they're also required to heavily incentivized to buffer their own imbalances within hourly/daily usage with a battery.

?‍
Clearly the electricity that enters my home is worth the retail rate. So the electricity that exists my home is also worth that. I suppose they are missing out on the profit they would get due to the difference between wholesale and retail?
I thought the whole point of TOU was that they need help balancing supply and demand across different periods. No one is forcing them to set those multipliers. If the electricity on the grid between 2PM and 9PM isn't worth 4x the electricity on the grid between 11PM and 6AM, then they shouldn't set the multipliers like that.

Yes, they are being forced to pay for extra power that enters the grid.. Should they not? I should just give it away for free? It doesn't seem like they are required to offer Net Metering, so I'm not sure why you're up in arms defending giant power companies.

 

[Hedges]

We were allowed (not sure if still) to aggregate meters of multiple adjoining properties for net metering purposes, if all in the same name.

Imagine if you created the "Sesame Street Power Co-op", which had all the neighbor's meters in it's name, and processed the individual meter readings to sub-meter bills to each property owner. For production, you'd get a credit a bit below retail (but above cost), and your neighbors would get to buy your power a bit below retail.

The co-op would then buy power from the grid at retail, and if it exported net power (your production exceeds all neighbor's combined consumption), it would receive whatever wholesale rate they pay. The goal of course is to consume 100% of production within the co-op.

 

[Mike 134]

To be clear, the only reason I "expect" to be compensated at retail rates is because it is PA law.

But that aside, I think its a bit odd that you think its "unfair" to think that the power flowing out of my house and into my neighbor's house should be worth the same as the power that flows from down the street into their house. Note that "retail" rates are only for generation, not distribution.

In Illinois I get one for one credit on the power, distribution and all taxes. IMO it's not a good business model because I do nothing to repair or install the distribution wiring, yet I get paid for it. But I'd be a fool not to take it!!!!

 

[zanydroid]

I suppose they are missing out on the profit they would get due to the difference between wholesale and retail?

Yes. And that markup also has to go towards supporting the infrastructure, so it's not pure profit, as they say.

Or rather, suppose POCO buys at retail and sells to your neighbor at retail. How are overheads going to get covered?

It doesn't seem like they are required to offer Net Metering

Most places with Net Metering in my mental model, it ends up being because PUC forces it on the POCO.

why you're up in arms defending giant power companies.

I'm up in arms (hypocritically, as a NEM customer, but hey I can put on my academic hat while also taking subsidies) about defending economically sustainable systems.

Yes, they are being forced to pay for extra power that enters the grid.. Should they not? I should just give it away for free?

What if they just told you that only zero export was the only allowed interconnect agreement? They won't even take it from you at that point, you'll need batteries or hot water dump load to get value out of excess solar.

If you were fully exposed to the wholesale prices, there is a real possibility at some point of zero or negative pricing during mid day solar hump. Negative pricing already has happened several times in US and Europe grid, so any generation that was that are non-dispatchable/non-load following had to pay to give away the power at those hours.

Fortunately solar is dispatchable (in the sense that they can stop on a dime) (setting aside details like the fact that grid tie inverters need feedback from POCO to stop) so it's unlikely solar / battery storage facilities ever have to pay to give away their electricity.

Water gravity storage MAY have to pay to give away their electricity if there's very high water levels/precipitation at the same time as negative prices.

No one is forcing them to set those multipliers. If the electricity on the grid between 2PM and 9PM isn't worth 4x the electricity on the grid between 11PM and 6AM, then they shouldn't set the multipliers like that.

Physics (solar being pushed out during the peak hours of the day, temperature of environment for cooling) and economics (supply and demand - peak demand is the overlap between work hours and people going home) determine that. They pay more for T&D (the depreciated extra cost of sizing the system) & generation during peak than during off peak. So they can pay you more wholesale.

 

[zanydroid]

So the electricity that exists my home is also worth that

The other issue here is that it is generally not legal for you to directly sell the electricity (regulatory capture in part, I guess)

So you have no way of entering into an agreement to sell your electricity to your neighbor.

(and you would have to pull a cable over there anyway)

IOW the POCO has control over distribution. So because of the way the game works it's not symmetric.