Why Net Metering Is Good For Businesses In Alaska – by Andy Baker, PE 2/10/09 “Celebrate the power of nature”TM …with YourCleanEnergy LLC
Net metering provides a stable return on investment to businesses because the value of electrical power produced remains equal to the retail rate of grid electricity over the design life of the renewable energy equipment installation. The retail rate of electricity is transparent to the public and is regulated by the Regulatory Commission of Alaska under state law. With net metering, escalation of the retail rate of grid electricity can be predicted with enough certainty to calculate payback periods accurately for renewable energy system installations. When combined with allowable federal tax credits, deductions and accelerated depreciation, net metering often makes the difference between renewable energy investments with favorable and unfavorable returns.
Net metering ensures positive and lasting growth in the residential and commercial renewable energy sector of Alaska. For every KW of net metered renewable energy equipment capacity installed in Alaska, approximately $10,000 will be spent in Alaska for consulting, materials, and installation. Additional economic growth will occur as a result of investments made in operation and maintenance of equipment and after market support services.
Net metering allows business owners to harness the power of nature on their land and buildings to produce affordable, reliable and safe energy to offset their monthly electrical usage.
Many commercial properties have open land and/or available roof area for installation of solar or wind power generation systems. Some commercial properties have access to exceptional sources of falling water, river currents or tidal variations. In practice, net metering functions much the same as energy conservation, allowing a business to simply use less electrical power from the utility grid. The main objective of net metering is to allow businesses to offset electrical usage with on site generation. Although sometimes net metering can be perceived as a threat to a utilities revenue base, programs in place in other rural western states clearly show that net metering improves public relations with commercial customers and does not negatively impact the utilities bottom line operating costs.
Net metering keeps the financial accounting of a grid tied system simple.
“True” net metering means there is one bi-directional meter installed at the customers meter base which can record usage taken from the utility and excess production returned to the utility, if this occurs. The most cost effective method of net metering for utilities is when excess production is reconciled annually, preventing the utility from processing small credit checks on a monthly basis. The installation costs of commercial renewable systems often prevent a business owner from sizing a renewable energy system to produce more than the annual consumption of power of the business.
Net metering keeps the technical elements of a grid tie system as simple and safe as possible. In addition to having a single bi-directional meter installed, a business that is producing electricity from a renewable energy system must also install pure sine wave inverters that convert DC power to grid quality AC power. These inverters must comply with the national UL and IEEE standards that will ensure they will not “backfeed” if the grid is down or if the inverter power is not synchronized perfectly with the grid. Thus the liability to the utility and business owner for the safety of the grid connection is essentially eliminated throughout the life of the renewable energy system.
Net metering is an effective way for a business to reduce both carbon emissions and show by example that they are serious about helping the State of Alaska achieve energy independence. Instead of relying solely on electrical power from distant fossil fuel generation plants, a business can produce grid quality electricity on site, reducing energy normally lost in transmission lines.