Tribune Business – September 23rd 2014
Confusion reigns over the Government’s intentions for ‘Net Metering’ vs ‘Net Billing’
The Government was last night warned that its energy self-generation initiative would cause “some confusion” without further clarification, although it was praised for getting renewables “out of the starting blocks”.
Guilden Gilbert, vice-president of Alternative Power Sources (Bahamas), told Tribune Business that the Government needed to clarify how much power homeowners with renewable energy systems could send to the Bahamas Electricity Corporation (BEC) grid.
And he also questioned why yesterday’s policy statement, issued by Kenred Dorsett, minister of the environment, seemingly prevented businesses – other than manufacturers approved under the Industries Encouragement Act – from sending power generated from their own renewable systems to the BEC grid.
Mr Dorsett did not return Tribune Business messages seeking comment, but he unveiled the framework terms for the long-promised Residential Self Generation (RESG) and Renewable Energy Power Purchase/Interconnection agreements between commercial customers and BEC.
The Government’s National Energy Policy, also released yesterday, confirmed that it wants the RESG initiative to generate 10 per cent of this nation’s total energy mix as early as 2014, although limits have been imposed on each individual homeowner.
The only permitted technologies are wind turbines or solar photovoltaic (PV) systems, while BEC can limit the number of participants. To facilitate all this, the Electricity Act has to be amended, which Mr Dorsett promised would happen “in short order”.
On New Providence, RESG participants can only supply a maximum 5 kilowatts (KW) to the BEC grid. This amount is further restricted on the Family Islands:
• On Abaco, Eleuthera and Exuma, homes with renewable systems can only supply a maximum 3 KW to the grid.
• On Long Island, Bimini, San Salvador, Andros, Inagua, Cat Island, Great Harbour Cay, Black Point and Staniel Cay, the limit is 2 KW
• And for all other islands, the maximum is 1 KW.
Mr Gilbert, though, told Tribune Business that the Government needed to better clarify what it meant by these maximum limits.
He said: “We believe the statement issued by the Minister when defining what can be sent back to BEC during the operation of these systems will cause some confusion.”
Using the 5 KW maximum for New Providence as an example, he explained: “We believe there needs to be clarification as to what is meant by 5 KW. Is it 5 KW at any one time? Is it 5 KW per day? Is it limiting system sizes for qualification to send power back to the grid to 5 KW?”
Mr Gilbert acknowledged that the Government and BEC were being “prudent” in setting the maximum supply limits, as they needed to control/manage the energy levels within the latter’s grid and prevent outage-causing power shortfalls.
He suggested, though, that there were alternatives to the Government’s proposal. ““Bermuda, for example, limits, what it calls Small Scale Renewable Generation Systems (SSRG) to less than 10 KW of total generated capacity of the system in order to qualify for an inter-connection agreement,” Mr Gilbert said.
“This is the same thing as a Power Purchase Agreement. In Bermuda, this was initially limited to the first 750 subscribers so that the total potential power produced by renewable energy was 7.5 Mega Watts. We believe there has now been some relaxing of this policy to include numbers greater than 750.
“It should be noted, however, that the system size in Bermuda is only for qualification to have an interconnection agreement signed between the homeowner and the utility; it does not, in any way, limit the size system the homeowner can have installed.”
When it came to commercial/business renewable energy systems interconnecting, and feeding excess power into the BEC grid, Mr Dorsett said the only permitted participants are public/government buildings and approved manufacturers under the Industries Encouragement Act.
And the maximum amount of power they can supply is limited to BEC’s “estimate of the customer’s peak demand” or 50 KW, whichever is greater, on New Providence.
For Abaco, Eleuthera and Exuma, the limit is placed at 25 KW, and for all other Family Islands it has been set at 5 KW per commercial/business renewable system.
Mr Gilbert expressed concern that Mr Dorsett’s statement appeared to exclude, and prevent, a wide range of Bahamas-based businesses from using their renewable energy systems to supply BEC and offset their use of the latter’s power.
He told Tribune Business: “It appears to prevent private sector commercial building owners from being able to use renewable energy at all, even as an offset to its [BEC] usage.
“We were of the view that the intent of the Government of the Bahamas, through its ongoing commentary on the goal of introducing Power Purchase Agreements between system owners and BEC, was that these agreements would be available to all.
“We know, for example, that most Caribbean and Atlantic countries (Bermuda) have restrictions on the amount of power that can be supplied to the grid and some have, until recently, prevented commercial Purchase Power Agreements but none, that we are aware of, exclude private commercial entities from using renewable energy.
“Maybe we have misinterpreted the intent of this clause. We know for a fact that inter-connection agreements between commercial entities and the utility, which is privately owned, have just been announced in Bermuda.”
With the existing Electricity Act allowing self-generation up to 250 KW, Mr Gilbert suggested: “Maybe the Government can consider allowing commercial entities to install RESG up to 250k KW in size, but do not allow any power to be sent back to the grid at this time.
“At least by doing this two things can be accomplished: The commercial entity can have some ability to manage its monthly cost of power, and in the event of power outages the entities do not have to rely on noisy stand-by generators and the fuel costs associated with these stand-by generators.”
He added: “I believe that both homeowners and commercial entities should be freely able to install whatever sized renewable energy systems they wish, and maybe the Government should re-word Section 15 of the Electricity Act to allow for this, notwithstanding the fact that the amount of power going back to the grid needs to be controlled and limited to prevent grid destabilisation.
“There is a rational reason for limiting the amount of power being sent back to the grid. To put if very simply, imagine, if you will that there are 10,000 homes each generating 5 KW of power or 50 MW, and that power is being sent back to the grid and used as part of the overall energy mix.
“Then there is sudden cloud coverage. This cloud coverage could reduce the production of these systems from 50 MW to 25 MW. The shortfall of 25 MW would have to be made up instantaneously by BEC generators, and if the generators cannot ramp up quick enough to make up the shortfall a power outage could be caused.”
Mr Dorsett’s statement said the self-generation initiative would be assessed after two years, and homeowners and businesses would be paid via net billing and the use of meters that could measure the two-way flow of energy.
“BEC shall credit the RESG’s account for all energy (kWh) up to the maximum threshold allowed that is supplied to the grid, based on BEC’s applicable fuel adjustment charge prevailing during the month the energy is supplied,” Mr Dorsett said.
If the renewable supplier used more BEC-generated electricity than it supplied to the grid, it would pay the net difference between the two. But, if it supplied more energy than it received from BEC, the supplier’s account would be in credit that was carried forward into the next billing period.
“Excess generated energy (kWh) within the allowable threshold will roll over form month to month until October of each year, at which time any energy credit will reset to zero. There will be no payment for excess energy generated by RESGs,” Mr Dorsett said.
Mr Gilbert, for his part, questioned why the Government had opted for net billing instead of net metering. The latter method would only see renewable suppliers billed for the BEC electricity they used.
Under net billing, Mr Gilbert told Tribune Business that BEC would pay renewable energy providers a lower price than it charged electricity consumers. He said providers were “hearing through the market” that BEC would pay between $0.15-$0.18 per KWh, compared to the $0.40-plus it currently charges.
“Typically, under net billing the utility buys the power from you at a lower rate than what they sell at,” he explained. “I’d like to see some clarification of the standards the Government will use in net billing.
“All around we need some clarification, but the good thing is we are seeing some movement in acceptance of the role of renewable energy systems. At least this is a good starting point. We have to start somewhere.
“I have to commend the Government for getting to this point, and hopefully we will get it out of the starting blocks and start to move along. In the big scheme of things, I still believe it is in the long-term best interest for the Bahamas to become less reliant on fossil fuels for the production of energy within the country.”
Mr Gilbert said that while there were “bound to be disagreements” between the Government and private sector, the Bahamas was now moving in the same direction as its CARICOM rivals.
Speaking for the Renewable Energy Association of the Bahamas, he added: “We, the industry stakeholders, are not interested in butting heads with the Government or BEC.
“We wish to work in unison to drive the energy sector forward, and we trust we will also see the Government of the Bahamas and BEC interact more with the industry stakeholders so that we can all be on one accord, or as close to one accord as can be expected.”