TVA’s Resistance to Net Metering Creates an Obstacle to Household Solar Power

In Small Planet by Patrice Coleleave a COMMENT

The beauty of photovoltaic (PV) technology is that it cuts out all the middlemen, the intermediate steps in turning sunlight into electricity.

We don’t have to wait for plants or algae to store the sun’s energy as starch, then convert that starch into coal or oil over millions of years, or ethanol in a matter of days. We don’t even have to wait for the sun’s energy to drive wind and weather, whose energy we can harness with turbines. Instead, sunlight goes into a PV cell and electricity comes out. This holds great potential for the energy independence of individuals and small businesses, but some energy policy in this region seems to be working against that.

A combination of financial incentives and falling prices has spurred growth in the solar industry in Tennessee as elsewhere. The cost for installing residential and commercial PV systems is now about half what it was just a few years ago. The price of polysilicon, a crucial component of PV panels, fell substantially over the past five to 10 years. Technological advances have improved efficiency, and simplified installation systems go more quickly, reducing cost. The federal Solar Investment Tax Credit (ITC) stimulated demand by allowing owners of residential and commercial PV systems to deduct 30 percent of the cost from their income taxes.

The Solar Energy Industries Association says there are currently more than 150 solar companies employing 2,200 people throughout the value chain in Tennessee. Most of those are contractors/installers, but many are manufacturers of panels or other components of solar systems.

However, a lot of the financial incentives that kick-started that industry are going away. The ITC is scheduled to be phased out over the next five years. Unlike many other states, Tennessee does not offer tax incentives for private solar generation. And TVA solar incentive programs have shrunk.

That doesn’t mean TVA isn’t sold on solar, now that utility-scale PV systems (those that produce more than 5 megawatts) are cost-competitive with non-renewable energy sources, even natural gas. Recent TVA investments in solar farms are an encouraging step toward sustainability, but that bypasses some of solar power’s most appealing benefits.

For a lot of people, the most exciting thing about solar is its potential to be a homegrown, dispersed power supply that doesn’t depend on the grid or centralized utility. Debbie Dooley, an early Tea Party organizer, actually became a solar advocate precisely because it represents energy independence for the homeowner, as well as having the national security benefits of diffuse energy sources being less vulnerable to attacks on the grid.

As long as batteries for a household system cost several thousand dollars, though, grid-tied systems are the most practical option for most people. Being tied to the grid gives you the option of drawing power from it when your PV array can’t keep up with consumption. The ideal arrangement for convenience and cost is to have a grid-tied system with net-metering that allows the system to export to the grid whatever excess electricity is being generated. The meter runs forward when drawing from the grid, backward when sending power to the grid, and presumably moves not at all during times when generation exactly matches consumption.

Net metering is said to create a smoother demand curve and allows utilities to better manage their peak loads. By encouraging generation near the point of consumption, net metering reduces strain on distribution systems and reduces energy losses in long-distance transmission. Net metering is allowed in 36 states. It is not an option for the 9 million people served by TVA.

The reason offered by the nation’s largest public power utility is that net metering is not allowed by the law that created TVA. The utility generates electricity and sells it to 155 local power companies (LPCs). The LPCs create and maintain the distribution system and sell the power they bought from TVA to us. The contractual arrangement with TVA is a “buy all, sell all” whereby the LPCs can purchase electricity only from TVA. This effectively forbids net metering, because TVA interprets that as the LPC buying power from the owner of the PV array.

Thus, any grid-tied solar system within the TVA region must have dual metering, one to measure power coming off the grid, another to measure power going to the grid. The arrangement with TVA is likewise “buy all, sell all” in that you have no choice but to sell all the power you generate to TVA, then you buy back whatever you actually consume. If you are able to get in under TVA’s “cap” for its Green Power Providers incentives program, you will be paid the retail rate for the power you generate. All others are paid the lower wholesale rate. Everyone pays the retail rate for what they consume. So the home or business owner pays for the PV system, and TVA makes money on the power generated by it.

It might be hard to understand how having two meters instead of net metering changes the identity of the party to whom you are selling power, given that’s it’s all traveling down the same wires. What is easy to understand is that it increases the return on investment time for the system’s owner, which can be a disincentive.

It seems inevitable that this bottleneck in solar proliferation will be eliminated by improvements in technology and cost. Hopefully, the young solar industry will be able to hang on in the meanwhile.

Patrice Cole's Small Planet educates readers on local issues pertaining to environmental quality and sustainability. Topics include particular threats to natural resources, public policy with local impacts, and advances in environmental science. She has 25 years of professional experience in environmental science and sustainability. She has also taught biology, ecology, environmental planning, and sustainability at the University of Tennessee and Pellissippi State Community College. Cole earned a master’s degree in planning and a Ph.D. in ecology and evolutionary biology at UT.

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