So I was hoping the Massachusetts Utilities and the state government would come to a conclusion about how to institute (define) the new net metering regulations stipulated in the Green Communities Act passed last year by the Massachusetts Legislature and the governor. Since they’re not quite there yet, I’ll stall and we can talk about Community Net Metering (CNM), or Neighborhood Net Metering (NNM) and why we haven’t done this sooner. For the sake of simplicity we’ll call it all CNM, and prepare yourself for an interesting blog post…
CNM is a tool that can be utilized by community energy project developers to make a project more profitable. Traditionally, power generation capacity is built by large corporations in large chunks. A nuclear station here, a huge coal power plant there, lend a hydroelectric facility to the books and you’ve got a pretty good/maybe diverse portfolio. But in this equation, with a grid of transmission lines coating the country but only a few nodes of generation, there was never a place for small scale, community-based generation capacity – I’m talking everything from a roof-top solar array to two or three utility scale wind turbines behind the cement manufacturing facility. The problem has been regulation. These small generators didn’t have their own permitting and regulation categories so they fell into processes meant for 100 million dollar power plant projects. Hundreds of thousands of dollars in permitting fees and five years of public hearings kinda takes the fun out of a small wind turbine at the high school, right?
Now I’m obviously exaggerating there at the end, but the point stands that renewable energy has had trouble penetrating the market. And it makes sense from a business standpoint. Let’s think of an analogy. You’re a sock distribution company. There are four big companies who will supply you all the socks you could ever need. They deliver socks once a day in one big truck. There are also 1,000 small sock makers who offer the exact same socks. They also offer them at the same price. However, they each have separate delivery trucks. Would you, as the distribution company, even want to talk to these other smaller companies and bear the hassle or receiving 1,000 small shipments daily? You’ve got all the socks you need and you only have to talk to three business partners and deal with minimal shipments. Sure, the socks are no more expensive, but the expense comes in terms of organizing an operating the receiving of socks.
These socks are electricity. The 1,000 small companies are solar roofs and residential or community-scale wind projects. The utility is doing what’s in their best interest. They are buying ‘bulk’ electricity and keeping their overhead down in terms of managing the electric distribution grid. So regulation must enter the sock sector if we want to give the smaller companies a chance to stand up to the big sock generators, or is that power generators? Nevermind! Two points: First, yes, the costs to the utility go up because they have higher overhead. Second, we get renewable energy on the grid and achieve energy independence (avoiding price spikes, energy security issues, and, yes, save the planet from global climate change). Prices will eventually go down or level out when the market is mostly renewable-based, because there is no fuel cost for renewable energy generation and economies of scale will eventually bring equipment and installation costs down.
Sorry, back to CNM. Now, with CNM, the utility is required to do the following, based on the sock analogy. You want a sock from the sock maker that lives on your street? You got it. Support your local industry. Maybe you even have a financial interest in this particular, small-scale, mom-and-pop sock producer. If you buy 10 pairs of socks a month, that big distributor (the sock, I mean electric grid) is required to buy the same number from the producer on your street. The socks are all identical, remember, so who knows if you’re actually getting those. That’s not important. . .
The important factor here is that the distributor is required to support your local business, your local industry, and potentially your local financial interest (that means your local solar panels or wind turbines). Pretty cool, huh?
