Renewable tracking

Net Metering (also referred to as net energy metering or NEM) is the billing arrangement with your utility provider to receive credit for excess renewable electricity your on-site generation system delivers to the grid. A 'net meter' tracks the net kWh purchased by the customer through the utility company metering point.

On-site generation can be by photovoltaic (PV) solar arrays, wind, or other renewables such as biofuels or even hydro. To track renewables properly in UtilityManagement, you must first determine which of several PV scenarios is applicable.

The tracking and Cost Avoidance process is similar for each, but different bill formats are used for tracking, and the meter setup process also varies. Below is a tracking process overview, followed by links to each of four possible scenarios. The links take you to the relevant sections of our best practice document on the subject.

Tracking process for PV net metering

  1. In EnergyCAP, create the accounts and meters, creating the appropriate bill formats for your scenario.
  2. Receive monthly bills for the Supplier, Local Distribution Company (LDC) and the renewable system owner (through a Power Purchase Agreement (PPA) if you don’t own the system), and enter them. It may be necessary to access a PV submeter data website that contains PV production data and to run a report or download of kWh in the same date range as the LDC bill.
  3. Proceed with normal monthly reporting tasks. If cost avoidance reporting applies, run the Calculate Savings processor first.

Choose your scenario

Determine which of these four common PV scenarios applies to your situation.

  1. Net metering by the LDC, without deregulated electric generation supplier, owned system (no PPA).
  2. Net metering by the LDC, with deregulated electric generation supplier, owned system (no PPA).
  3. Net metering by the LDC, with deregulated electric generation supplier, PPA (non-owned system).
  4. Net metering by the LDC, without deregulated electric generation supplier, PPA (non-owned system).

Factoring in Cost Avoidance

If Cost Avoidance reporting is used, it is necessary to perform special adjustment configuration tasks. Certain calculations must be updated annually for each NEM meter. Cost Avoidance tracking for PV Net Metering requires a consistent and thoughtful approach.

Scenario #1

Net metering by the local distribution company, without deregulated electric generation supplier, owned system (no PPA).

  1. Create one account to represent the monthly local distribution company (LDC) bill. The account type is full service and the vendor is the LDC. Set up one meter to represent the LDC's NEM meter.
  2. See the sample bill format (previously FD_KWH_A_Y_T1_05).
  3. Complete the configuration tasks for Cost Avoidance if needed.

Scenario #2

Net metering by the LDC, with deregulated electric generation supplier, owned system (no PPA).

  1. Create an account to represent the monthly LDC bill. The first account type is distribution only and the vendor is the LDC. Set up one meter to represent the LDC's NEM meter.
  2. See the sample bill format (previously FD_KWH_A_Y_T1_06).
  3. Create a second account to represent the supplier bill. The account type is supply only. Do NOT set up a second meter. The supplier uses the LDC's meter for billing, attach the LDC meter to the supplier account. By entering supplier bills on the second account, UtilityManagement cost accounting reports for this deregulated vendor are accurate.
  4. Use template S_KWH_A_N_T1_01. This template tracks the supplier bills separately. Note that the Electric Supply Usage line item is informational and is the same NEM KWH that appears on the LDC bill. By treating it as informational it is not double-counted on use reports. 
  5. Complete the configuration tasks for Cost Avoidance if needed.

Scenario #3

Net metering by the LDC, with deregulated electric generation supplier, PPA (non-owned system).

  1. Create an account to represent the monthly LDC bill.  The first account is distribution only and the vendor is the LDC.  Create one meter to represent the LDC’s NEM meter. 
  2. See the sample bill format (previously FD_KWH_A_Y_T1_07).
  3. Create a second account to represent the monthly PPA bill.  The account is supply only and the vendor is the PPA vendor.  Create a second meter because a physical submeter exists that measures the total PV array production.  
  4. Use template S_KWH_A_N_T1_01. This template tracks the PPA bills separately so that reports correctly show the amounts paid to the PPA.  Note that the Electric Supply Usage line item is informational and is the same PPA kWh that you enter on the LDC bill (the second line item on the template shown above).  By treating it as info only it is not double-counted on usage reports.  
  5. Create a third account to represent the monthly deregulated supplier bill.  The account is supply only and the vendor is the supplier.  Do NOT set up a third meter.  The supplier uses the LDC’s meter for billing purposes, so attach the LDC meter (not the PPA meter) to the supplier account.  By entering supplier bills on this third account, EnergyCAP cost accounting reports for this deregulated vendor are accurate.
  6. Use template S_KWH_A_N_T1_01. This template tracks the Supplier bills separately so that reports correctly show the amounts paid to the Supplier.  Note that the Electric Supply Usage line item is informational and is the same NEM kWh that appears on the LDC bill.  By treating it as info only it is not double-counted on usage reports.  

Scenario #4

Net metering by the LDC, without deregulated electric generation supplier, PPA (non-owned system).

  1. Create one account to represent the monthly LDC bill.  The account is full service and the vendor is the LDC. Create one meter to represent the LDC’s NEM meter.
  2. See the sample bill format (previously FD_KWH_A_Y_T1_08).
  3. Create a second account to represent the monthly PPA bill. The account is supply only and the vendor is the PPA vendor. Create a second meter because a physical submeter exists that measures the total PV array production.
  4. Use template S_KWH_A_N_T1_01. This template tracks the PPA bills separately so that reports correctly show the amounts paid to the PPA.  Note that the Electric Supply Usage line item is informational and it is the same PPA kWh that you enter on the LDC bill (the second line item on the template shown above). By treating it as info only it is not double-counted on usage reports.  
  5. Complete the Configuration Tasks for Cost Avoidance, if needed.

Configuration tasks for Cost Avoidance

Special configuration is required for NEM and PV.

The most important principle of on-site generation is that kWh reductions in the building because of energy management are always valued at the LDC prevailing unit cost. Some people may say that the value of saved kWh is zero because PV electricity is free, particularly when the system is owned and the cost is considered a sunk cost, but this is not an accurate representation of actual out-of-pocket costs of the building owner.

  • The PV system typically cannot be throttled. Therefore 100% of the PV output either goes to the building or is excess production fed back into the grid.
  • PV kWh is always used first. The grid supplies the constantly varying demand while the PV provides the base load.
  • When a kWh is conserved because of energy management, that kWh reduction is a grid kWh, not a PV kWh. Therefore it should be valued at the prevailing grid unit cost.

When the PV meets the entire building load, such as a sunny Sunday when the building is unoccupied, kWh reductions don't reduce grid kWh because none are being consumed. A kWh reduction saves a PV kWh, which means that kWh is fed back to the grid. This kWh is banked by the LDC and is withdrawn and used later. This replaces the need to buy a new kWh from the grid, and its value is the same as the grid's prevailing unit cost.

What is the grid's prevailing kWh average unit cost (AUC)?

In non-NEM situations, AUC is calculated from the monthly LDC bill (plus supplier bill, if applicable) by dividing the total cost by total kWh consumed.

This doesn't work with NEM because:

  • The average unit cost cannot be calculated in a month when the net kWh is negative. This is uncommon but can occur in a summer month when the building has low occupancy.
  • Many NEM tariffs provide an annual true-up. To correctly calculate an AUC requires an entire year of bills.
  • It is typical for an LDC bill to have a high KW demand charge because at some point during the month building load was high while PV production was low. One 15 minute period out of the 3,000 quarter hours in a month sets up a high billed demand. It is possible for a high demand charge in a low NEW month to drive the AUC artificially high.

Calculating NEW Average Unit Cost

  • Use a proxy non-NEM building. Calculate the annual AUC with 12 recent LDC bills from one or more similar buildings. This should be updated annually.
  • An alternative is to contact the LDC and ask what they consider the AUC for this class of service. Be sure to add any applicable non-tariff charges. The LDC publishes average tariff costs, but these usually do not include sales tax or state-mandated surcharges.

Enter a special adjustment

Now that an AUC is established as the value of avoided kWh use, the next step is to make a special adjustment for every NEM meter.

  1. Select the meter and then click the Savings tab.
  2. Add an adjustment on the Special Adjustments tab.
  3. Set the Adjustment Category as Incremental Unit Price.
  4. Set the frequency and dates. It is recommended new adjustments be added each year. (Does not need to be a calendar year.) Create a new set of adjustments each year, otherwise, Cost Avoidance does not calculate correctly. It is not recommended to edit the previous year adjustment by updating the AUC value. If you do this you are overwriting the previous year's rate. If you ever re-process Cost Avoidance, it will be incorrect.
  5. Set the adjustment method and AUC. Special Adjustments can also be entered with a spreadsheet.
  6. If you created PPA meters in scenario #3 or #4 TURN OFF Cost Avoidance because the Cost Avoidance is included in the LDC meter.

S_KWH_A_N_T1_01

Example bill templates that are no longer used.

Definitions

  • LDC–Local Distribution Company. This is your electric utility company – the grid -- to which your building is connected. SCE, PG&E, APS, SDG&E, FPL, JCP&L, etc.
  • Supplier – If and only if you have taken advantage of a deregulated electricity customer choice program, the supplier is the third party to whom you pay for the generation of the electricity delivered to you by the LDC across the grid. The supplier typically receives the kWh consumption data directly from the LDC; no separate supplier meter is required. The supplier normally invoices you using the same start and end meter reads as the LDC.
  • PPA–Power Purchase Agreement. Typically two PV ownership scenarios exist – either you own the system (you have financed it in some way) or you have entered into a long-term agreement with a vendor whereby the vendor has installed the PV at its cost and you have agreed to purchase 100% of the PV output at a predetermined cost per kWh. Under a PPA, the invoice from the PPA is essentially a supplier bill.
  • NEM–Net Energy Metering. Excess kWh from the PV, when not needed by the building load, feeds “backward” into the grid. In essence, the grid serves as a kWh bank. Excess kWh can be banked for free and withdrawn on demand. The monthly LDC invoice shows the net kWh that passed from grid to building load, which is equal to the total kWh supplied from the grid less the total kWh fed back into the grid from excess PV production. (It is possible for the monthly net to be less than zero, a situation that should be avoided by proper sizing of the PV output.)