January, 2014 – A concept called “Net Zero” energy has been around for a while but we’ve heard more about it lately.
The idea is that a consumer could install enough renewable generation (usually solar) to fully offset their average daily electricity use. Since most renewable generation is intermittent (particularly wind and solar), the idea is to generate lots of electricity when the resource is available to offset the times when it is not. The excess is sold to the electric utility and re-purchased later when needed.
The concept is interesting in that most of the discussion is about setting a “net zero” energy goal and designing a home or commercial building with super high-efficiency systems with a very low energy use as a first step. The second step, of actually installing the renewable generation, is much more difficult for a couple of reasons: 1) the initial investment and 2) the economics of re-paying that investment.
Wake Electric’s average residential member uses around 1,200,000 watt-hours (1,200 kWh) per month. Given that solar panels produce their full capacity about 15% of the time, the average member would need to install around 11,000 watts of solar capacity to generate that much electricity in a month. At a current installed price of $4 to $6 per watt for residential solar, that’s a $44,000 to $66,000 investment. Counting state and federal tax credits that could offset up to 65% of the cost, it’s still a $15,000 to $22,000 investment.
Even if you “net zero” the energy, it’s even harder to “net zero” the electric bill, since as much as 75% of the electricity generated would be sold back to Wake Electric at our “avoided cost” of around 4.4 cents per kWh. The 4.4 cents “avoided cost” value of solar power is lower than our average wholesale power cost of around 7 cents. That is due to the natural intermittency of solar and the mismatch between the solar power peak at mid-day and our early morning winter peaks and late afternoon summer peaks.
In the last session of the state legislature, a bill was introduced to require electric utilities to allow “net zero” energy schools to sell electricity back to the utility at the full retail rate rather than the real value or “avoided cost”. That would essentially provide a significant financial subsidy to the school that would have to be paid for by other members. Understandably, the bill died in committee.
That said, we were surprised to hear recently that a new public school in North Carolina announced that they have invested more than $2 million in roof-top solar capacity and expect to achieve their goal of “net zero” energy and anticipate a “net zero” electric bill as well. While we can’t imagine how they make the economics work, we will follow the story and see what makes their situation unique.