WAPA and Energy Office Looking for Ways to Make Net Metering Fair to All

This is the second installment of an ongoing series examining the V.I. Water and Power Authority’s net metering program, its challenges, and its future.

In terms of encouraging the public to embrace small-scale solar energy production, the net metering program has been an unqualified success. The rapid expansion of renewable energy in the Virgin Islands is raising eyebrows throughout the territory’s energy industry.

“We used to know every solar system that went in,” said Don Buchanan, spokesman for the Virgin Islands Energy Office. “Now there’s so much going in, we can’t keep track of it.”

This has led many to question just how long the net metering program will last before reaching its cap production of 15MW set by the Senate of the Virgin Islands.

Carl Knight, director of the Energy Office, said that when the cap was set in 2009, many involved believed it would be enough to keep the net metering program active throughout the majority of the governor’s 60 by 25 campaign, an effort to reduce the territory’s fossil fuel consumption by 60 percent by 2025. Now he’s not so sure, and it’s causing his office to start planning for what happens if, and after, net metering ends far sooner than they had anticipated.

“It’s a conversation that was sort of a future-tense conversation, but is now becoming a very present conversation,” he said.

Knight isn’t concerned about the amount of cap space left. According to WAPA, the St. Croix grid is currently only using 787 kW of its 5 MW cap. The St. Thomas/St. John grid is just over 1MW into its 10MW cap. What has gotten Knight’s attention is how rapidly the rate at which new systems are coming online is increasing.

“We are far away from the cap, but we are moving towards it faster than we have been over the first three, four years of the existence of the program,” he said. “We haven’t gotten to the destination, but we’re driving faster.”

Just how much faster is hard to tell. According to WAPA there are currently 285 net metering customers in the territory, 142 on St. Croix and 143 spread across St. Thomas and St. John. The authority has confirmed that the rate at which new customers are joining the program has been increasing steadily over the last few years, and so far the numbers for 2013 suggest that this year will set a record for enrollment.

But the total number of customers only says so much about the growth of the program. The real question is how large are the systems these customers are building and, more importantly, how large are the systems still being planned that WAPA doesn’t know about yet?

In the same law that set the 15MW total net metering cap in 2009, the Senate also set individual caps for customers. Residential systems cannot exceed 20kW and commercial properties are limited to 100kW, regardless of how large their energy consumption may be.

Owners of solar panel providers in the territory are saying that, during the last six months, they’ve seen businesses willing to invest in larger and larger systems. They said 50kW is no longer an uncommon size and there are at least three 100kW systems currently out to bid.

These large systems can eat up cap space quickly. The 4.2MW remaining on the St. Croix grid is only enough to accommodate 42 companies at 100kW apiece or 84 companies at 50kW.

Possibly a larger concern is government agencies joining the program. The law allows for a much higher individual cap for government properties, 500kW.

Currently there is only one system that comes close, a 450kW solar array at the Cyril E. King airport on St. Thomas. If a similar system were created at the Henry E. Rohlsen airport on St. Croix, it would take up almost an eighth of the district’s remaining cap space.

With these larger systems going online, it’s hard to tell how long it will take for the cap space to run out, but Larry Aldrich, owner of the V.I. Solar Depot, is encouraging his prospective net metering customers not to drag their feet.

“If you procrastinate for two years, forget it. Cross it off your wish list because you’re not going to get one. There ain’t going to be no permits,” he said.

And while Aldrich has a clear financial benefit from people believing the time to buy is now, officials at the Energy Office and WAPA are not disagreeing with his timeframe.

No one is predicting the cap to fill sooner but two years is roundly considered feasible with some estimates ranging up to four years left before the program reaches capacity.

No one at the Energy Office or WAPA is talking about slowing down the growth of net metering. In fact, if anything, they are working to speed it up. WAPA’s new VIenergize initiative is aimed at helping individuals and businesses in finding financing for renewable energy systems.

Also this week WAPA announced it was loosening requirements for some small systems. Those under 10kW will no longer be required to have a external manual disconnect switch, which should save consumers hundreds of dollars.

Instead, officials at the Energy Office and WAPA are starting to discuss how best to manage the remaining cap space.

When the caps were established, the Legislature did not include any type of development plan for the net metering program, leading to something of a free-for-all. If your system is up to code and there is cap space remaining, there’s little anyone at WAPA or in the government can do to prevent you from claiming your share.

The concern is that this unfettered access to the program may end up limiting the number of homeowners who can participate. Right now, commercial, residential and government properties are all drawing cap space from the same pool and are, in essence, competing with one another for access.

Since commercial and government systems take up much more cap space on average than residential ones, as more of them enter the program they threaten to block out small homeowners.

For instance, if a single commercial customer installs a 100kW system, they are laying claim to cap space that could have been divided between 33 residential customers with 3kW systems.

To combat this, WAPA and the Energy Office are considering asking the Legislature to amend the law to create smaller caps within the total cap, earmarking a certain amount of space for residential, commercial, and government projects.

It’s too soon to tell what these smaller caps might look like. WAPA and the Energy Office are only in the most preliminary stages of the discussion. However, there is wide consensus that the net metering program must be reformed for more reasons than just dwindling cap space.

The rapid expansion of net metering is bringing to light some hidden costs to the program that are starting to affect WAPA’s bottom line and, right now, those costs are being paid not by net metering customers, but by average rate payers.

In the next installment, we’ll take a closer look at the hidden costs of the net metering program and some of the possible plans being discussed to address them.

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