Net Metering Buzz Words 2012-03-03

In order to understand what is possible, one needs to understand some buzz words. If one wants to learn to sail, one needs to learn words like Port, Starboard, Stern, Forward, Hatch, Spinnacker, etc. If one learns to run, one learns about Pronate, Shoes, Roads, Tracks, etc.

For electricity one needs to learn terms such as kwh, AC, DC, Grid Tie, Reverse Feed, Net Metering, Retail Wheeling, Utility, IPP, Embedded Generator, Renewable Energy, Photovoltaic Panel, PV, Inverter, etc. I pray that the following summary gives a good overview of these terms.

The bottom line is that in July the City of Cape Town will charge R1.60 per kwh for electricity for private homeowners who use 1200 kwh per month. And in July this year, it will be possible to install your own Photovoltaic PV system to produce electricity at the same price. And as you know the electricity price is going up every year. And the price of Renewable Energy is coming down every year.

What is Net Metering?

Net Metering refers to the ability to buy and sell electricity at the same price.

Utilities, such as Eskom, produce electricity. Customers buy that electricity. Some customers also produce electricity. Those customers should be allowed to sell their electricity to the Electricity Distribution Grid.

If one buys electricity at R1 per kwh (kilowatt hour) then one should be able to sell electricity at this price as well.

The process of feeding back into the grid is called "Reverse Feed."

Retail Wheeling

The process of a supplier or IPP (Independent Power Producer) selling electricity to another via the national grid is called "Retail Wheeling." The customer and supplier agree a per kwh rate and an additional charge (or tariff) per kwh is paid to the national grid to maintain the grid.

In South Africa, electricity producers besides Eskom are not allowed to sell electricity into the grid. Eskom and the Cities, such as the City of Cape Town, blame the government for this state of affairs. But the Government owns Eskom and Eskom is a monopoly and monopolies usually get their way. It didn't really matter during the time that the Government (Eskom) could supply electricity cheaper than customers could make it, but now customers can make electricity at similar or cheaper prices to Eskom and it makes sense to use a process called "Grid Tie" to allow one to buy and sell electricity to and from the grid. Net Metering refers to the way one is paid or the way one pays for this electricity.

Zero bill at the end of the year

With Grid Tie, a customer who wants to have a zero bill at the end of a year produces excess electricity during the day when the sun shines and banks this electricity. At night the customer buys back the electricity. In summer the customer sells more electricity than in the winter, so the customer buys more electricity in winter.

If a customer uses an overage of 1200 kwh per month, then that customer uses 39.5 kwh per day (1200 kwh * 12 months / 365 days).

In Cape Town, the average sun hours is 5.9, but one has to allow for efficiency losses in the system from the Photovoltaic Panels DC (Direct Current) Power to the Utility's AC (Alternating Power), so in Cape Town we use 5 sun hours as an average. So 39.5 kwh / 5 = 8 kw. The efficiency losses are called the "Derate Factor."

Thus the customer needs an 8 kw system to supply all their needs all year around.

Net Metering South Afria are working towards a small scale Grid Tie installation price is R24 per watt including VAT, so the system price is R192,000.

Looking at this another way an 8 KW system would cost the homeowner R1.60 per kwh including VAT. In the City of Cape Town, the price a person who uses 1200 kwh per month is paying is R1.29 per kwh. In July we expect this price to go up 25% to R1.60 per kwh. At this point, the homeowner will be able to produce electricity at the same price as she is paying for it.

If 12 homeowners got together, or if a business has a lot of roof space and we can supply 100 KW or more, then we think we can reduce this price to R1.36 per kwh inc VAT.

The R1.60 per kwh is calculated as follows: R192,000 borrowed at 10% over 20 years is a monthly repayment of R1879. R1879 / 1200 kwh equals approximately R1.60.

By David Lipschitz on March 3, 2012.