Electricity Net Metering and Feed-in Tariffs, and the Law of Unintended Consequences

Posted on November 13, 2013


There is no magic solution to the damage that our use of energy inflicts on the earth’s climate, other than conservation.  Every other strategy has its downside of unintended consequences.  That includes the use of renewable generation technologies.

There is a growing push from US utilities to flatten out block or multi-tiered electricity rates to buffer themselves from losses from net metering. Obviously this is a smaller issue in Canada, including here in BC with our limited potential for distributed solar, but presumably the trend in rate design will tend to spill across jurisdictions, given the way that regulators and the experts they rely upon tend to drink each other’s bathwater.

Here’s an interesting article by an  American academic describing the problem.

If you haven’t read it already, I highly recommend the linked article in Der Spiegel about the problems stemming from Germany’s extreme deregulation of renewable generation (aka “feed-in tariff”). This has been disguised as a politically progressive concept.

There is a hidden carbon content in solar/wind/etc. That is the increased need for dispatchable (mainly thermal) generation that can be cranked up or down at will to fill the gaps when the wind stops blowing or the sun stops shining, to “firm up” the flow of electricity through the system. The very inefficient way these thermal plants have to run, constantly revving up and down with fluctuations in renewable supply, makes their emissions far worse than if they were running more constantly.

The German feed-in tariff has magnified this problem enormously because of its destruction of the planning process for the development of the grid. Anyone who wants to can add a photo-voltaic generator, wind turbine, or whatever, and the system has no choice but to absorb it and smooth out the peaks and troughs that result from the intermittency of these sources of supply. They also produce extreme distortions in cost, including negative pricing of electricity (where the utility and its customers have to pay someone else to take surplus power off their hands. Intermittent “green” power can be a serious financial liability). This is increasing the rate of “energy poverty” – households whose ability to meet their cost of food, shelter and other necessities is put at risk because of soaring energy costs.

The net impact of the feed-in tariff has actually been an increase in GHG emissions from electrical generation in Germany, while impoverishing consumers in favour of IPPs.