APS Solar Guide #1: Maximizing Solar Savings

APS Solar Guide #1: Maximizing Solar Savings

Using Electricity Homeowners who go solar continue to rely on their local utility to supply power at night or other times when their energy demand is above the output of their solar array. While some homeowners choose to go entirely off-grid by adding batteries and generators, most find that the additional cost and lifestyle change required to live entirely grid free is more costly than simply striking a good balance with a solar optimized utility rate plan. The good news is that most utilities still offer a rate plan that encourages solar integration, but as solar becomes more popular, some utilities are increasing their access fees in an effort to slow the advance of residential solar. A reputable solar installer can advise you on the rate plans available in your area and provide an accurate ROI calculation for your solar investment. Once your solar is installed, there are still many ways to minimize your energy use and save money on any electricity you draw from the grid. Maximizing savings post installation begins when you shed the set it and forget it mindset. It matters how you use electricity hourly, daily, and over time. Actively engaging with your own electricity consumption is rewarded with added savings every time. Every bit of solar energy you generate replaces electricity that you would otherwise have purchased from the utility. So, once your solar energy system is operational, your new focus becomes monitoring and reducing your utility demand. To better visualize how you can influence this, it s helpful to understand the factors that impact utility charges and how your usage is related. Consider your monthly utility bill as your financial barometer, with lots of information to inform your decisions. We ll begin with a brief summary of the sophisticated utility network that drives their pricing, and conclude by explaining how to view your usage in order to minimize what you buy. Even after you ve implemented solar, there are still many opportunities to minimize your total energy use 2

Supply Basics and Understanding THE GRID! To deliver 120V reliably to homes and businesses around the clock requires a sophisticated hardware network installed across many miles. Whenever you see big power plants, you can be sure that the large power lines exiting the facility carry hundreds of thousands of volts. Expensive hardware is needed to manage this system, and this hardware is paid for through the complex rate charges that appear on everyone s power bill. Regular rate increases keep the system up and running as traditional power sources become more expensive, and equipment is replaced due to age and wear. These increases are one of the primary reasons that solar has gained popularity as people look to reduce reliance on the grid. Color Key: Orange: Generation Blue: Transmission Green: Distribution Black: Customer Transmission lines 765, 500, 345, 230 and 138kV Substation Step Down Transformer Subtransmission Customer 26kV and 69kV Generating Station Primary Customer 13kV and 4kV Generating Step Up Transformer Transmission Customer 138kV or 230kV Secondary Customer 120V and 240V Source: Federal Energy Regulatory Commission POWER GENERATION These are large plants rated in hundreds of megawatts (MW) and single digit gigawatts (GW). In Arizona this includes hydroelectric, fuel burning, and nuclear sourced plants with 24 hour staff to operate them. TRANSMISSION SYSTEM This is the network of large wires supported by tall, steel towers high above the ground. Except for the largest users such as factories, this part of the network simply moves the power to the various distribution system feeds. These are the ground mounted substations that you often see near housing developments or businesses. DISTRIBUTION SYSTEM One large transmission system typically feeds multiple distribution systems. Distances may be shorter in distribution, but there is still more hardware needed than in transmission. Multiple substations in one distribution network are usually needed. Substations feed other substations, and voltages are reduced along the way to keep hardware costs as low as possible. Eventually you see the power pole mounted transformers or the ground mounted cubes that do the final work to deliver your power. 3

Demand Vs. Consumption To fully understand how your utility charges you for electricity, it s important to understand the difference between demand and consumption. In many ways, supplying electricity is similar to supplying water. Since visualizing water flow through a pipe is sometimes easier than visualizing electrical flow through a wire, we will use a water analogy to help illustrate demand and consumption. Anyone who has seen a newscast about a water main breaking knows that somewhere in every town there is a large pipe that feeds smaller pipes. Water is supplied more efficiently through the larger pipe at high pressure, just like electricity through larger wires at higher voltages. Demand (kw): All of the water sitting in the piping network is needed to satisfy every user. If 10,000 gallons are needed in an area, it must be there from the source to the final connection for everyone. With electricity, 10,000kW may be needed throughout the network in order to make sure every device and user is satisfied. Demand Comparison: When you want to fill your bathtub, between 60 to 80 gallons of water needs to be available immediately. When a refrigerator cycles to cool, it needs from 600W to 1,000W (0.6kW to 1kW) to be available at that moment. Consumption (kwh): As many people use water, the network needs to be able to supply the amount demanded while also replenishing itself in order to remain dependable for others. If not, the pressure drops as the system depletes. For electricity, the same principles apply. Just as water pressure drops, so does voltage in a power system in reaction to demand. Even the smallest voltage drops can cause lights to dim or can wreak havoc with some electronics. Consumption Comparison: If you want to fill a 60-gallon bathtub in 5 minutes, the network needs to be capable of supplying at least 12 gallons each minute, or 144 gallons per hour (GPH). When your refrigerator cycles, the network needs to be able to ensure you have at least 600W available without a local voltage drop, for as long as it is needed. Like water supply, the common time unit is one hour. If cycling for 5 minutes, which means the refrigerator only used 5/60 minutes of energy, or 50Wh (0.05kWh), the network must still be ready to supply 600Wh (0.6kWh) just in case the full hour is needed. 60 gallons = = network supply of 144 gallons per hour network supply of 600W per hour 4

So, how much electricity you use and when you use it will directly impact your monthly APS costs. Your solar energy system must be able to meet your power consumption needs, or you must purchase the extra power from the utility grid. In other words, your solar energy system will be most effective when you align your energy use to your solar system s output. With most utility rate plans the time of use is also important, as a different kwh price may be applied based on the time of day. Similarly, some plans, such as the one introduced in 2015 by SRP, also include a demand charge, where the momentary demand peak measured in a short period of time is assessed an additional kwh rate for that billing period. (For more about demand charges and SRP solar rates visit www.svssolutions.com). As an APS customer your rate plan is much more straight forward. And as an Arizona resident, your solar energy system can dramatically offset the amount of energy you have to purchase from your local utility. After all, solar panels produce electricity in direct relation to the amount of sunlight that hits them in a given timeframe. While time of day, weather, and season all have some variable influence, Arizona s reliable sunshine ultimately works in solar s favor by minimizing the variables and offering ample return potential. Your solar energy output can offset both your demand as well as your consumption. If your system is generating enough kwh to cover your refrigerator cycling and any other electrical activity in the same timeframe, then you re offsetting 100% of your power needs and won t require any power from the utility. If your demand exceeds your solar energy system s capacity--such as at night or when it s stormy--then the grid must supply the difference for as long as it s needed. What does all this mean? You can easily see additional savings if you propertly optimize your consumption to your solar system s output in order to minimize excess billing charges. And how you match those things is different from user to user, since every family consumes electricity differently. This is why understanding utility rate plans and engaging with your energy use every day can result in considerable financial return--especially with solar. 5

Net Metering - Your Energy Savings Account Getting engaged with your energy use begins with understanding net metering. In short, net metering allows homeowners who generate their own electricity from solar power to feed electricity they do not use back into the grid. APS credits this excess energy and allows solar customers to use these credits during the spring and summer months when high demand appliances like air conditioning systems are more likely to push household consumption past solar energy output. The APS EPR-6 rate plan (preferred for most APS solar customers) also allows for an end of year billing credit associated with the running total of the monthly difference between electricity supplied by APS and the electricity credited (generated) by your solar electric system. Each statement tabulates these values on the right hand side, and conveniently includes a net summary of the difference. At the end of the year, APS issues a true-up statement, which includes a monetary reimbursement for any remaining credits, or a charge for any overage not yet paid for. How Net Metering Works: 1. 3. 4. Solar panels convert sunlight into direct current (DC) electricity Clean solar energy is sent to your home A bi-directional solar meter monitors energy consumed and energy produced 2. An inverter converts the DC electricity to alternating current (AC) electricity to your home The grid powers your home during non solar hours Excess energy is sent back to the grid The grid saves your excess energy for you to use during non-solar hours. This process is referred to as Net Metering 6

Maximizing Your Net Metering Return There is no bad time to install solar on your home. The sooner you start capturing sunlight and generating your own electricity, the sooner you can cap the power that you have to purchase from your local utility. With that said, there is a secret to getting the absolute maximum return out of your solar energy system in its first year of operation--start Early! As we explained earlier, net metering allows you to earn energy credits that can help offset the higher electricity costs during Arizona s hottest seasons. It s much easier to bank these credits during the cooler months when your solar production is more likely to exceed your consumption rate. This timeframe has an added benefit as well, since solar providers and utilities are generally less busy in the fall and winter, which translates into faster installation times. Unfortunately, many utilities across the country are considering changing or even eliminating their net metering programs. The good news is that most utilities -- including APS -- have traditionally allowed current solar customers to remain on their contracted plans even as new rate programs are introduced. So if you ve been considering solar and would like to take advantage of today s more favorable net metering policies, now is the best time to consult a reputable solar provider and begin the process. 7

APS Solar Billing Statements For most customers, the APS EPR-6, or Net Metering plan, is selected to maximize the benefits of a newly installed solar PV system. The simplest way to look at this billing statement is to separate it into two areas. Those that are fixed and essentially tied to the number of days in the cycle (left column), and those that are tied to your usage (right column). Fixed Charges: As with most services, some fees and taxes must be collected to cover non-variable costs for utility hardware such as your meter. This list is set, and cannot be impacted by your usage decisions. Any variations are typically tied to the number of days in the billing cycle. The most significant of these include: Customer Account Charge The minimum charge for having service available, independent of usage even if zero Metering The fixed fee for providing and maintaining the meter as described above. This partly accounts for the generator side of utility costs, or ramping costs (up and down of plants) System Benefits Charge the cost to cover mandated Arizona Corporation Commission (ACC) programs, such as low-income assistance, etc. Environmental Benefits Surcharge the cost to finance ACC approved efficiency and renewable energy programs Taxes and Fees: Common for all products and services sold. Meter Reading The fixed fee for determining your usage Billing The fixed cost of calculating and generating your statement Your electricity bill Susan Smith September 12, 2015 Charges for electricity services Your account number 5555xxxxx Usage Related Fixed Charges: Some of the smallest charges are tied to your usage and separate from the main usage charges indicated in the right column. We ll only look at the more significant. Delivery Service Charge Covers the utility network and infrastructure costs to provide enough electricity to meet demand Federal Transmission Fees (ancillary services and cost adjustment line items) A special allocation for the supply of transmission level voltage (highest) C Cost of net electricity y T f s Taxes and fees T g f y Total charges for electricity services $10.00 Amount of electricity y from APS S Meter reading g 1 000 1 13000 Meter reading g 2 000 2 12000 y f Total electricity from APS, S in kwh h 00 1000 Usage Related Fixed Fees Amount of electricity credited Meter reading 1 Meter reading 2 Total electricity credited, in kwh Last month s kwh credit Net electricity Electricity from APS, in kwh Minus electricity credited, in kwh Minus last month s kwh credit Net electricity, in kwh 18000 17500 500 2000 1000 500 2000-1500 8

Usage and Rates: These are the charges that are summarized in the right column of your APS bill, and they are most important becasue they directly reflect your usage and are therefore comletely within your control. They re also typically the highest charges, so there s plenty of opportunity to engage with your energy usage and realize significant savings. As you look at the sample bill on the right, it s important to note that APS does NOT show the total amount of electricity your solar system generated during the billing cycle. Instead you are only shows the amount of energy you both contributed to the grid, and the amount of energy you took from the grid. Understanding each of these fields can help you make better decisions about your energy use and lifestyle. Let s take a closer look. Your electricity bill September 12, 2015 Susan Smith Charges for electricity services Cost C of net electricityy Usage Taxes and Fees fees (variable) s Total charges for electricity yservices $10.00 Your account number 5555xxxxx Amount of electricity y from APS S Meter reading g 1 13000 Meter reading g 2 12000 1 Total electricity y from f APS, S in kwh h 1000 Amount of electricity credited Meter reading 1 Meter reading 2 Total electricity credited, in kwh Last month s kwh credit Net electricity Electricity from APS, in kwh Minus electricity credited, in kwh Minus last month s kwh credit Net electricity, in kwh 18000 17500 500 2000 1000 500 2000-1500 Amount of Electricty from APS When your solar energy system produces less power than you re using, your solar meter runs forward just like a regular electric meter. You must purchase the extra electricity from the utility. Amount of Electrictiy Credited When your solar energy system produces more electrcity than you re using, your solar meter will run backwards, and APS will credit you for the excess energy sent back into the grid. This is Net Metering. Net Electricity This is the difference between the amount of energy taken from the grid, and the amount of energy sent back. When this shows as a negative number, you sent more energy back to the grid than you used. APS will credit that overage so that you can use those killowatt hours earned during months when your solar output may be less then your consumption. This is net metering. 9

Taking Advantage of Your Solar PV System Being aware of your demand, consumption, solar power generation, and how your rate plan aligns to all of these variables is a critical first step toward maximizing the benefits of you solar system s performance and minimizing your monthly bill. Even before installation, your solar consultant should begin with a thorough review of your billing history, structures, and energy goals in order to design the best and most efficient solar PV system for your home and your lifestyle. In fact, the customer/solar integrator relationship extends well beyond activation. A good solar partner will be an important source of information and maintenance services as your life and structures change over time. Whether additions, upgrades, or simply a scheduled system cleaning or rate adjustment, a reliable solar partner will keep your solar electric system working at peak performance while providing guidance on consumption and rate plan advice along the way. But saving money with solar does not stop at your panel count and rate plan alone. Engaging with your own energy use, and adjusting your lifestyle to minimize unnecessary demand peaks can also dramatically reduce your electric bill. A good solar partner will help you understand how lifestyle choices can impact your bill, and teach you how simple changes can take your solar energy savings efforts to a whole new level. Finally, most utilities also have resources to help consumers minimize their energy demands. After all, they have a vested interest in keeping their pipes full and healthy in order to avoid unnecessary interruptions for everyone connected to their energy grid. Contact one of our solar consultants for a free quote or to learn about rate plan optimization and other renewable energy initiatives: www.svssolutions.com. 10