Is Net Metering with Solar PV the RIGHT choice for your company in Ontario?

Written by Michael Tingle and Ka-Ming Lin

The answer depends on your view of the trend in future electricity pricing.  If you feel the price of electricity is going to drop or stay the same, this may not be for you.  However, if the price of electricity for Commercial and Industrial (“C&I”) users will continue to rise in the next 5-15 years, net metering with solar photovoltaic (PV) may be of interest.

Ontario Electricity Prices vs Cost of Solar PV

This graphic depicts the historic, and forecasted price of electricity versus the install price for a solar PV facility. Although there are many variables, this serves as a reasonable guide.

Other assumptions considered in the preparation of this graphic are:

Price of solar based on a typical < 100 kW Feed-in-Tarrif (FIT) rooftop facility,
Price of solar (forecast) is based on a 4% annual reduction in costs,
Electricity prices are the time of use (TOU) rates based on 50% on-peak, 30% mid-peak and 20% off-peak plus typical local distribution company (LDC) delivery charges,
The delivery charge benefit would only apply to load displaced, you do not get delivery charges back on energy returned to the system under net metering, and
The electricity price (forecast) is based on the Bank of Canada’s target 2% rate of inflation.

What is Net Metering with Solar PV?  Net metering allows an electricity user to install a solar PV facility onsite (or close to it) to generate electricity which can be used with any access delivered to the grid with compensation in the form of a credit on a future electricity bill.   Net metering has been an option since 2015 and is governed under an Ontario Regulation (O. Reg. 541/05: Net Metering).  However, only more recently has the price of electricity and the cost of installing a solar PV facility made net metering with solar PV more worthy of consideration.

As shown in the graphic above, even if you were to install the solar PV facility today, the price of solar exceeds current electricity prices.  However, looking forward not too far in the future, price parity and beyond are possible. Some key business drivers you should consider when evaluating whether Net Metering with solar PV makes sense now (2017), instead of waiting until 2020 are described below.

  1. Cost Certainty of Electricity: Electricity prices are expected to rise in the short and long term.  When you factor in all the components of your electricity bill, the type of power user you are (time of use, class A/B) and global adjustment, you might want to lock in the price of electricity in the future. A Net Metering solution with solar PV can help you do that.
  2. Time Sensitivity:  Your Local Distribution Company (“LDC”) has a limit on the percentage of net metering solutions with PV they can manage on their distribution network.  Once they hit that level, you will not be able to participate in the net metering program although you could still be a “Behind the Meter” generator.  When it comes to net metering “the early bird has the best chance of getting the worm”. 
  3. Speed to Operation:  This solution has advantages over other renewable energy procurement processes as there is no environmental permitting unless you decide to go for a ground mount solar PV facility for which there is a simplified permitting process. Securing the connection with the LDC is likely to be the main hurdle.
  4. Greenhouse Gas (GHG) Emissions: If you generate emissions, as a course of operating your company or plant, net metering with solar PV will allow you to reduce or offset your emissions. This solution will enable you to retain your emission reduction credits. (currently emitters above 25MT only)
  5. Saving Money:  The benefit of net metering is that when you are not using electricity at your plant, you are allowed to inject power back into the grid and receive a credit on your next bill. Currently, you can bank this credit for 11 months which can help balance cash flow.
  6. Reputation: In addition to future cost saving, there are marketing and promotional advantages to be realized. Maybe your owners, board of directors or shareholders have given you a mandate to “GO GREEN”.  Generating your own electricity using renewable energy such as solar PV fits the bill. 

Whats Next?  Making a decision on net metering with solar PV requires a level of analysis. You will need to understand how you pay for electricity and review monthly bills (1 or more years of history) to determine your peak demand and load profile. This in combination with an assessment of which of the above drivers are most important to you should assist in the decision making process.  The solar industry

in Ontario is flush with capable and knowledge firms and individuals, reach out to them for assistance and advice to determine whether net metering with solar PV may be right for you now.

For more information on ORTECH's Net Metering with Solar PV, click here.