Interconnection of Small Wind & Solar Systems to Distribution Utilities: A Cooperative Perspective Patrick Parke Midwest Energy Hays, KS September 26, 2007

Outline Governing statutes & regulations Interconnection tariff content (generic) Net metering

Governing Statutes KSA 66-1,238 – Directed KCC to establish interconnection provisions for renewable sources KSA 66-1,184 – Interconnection and buy-back KSA – Renewable generation coops FERC guidelines apply if the device is connected to FERC-jurisdictional transmission lines or no KCC-approved guidelines are in place.

KSA 66-1,184 interconnection and buy-back provisions Residential – 25 kW or less Commercial – 200 kW or less (previously 100) Appropriately sized for customer’s load Excess generation priced at 150% of system average energy cost (Note: Customer gets value of full retail rate for every kWh displaced) Dodge City CC/Cloud County CC – 1.5 MW Buy-back = 100% of system average energy cost

KSA 66-1,184 interconnection and buy-back provisions (Cont.) Annual bill credit/payment or when total = $25 Utility owns, supplies & maintains meter(s) Very general safety/protection guidelines Total connected capacity may be limited by capacity of line or 4% of utility peak load Subject to KCC-approved tariffs or current FERC procedures and regulations

Generic Interconnection Tariff Content Applicability Process overview Technical requirements Cost responsibility Metering Boilerplate Sample agreements

Applicability Who qualifies? Per KSA 66-1,184 – Residential customers up to 25 kW – Commercial customers up to 200 kW – Schools (CCCC & DCCC) up to 1.5 MW Utilities not prohibited from connecting larger systems

Process Overview – Series of steps largely dependent on generator size Coops Utilizing FERC SGIA Model Midwest Energy 10 kW Inverter ProcessSimplified (10 kW inverter) Fast Track Process (those that pass certain screens) Expedited (those that pass certain screens) Study ProcessStandard

Typical Screens Use of qualified inverter (UL 1741) Aggregate generation as % of annual peak on that line segment % contribution to maximum fault current % of short circuit interrupting capacity Contribution to imbalances % voltage drop for motoring

Technical Requirements Interconnection Operation Disconnection – For protection of people and property on both sides of the meter. Customers may not understand these provisions, but their vendors should!

Cost Responsibility: Interconnecting Customer Review and study costs Interconnection equipment costs System modification costs May be a requirement of creditworthiness Minimal/no fees for smallest systems – Midwest Energy, up to 10 kW = $0 – SGIA model = $100 Utilities must provide cost estimates in advance (KSA 66-1,184)

Metering KSA 66-1,184: Cost is utility’s responsibility For larger systems: Utility specific Meter type dependent on generator size and contract provisions

Boilerplate Definitions Insurance requirements Indemnifications Confidentiality provisions Notices Amendments Assignment Etc.

Typical Agreements Combined Application & Agreement (10 kW category) Review or Study Agreements Interconnection Agreement

Net Metering

Net Metering Definition Customers use their own generation to offset consumption; electric meters turn backwards when electricity is generated in excess of actual load

Net Metering Definition (Cont.) Net metering allows for the flow of electricity both to and from the customer through a single, bi-directional meter Customers may receive retail prices for the excess electricity they generate, depending on the state Avoided cost; average power cost or monthly market rate also used (per IREC)

Net Billing A second meter measures electricity that flows back to the utility Utility purchases the power measured by the second meter at rate reflecting variable energy cost (w/o capacity cost) The amount that the utility pays the customer is netted against the amount that the customer owes the utility

Reasons Cited for Allowing Net Metering Easy to administer – standard electric meter registers net flow (w/o TOU info) Subsidy encourages investment in renewable energy technologies Allows customers to "bank" their energy and use it a different time than it is produced, i.e., another subsidy, especially with wind

Components of Retail Service When a utility sells electric energy to the customer, the utility is selling 3 services – Generation – Transmission – Distribution With rare exceptions, all three services are “firm”, but wind is an intermittent resource

110 MW Gray County Wind Farm 2005 Operating History 18% of year: output was 0 MW 32% of year: output was <10% capacity 66% of year: output was <50% capacity 22 occasions, the output dropped by 55 MW or more in a ten-minute period; 4 occasions by more than 99 MW. 38 occasions, the output increased by 55 MW or more in a ten-minute period; 1 occasion by more than 99 MW. Wind is an intermittent energy source, not firm capacity

Net Metering Subsidy Customer generation is non-firm Customer does not own transmission or distribution (T&D); significant portion of the costs in retail rates Payment calculated using the firm retail rate is too high for intermittent power produced and absence of T&D functions

Net Metering Subsidy (Cont.) Subsidy is paid by remaining customers I.e., a subsidy from those who cannot afford generators to those who can; not everyone can afford a $30,000 - $40,000 wind machine and tower. (Bergey Excel) Environmental benefits flow to all citizens; cost of net metering subsidy falls on customers of mostly rural systems

Kansas Coops Demonstrating Support for Renewable Energy Concern with net metering ≠ opposition to renewable energy Sunflower: 100 MW of wind Midwest Energy: 25 MW contracted; 25 MW under negotiation KEPCo gaining access via supply contracts 150 MW = 20,000 Bergey Excel 7.5 kW units

Smart Shopping Typical wholesale wind cost <5 cents/kWh Average residential rate >10 cents/kWh Net metering means the utility pays firm retail rates for a wholesale commodity Why should the coop pay 10 cents for what it can buy at under 5 cents?

An Economist’s Perspective: Two Policy Questions Does net metering lead to greater efficiency? Not if the result is paying double for wind energy! Does net metering lead to greater equity? Not if those who can afford renewable generators are subsidized by those who cannot.

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