Indiana Net-Metering vs EDG Rate - What does it mean for solar payback?
Updated: Jan 12
One of the puzzling questions I always ask myself is why is solar energy so controversial and why are there so many people fighting against it. To answer that question, let's understand what rooftop solar energy systems do.
"Solar energy systems reverse the flow of electricity on power lines, and therefore reverse the flow of money away from monopolies and keep it in the home owner's pocket."
So, it's mind boggling that there are so many home owners out there actively fighting against their own self interest to be able to generate life sustaining electricity for their family and build equity of energy ownership at the same time. But, this is a big reason why Indiana politicians have voted in favor of monopolies instead of the people when it comes to solar.
Since 2004, Indiana has had a residential net-metering law that allowed home owners to be credited at retail retail when their meter spun backwards. At that time, there were virtually no home owners in Indiana with solar systems. The price of photovoltaic panels was very high and unaffordable for most. In 2010, Governor Mitch Daniels issued an executive order to expand the net-metering law to include businesses and allow system sizes up to 1MW. Over the next decade, over 3000 solar energy jobs were created in Indiana and several hundreds of MW of solar energy were installed in the Hoosier state, and the price of photovoltaic panels dropped and mass production of solar panels ensued.
Please watch this video from 2015 to learn more about the fight for rooftop solar in Indiana: https://www.youtube.com/watch?v=HBsB1mntoPk&t=74s
Dennis Gage installation in Evansville, Indiana.
Unfortunately, the monopoly utility companies lobbied our state legislature to phase out net-metering and in 2017 they passed SB309 to do just that. And just recently, CenterPoint Energy was the first utility company to reach its net-metering capacity and switch to the new EDG rate. What does that mean for new solar energy customers? It means that the energy you produce and consume instantly inside your home is still credited at the high retail rate of $0.16 per Kwh. For the excess energy that you produce, and do NOT consume instantly and is sent back to the grid, this portion of the energy is (currently) credited at roughly $0.05 per Kwh.
So, enough of the bad news about our Indiana legislature, let's talk about the good news.
"Is the glass half empty or half full, the good news is that it can still be 70-80% full if your system is designed properly!"
That's right, you can still get 70-80% at retail rate and that is what we want to talk about in this article. How to get the maximum ROI, return on investment from your solar energy system under the new EDG rate. Since solar energy systems produce most of their energy from 9am to 3pm, the key to get the maximum at retail rate would be to CONSUME this energy in your home during this time period. So, the key is load shifting and here are some recommendations that we have for our customers:
HEAT PUMP WATER HEATER - With a programmable option, you can install a heat pump water heater and program it to operate from 10am to 2pm. This will effective become a 'BTU Battery' for you and allow you to store energy in your water heater.
PROGRAMMABLE THERMOSTAT FOR AIR CONDITIONING - Solar and AC work great together. When the sun is shining the most, you typically need your AC the most. To get the most out of your solar KWH's, we recommend installing a programmable thermostat to keep your home cooler during the day. Then, it will run less in the evening and be comfortable for you when you get home from work. Yes, the more insulation you have in your house the better.
HEAT PUMP FOR HOUSE - With the new IRA Bill that was just passed, there will be tax credits for installing a Heat Pump on your home. We recommend coupling this with a programmable thermostat such as a NEST which will allow you to operate the heat pump at a higher temperature during the daylight hours of 10am to 2pm. Essentially, your home envelope becomes the 'BTU Battery'. And yes, the more insulation you have in your home the better.
CLOTHES DRYERS - If you have the ability to operate your clothes dryer during the daylight hours, this energy gets credited at retail rate. This is not the easiest option if you work during the day.
ELECTRIC VEHICLE - Program your EV charger to charge your car during daylight hours. If you do have an EV, solar is a no brainer for you. Your fuel (sunlight) is free, and will improve your solar ROI tremendously.
SYSTEM SIZE - Simply size the solar energy system to provide power for the summer loads such as air conditioning and pool pumps. You will get 90-100% at retail rate when you do this.
EAST & WEST FACING SOLAR PANELS - East and west facing solar panels, such as on a pole barn roof, can provide a broad power curve to more closely match the consumption load of the house.
This is the typical solar production curve in the winter time of a south facing solar array in Evansville, Indiana
The Tesla Powerwall
Installing a battery, or energy storage system (ESS) such as the Tesla Powerwall with your solar energy system can not only ensure you are getting 100% of your solar energy at retail rate, but also provide backup power during emergency outages and rolling blackouts. The Powerwall is a revolutionary product that does just that and the cost has steadily come down as major battery manufacturing plants and automation scale up. Additionally, the Powerwall allows you to disconnect from the grid, at the touch of a button, anytime you choose to do so.
How does it work? The Powerwall system design and installation involves installing a 'smart' transfer switch called the Tesla Gateway. This is a 200A transfer switch which is installed similarly to a transfer switch used by a backup generator. The difference is that this unit is designed to work with your solar energy system and keep it running during an outage and let your home function and operate as it would normally. There are certainly limitations such as the how many Powerwall's you need for the size of your home. But, they can be configured as either a partial or whole home backup.
During non-emergency operation, the Powerwall can be configured to store your solar energy during the day, and then slowly release that energy into your home in the evening (after the sun goes down). This effectively keeps your electric meter from spinning in either direction, and can keep it at zero on a daily basis if everything is sized accordingly.
This is the Tesla display from the software which is very informative and easy to understand.
What is my solar payback?
What is the 'payback' of a Tesla Powerwall or other battery ESS system? It is impossible to calculate payback since it is impossible to know how many times a grid power outage will occur in the future. Having a Tesla Powerwall is similar to having a backup generator on their home, but nobody ever asked the question of payback concerning their generator. The fossil fuel propaganda machine has not targeted generators yet.
We acknowledge that even the calculation of payback of a solar energy system is purely speculative and it impossible to know that the price of fossil fuels such as coal, natural gas, and oil will be in the future. We do know that as power plants convert from coal to natural gas, the demand for natural gas will skyrocket and along with it electric rates. Additionally, what is never calculated in a payback chart is the value of ownership which increases property value as an asset. It's kind of like owning vs. renting your power.
What is my payback from doing nothing and buying my power from the utility company?
This is actually a simple calculation and an easy question to answer. And, I am going to let my friend Buzz Lightyear answer that. Here is his answer, "To Infinity and beyond!"