Proposed Changes to the Micro-Generation Regulation (as presented by Alberta Energy at the Micro-Generation Regulation Workshop; Calgary; June 13th, 2013) will force retailers to carry the financial burden of fairly compensating micro-generators. In addition, the Alberta Electric System Operator (AESO) is pressuring retailers to credit solar generators at retail rates less than fair market value. For these reasons, electrical retailers in Alberta have been forced to end the Light up Alberta program and begin compensating solar generators at rates significantly lower than coal and gas power plants are receiving.
Light up Alberta billing and compensation model:
- Customer with solar purchases electricity from retailer at different fixed or variable rate options as low as 7.3 ¢/kWh
- Customer with solar receives a credit for electricity exported to the grid at fair market value of 15 ¢/kWh – paid for by the AESO via the retailer
Changes forced by Alberta Energy and the AESO:
- Customer with solar receives a credit for electricity exported to the grid at the same retail rate they are paying (ie 7.3 ¢/kWh) – the AESO credits the customer at the same rate as the customer is paying
15 ¢/kWh paid by the AESO to solar generators (via the retailer) is fair compensation – it is not a subsidy, tariff, or grant. It is fair market value for several reasons:
1) Solar production happens during peak electricity demand in Alberta – power pool prices during solar hours of production are inherently higher than average pool prices or retail rates. A solar PV system selling electricity at power pool prices would have received an average of 14.9 ¢/kWh from January 1st – June 30th, 2013. Clearly, compensation at retail rates as low as 7.3 ¢/kWh is not fair market value.
2) Solar micro-generators are effectively subsidizing distribution and transmission in Alberta as Wires Services Providers charge direct neighbours for using the energy exported by solar micro-generators without simultaneously compensating the micro-generator. Alberta Energy should recognize the positive impact distributed generation systems have on the electrical system and provide fair compensation for this. In Calgary and Edmonton, the variable portions of transmission, distribution and local access fees equate to approximately 3.5-4 ¢/kWh. While a micro-generator ‘saves’ on these charges for energy produced and used within the building, they receive no credit for this when exporting.
3) Solar electricity generation is emission free and a low-cost way of contributing to Alberta’s climate change mitigation goals.
4) Other jurisdictions similar to Alberta have also calculated the value of solar generation to be significantly higher than retail rate and the 15 ¢/kWh. A detailed study was conducted on this issue last November which was prepared for Mid Atlantic Solar Energy Industries Association & Pennsylvania Solar Energy Industries Association. They were faced with the same issue that Alberta Energy is struggling with and in their market they calculated the total value to be in the range of 25.6 cents per kWh to 31.8 cents per kWh, compared to the 15 cent rate established under the “Light up Alberta” program.
Additional reasons to keep Section 7 in its original form:
1) Fairness between micro-generators – different retailers in Alberta have different retail rate offerings. Lower rates are sometimes available for seniors, small business, non-profit organizations and co-operative members. Why should senior citizens buying electricity at a lower rate receive less compensation for the energy they export to the grid than their neighbour who is not a senior? Why would we value and compensate this energy entering the grid differently? This is not logical.
2) Equal opportunity for all retailers – all retailers should have the ability to offer a fair price to solar generators in this province.
In place of these changes, we would recommend that the Alberta Utilities Commission (AUC), as the ruling ‘court’ for Alberta’s deregulated electricity market, accept the Light up Alberta program and provide clarification on what maximum compensation a retailer (funded by the AESO) can provide as compensation for energy exported to the grid from a solar micro-generator. The AUC has the flexibility to modify a maximum micro-generation export credit value over time as required. In addition, the AUC is set up to be an impartial body that can make a fair and equitable ruling for all parties.