Iowa Utilities Board decision on net metering doesn't help Luther College that much

Earlier this month, the Iowa Utilities Board (IUB) made a decision to uphold net metering in Iowa for the next three years. The decision is generally considered a victory by individual producers who feared that utility companies, such as Alliant, were trying to secure future profits by getting rid of net metering policies altogether.

However, the ruling does not  necessarily benefit Large General Service (LGS) energy producers such as Luther College, which has the most solar PV of any entity in Iowa.

Iowa has a 500 kW net metering limit, meaning that energy producers can get the full retail value for the power above what they are able to consume, from a system that is 500 kW or smaller.

According to Jim Martin-Schramm, who coordinates the Energy and Climate Program for Luther's Center for Sustainable Communities, all of Luther's solar arrays are net metered, except for one installed last year, which has a capacity of 820 kW. One of the reasons that it was limited to that capacity, was so Luther could be confident they wouldn't export that power to the grid.

LGS producers like Luther are billed differently than individual producers who may have a solar array on their roof. LGS producers are billed based on a separate demand charge which is based on the maximum amount of power the customer required at any one given point in the previous year.

"The demand charge represents 35 to 40 percent of Luther's bill and is not eligible for net metering according to Alliant's net metering tariff," Martin-Schramm said. "Thus, instead of getting $0.07/kWh value for the power, we would only get around $0.054/kWh, which is too low to finance the cost of solar power.

These policies, which have recently come under significant debate throughout the state, could have a negative impact on Luther's carbon neutrality goal.

"Unless the IUB changes Iowa's net metering rule by raising the cap or limiting net metering to 110 percent of annual consumption for all ratepayer classes, one way Luther will be able to add more solar power to serve the main campus will be to combine the new capacity with some sort of energy storage system," Martin-Schramm said. "The National Renewable Energy Laboratories (NREL) are conducting such a study for us now."

If Luther does proceed in installing more solar PV in the coming years, another option would be selling the surplus energy to Alliant under a Planned Power Purchase Agreement (PPA).

"A lot hinges on what they are willing to pay for the power," Martin-Schramm said. "They want to limit it to their published avoided costs, which is the cost to produce or purchase the next megawatt hour of electricity."