Net metering - a handy way to offset your hydro costs

Monday, March 7, 2016

A Kingston-area beef producer is employing this little-used Hydro One program to cut his farm's electricity costs to just $400 a year

by SUSAN MANN

High energy costs are hitting Ontario's farm businesses hard, but Kingston-area beef producer Tom Hawley has found a way to offset most of his electricity usage through a program offered by Hydro One. It's called net metering and it enables customers producing their own power for their own use with renewable resources to send the energy they generate to the distribution system for a credit towards their energy costs.

There are a number of caveats to consider before plunging into the program. The credit for power that's generated in excess of usage can only be carried forward for up to 12 months. The maximum size of the energy generation facility can only be 500 kilowatts. Similar to other energy generation programs, farmers should find out first whether there's capacity on the distribution grid for their project before signing any contracts with companies to install systems or buying equipment. If there's no capacity, the net metering project cannot go ahead.

Hawley uses a single-axis tracking solar array system to produce 18,000 to 19,000 kilowatts of power annually. Last year, with his house's electric heat and the barn equipment, he used 24,000 kilowatts of electricity but had a hydro bill for about 5,000 kilowatts once his credits offset his usage. His annual hydro bill was just $400.

Hawley and his father-in-law, Glendon Redden, have a 45-head cow-calf operation located just north of Kingston. They farm 400 to 500 acres.

The net metering program has been around for 12 years. Hawley, a retired Hydro One lineman with 38 years of service who still works a few months annually on contract training new lineman, has had his system for two years. He says he didn't sign up for the program earlier because "it was never feasible."

Tiziana Baccega Rosa, Hydro One senior media relations adviser, says slightly more than 330 customers across Ontario are enrolled in the net metering program. She couldn't say how many of those people are farmers.

Hydro One doesn't charge customers to check if there is capacity in the distribution grid for their net metering project to be connected. But there are charges if, for example, lines need to be upgraded or meters installed for the project to be connected. The charges "vary from customer to customer depending on what their current set up is and the type of generation they would like to install," she says.

Hawley says very few people have signed up for net metering because, when the program first began, it was "so expensive to do, the only people that did it were people who wanted to say they were participating in the Green Energy Act." Another reason for the low participation numbers is people don't realize how much they can save, he notes.

"Net metering is an ideal way for farmers to get as close to being 'net-zero' as possible, meaning they generate as much of the power they need for their own operations as they can," says Karl Hollett, President and CEO of Strathcona Energy Group. "In return, the lower and clearly calculable operational costs are freeing up capital that can then be reinvested into other aspects of the farm."

Strathcona Energy Group does solar development, engineering, solar panel and tracker manufacturing, equipment installation and service. Net metering is very popular.  

Hawley notes that he did 90 per cent of the work himself to set up his 10-kilowatt system and that "makes it very feasible." He laid the electrical wire and poured his own concrete, while Strathcona helped him assemble the panels and he got a crane to lift them onto the stands. The system uses a 60-watt panel on the solar panels to generate energy for the tracker to "follow the sun."

His system has "very little maintenance," Hawley says. He just needs to check the bolts on the racks holding the panels annually and tighten them if needed. "It takes me about two to three hours to do."

For farmers unable to do their own electrical and other work, the system would be more expensive than Hawley's to set up. But Hawley still predicts farmers will be able to save money using the system as hydro costs continue to go up.

Another benefit to the program along with the energy cost savings is the ability to write off the equipment on his farm's taxes. Hawley says that, since he's a part-time farmer, he couldn't write off 100 per cent of the equipment's costs like a full-time farmer could. However, he was able to write off a small portion.

The tax write off for the net metering unit is the same as for a farmer buying a new tractor and being able "to write it off over four to five years," he explains. A full-time farmer "should be looking at installing a net metering system because you get to write off the cost of it and it brings the cost of hydro way down," Hawley says.

Interviewed last fall when he was Strathcona's sales and marketing director, Michael Howe said the tax write-offs for net metering are different than for the feed-in tariff (FIT) and micro feed-in tariff (micro-FIT) programs. Net metering is a "cost-avoidance system and not a revenue generator" like the FIT and micro FIT programs. "You can get a better tax incentive off the net metering, which helps to draw down your pay-back period that much more."

The pay-back period for net metering based only on the cost avoidance of the electricity is about 10 years, Howe said. Factoring in the tax write-off portion, the pay-back period is eight years or less.

Farmers can have net metering along with FIT or micro FIT systems on their operations. Farmers with FIT or micro FIT systems are still paying the high costs for electricity "like everybody else is," Howe said. "As electricity costs continue to climb, they're feeling more and more of the pinch." Howe is no longer with Strathcona.

Jason Bent, policy research director for the Ontario Federation of Agriculture, says the federation doesn't recommend one system or program over another.

Farmers need to look at their operations, figure out their options and determine which system works best for them. "It may make sense to sell the energy (through the FIT or micro FIT)," programs," Bent says. "It may be better to sell the power at a higher price than replacing your own power." BF