Renewable energy systems pose learning curve

Doing good deeds for the environment was certainly on the mind of Jeff Mumford of Warren’s Station restaurant in Fenwick Island when he first started researching renewable energy systems. Equally on his mind was the economic benefit and the sustainability of a installing such a system, including his recently completed 14 kw worth of solar panels.

“The environment, yes,” said Mumford, explaining his reasons for looking into solar, “but also the savings and having the ability to produce electricity that will be used in the wintertime elsewhere.”

He had originally wanted to do windmills, but with a recently passed Fenwick Island ordinance restricting height on such systems, he felt he couldn’t.

“The ordinance says no higher than 33 feet, and I am at 30 feet here and just the pole for the windmills is 36 feet, plus the windmill,” said Mumford, adding that that is not enough height to make a windmill effective. “There’s no sense in doing it if it’s not going to work. But they do say that solar is more efficient.”

So, Mumford decided to go with solar and hired Flexera, a Harbeson, Del.-based solar and wind company to do the job. Because the restaurant is closed for months out of the year, the electricity produced will go back to the grid and come back to Mumford in the form of a credit. Also, because solar renewable energy credits have risen in value, he stands to make about $300 on each one (per 1,000kw) and has already produced more than 6,600kw worth.

Because he was going to be producing power that would be going back to Delmarva Power’s grid, he said, he thought it would be simpler to become a Delmarva Power customer. His contract with Washington Gas Energy Services through the Bethany Fenwick Chamber of Commerce happened to be up anyway, so he didn’t renew and went with Delmarva Power.

“Delmarva Power was comparable, so I thought it would be simpler to go back with Delmarva Power since the electricity was going back to their grid,” said Mumford.

But in doing so, Mumford now receives a “demand charge” on his bill. Both consumption and demand charges are part of every electricity customer’s services bill, said Delmarva Power representatives, but residential customers pay one rate for service that covers both. This is not the case among many commercial and industrial users, whose consumption and demand varies greatly.

Matt Likovich of Delmarva Power explained the demand charge like this: “Some need large amounts of electricity once in a while, while other almost constantly. Complicating this is the fact that energy cannot be stored. It must be generated and supplied to each customer as it is called for, instantly, day or night, in extremely variable quantities.

“Meeting these customers’ needs requires keeping a vast array of expensive equipment — transformer, wires, substations — on constant standby. The amount and size of this equipment must be large enough to meet peak consumption periods, i.e. when the need for electricity is highest.”

He went on to explain that commercial customers will see that demand charge unless monthly energy usage drops below 3,500 kWh for 12 consecutive months. If electricity needs exceeds 3,500 kWh for two consecutive months, that’s when demand charges start to appear on the bill.

Mumford’s question about his bill is: Why, then, if he has used no electricity, is his bill higher than it was this time last year? He got his first bill after having his system installed, and it was for $745, even though he used only 1,300 kwh and was actually in negative usage with credits; and last year, for the same time period, his bill was around $600, and he used 4,000 kwh.

Having not renewed his contract through the Chamber cooperative, Mumford is now not eligible to enjoy one of the benefits of being a co-op member, which is not having a demand charge, explained Chamber Executive Director Carrie Subity.

And to be able to get credit for his electricity production, he is in a bit of a catch -22 explained Ed Jackson, who brokers co-op agreements for the Chamber of Commerce, who said he has to go with Delmarva (and not a competitive supplier, as he could in the co-op) to be able to produce power.

“If you install solar or wind, even if you are over-generating for only a few months out of the year and are selling back to the grid, you are not eligible to enter into a contract with a competitive energy supplier (like WGES),” said Jackson.

“They anticipate that they are going to sell you power for 12 months out of the year, and in essence they pre-purchase your energy needs into the future. For example, they look at your October bill and if you use 1,000kw, they are pre-purchasing 1,000kw for next October. In cases like Warren’s, the contract would break down. They would say, ‘Timeout. I don’t want to buy power. I want to sell you power.”

He added that all suppliers are consistent in their contract terms, and if customers are going to be producing power, they must disclose it upfront.

“That’s not an Ed Jackson thing or a Chamber co-op thing. ... They are counting on you to buy power.”

For example, he said Nantucket’s restaurant, which is just down the street, is not generating more power then it uses with their newly installed solar panels and windmill. (Nantucket’s is outside town limits, so they did not have the same height restrictions as Warren’s Station.) So they are in a different boat. Being a year-round restaurant with smaller system, they are not in the position of having to sell excess power back to their supplier.

Mumford will get some relief from when he sells his solar renewable energy credits, or SRECs. Finn McCabe of Flexera, who installed the system at Warren’s, said his yearly savings with the 30 percent federal tax investment grant and all the renewable energy credits will still amount to about $7,000 per year with a projected payback time of three years.

He explained that the grant is a grant in lieu of a tax credit, which is available through stimulus funds until the December of 2010. Mumford is also eligible for 25 percent through the Delaware Green Energy Program as a Delmarva Power customer (there are different rebates for Delaware Electric Co-Op customers).

Commercial establishments can get 25 percent, up to $250,000 and residential property owners can get 25 percent, up to $31,500 in rebates. McCabe explained that it can take one to three years from the time a system is installed to receive those rebates from the state.

He said coming to terms with it, as it is a relatively new system, should help and said the power companies often have meter discrepancies and they are waiting to see the next set of bills. Mumford said he contacted the Public Service Commission to see if anything could be done in the meantime.

Dave Bonar of the Public Service Commission said the best thing customers – either residential or commercial – can do when they have a question about their electric bill is to contact the electric company directly and ask to speak to a customer service representative, or to a supervisor if they cannot get their questions answered.

“If that still fails, they can call the Public Service Commission, but they should exhaust options on their end before calling us.”

Amy Vickers – who, along with her husband, Stephen – owns the Seaside Country Store, also in Fenwick, has been on the grid since last October with their solar panels. Vickers explained that their bills were fine until March and April, and then the demand charge went “out of this world.”

“It was a higher demand than in the previous August, and that is our second biggest month and probably the hottest month of the year,” she explained. She called Flexera, who also was their installer, and called Delmarva Power to see if she could get answers.

“When I finally got a call back, [Delmarva Power] told me the meter must have been tampered with by children. There’s no children here, especially in March! It seemed like some sort of billing error. How can you tamper with a meter? If you knew how to tamper with it, wouldn’t you make it go backwards?” she joked. “It’s unbelievable. Just not believable.”

She said they understand how the demand charge works and are cautious to gradually turn on lights and appliances and not jolt the system into a frenzy in those crucial first minutes of the day.

She also said that the higher-ups at the power company were aware of the problem and admitted it was sort of a new thing, so maybe things were just getting worked out, adding that she would love to see it get resolved and get a real answer.

Likovich said he was under the impression that the issue with Seaside Country Store had been resolved.

“We read the demand meter and billed based on the meter reading. We believe the demand meter might have been inadvertently reset between meter readings, which would have accounted for the variation in demand charges,” he said.

As for Mumford, he is cautiously optimistic about his major new purchase and is being patient as the kinks get worked out and he tries to understand it all. He did say the meter had been changed twice this spring, which could account for discrepancies, and added that the money from the SREC’s add up, which will help offset his costs.

After receiving another bill with a demand charge over $1,000, he recently exercised his right as a consumer and found an energy supplier, Glacial, that he can use without a yearly contract, which he hopes will eliminate that charge and bring his bills down a bit. He is still a renewable-energy proponent, but wants to be proactive in helping others then come behind him understand the process.

“I’m not unhappy with what we have done,” he explained. “But, Delmarva Power needs to address this better that what they are doing. They are trying to protect their interests too much, to the point that they try to make it disadvantageous to do it.”

Mumford did admit that, as a business owner, he understands their position. He likened it to if someone built a restaurant down the street that was competing with him, but said because of their size and power, utilities can often “do whatever they want and nobody bothers them.” And he did say that, because it is all fairly new, everyone is learning and things are evolving each day.

For example, just recently, Forest Reach, a community near Bethany Beach, had a ribbon-cutting for what amounts to be the first small-scale power plant in the state. With help from negotiations between Flexera and Delmarva Power, the community found a legal way to sell their excess energy back to the grid wholesale – something that has not been done before. Mumford said that idea was mentioned as a possible option, but for now, he is changing suppliers.

“It makes me go find somebody else, which is what it amounts to,” he said.

He added that he sold his life insurance policy to make the investment, so he is lucky in that regard that he did not have to borrow money, making it a little easier to be patient during the payback period.

“If I had not done the project, my energy costs would have probably risen over time,” he said. “I’m probably doing the right thing. It just might take longer than I thought to re-coup. But, we are all learning.”