I am thrilled to see new businesses being created as a result of Newfoundland and Labrador’s recently implemented net-metering program; however, I’d like to draw attention to some serious flaws with the policy.
Firstly, the incentive rate being offered through the program is inadequate. For example, an average 5.6 kilowatt residential solar system is expected to cost $19,200 installed. The average solar resource in St. John’s is 950 kWh/kW (yearly), which means a 5.6 kW system would be able to produce 5,320 kWh per year (950 x 5.6). The “incentive” rate being offered by the policy is equivalent to the wholesale electricity price in your area; in St. John’s that would be approximately $0.12/kWh. Therefore, your solar system will produce an annual electricity value of $638.40 per year (5,320 kWh x $0.12). Divide the system cost by your yearly annual electricity value ($19,200/$638.40), and we find out that it will take 30.07 years to recoup your investment.
Sorry folks, but the lifespan of a residential solar system is only 20 to 25 years. Even if electricity prices in the province rise to $0.17/kWh (which the Liberals say is the maximum!) — the payback period for your installation drops only to 21.22 years. In Nova Scotia, net-metering customers have recouped their investment in as little as seven years.
Secondly, there is a province-wide cap of five megawatts for net metering in the province. For reference, a single-utility scale wind turbine in St. Lawrence or Fermeuse is three megawatts, Holyrood is 490 MW, Muskrat Falls is 824 MW, and the island’s peak demand is 1,700 MW. Five megawatts is a drop in the bucket.
Wreckhouse Energy, the company referenced in this article, is aiming to install mostly 100 kW systems. That means that if 50 large companies install a 100 kW system each, the province reaches its net-metering cap of five MW.
Finally, there is no effort in the net-metering policy to target low-income groups, not-for-profit organizations, public housing associations, or off-grid Indigenous communities. The 21 off-grid communities (think coastal Labrador and Newfoundland) currently consume 15 million litres of diesel fuel annually — and their unsubsidized electricity costs can range from $0.30 to $1/kWh (compared to the $0.12/kWh paid by grid-connected customers).
The policy is designed to help organizations and individuals who are already financially secure, instead of targeting those who need it most.
If you truly want to see “winds of change” as a result of this policy, the province needs to improve the net-metering incentive rate, drastically increase the net-metering cap, and target this policy towards individuals and organizations who are going to be hurt the most from ever increasing electricity rates as a result of Muskrat Falls.
Thank you for your time.
Division of social science
Grenfell Campus, Memorial University of Newfoundland