This Tuesday at its regular meeting the Traverse City Light and Power board will discuss a new net metering policy.  Net metering would encourage small renewable energy systems on homes and businesses in the city by crediting the customer for what they generate – a first step towards distributed energy generation in the city.

What is net metering?

With net metering, a home or business customer installs solar panels or small wind turbines and uses electricity from those systems to power the home or business.  To state the obvious, solar panels only produce energy when the sun is shining, and when it is shining, they produce more energy than the homeowner can use.  The same is true of wind turbines and the wind. 

Net metering allows the home or business owner to generate electricity for the grid, and the utility credits the customer for energy generated by the system.   TCLP would install a two-way meter at the home or business that reads energy coming into the building from the distribution grid, and energy going out to the grid from the customer’s renewable energy system.  The customer pays for the net of the amount of energy they use over the amount of energy they generate.  The policy even allows some carry-forward of excess kWh generated during a billing month, so long as the “credit” is used within a year.  With solar in particular, that seems like a likely scenario – especially in a house with solar panels but without central air.

 The TCLP policy allows up to 20 kW of capacity per project, or up to 80% of the customer’s energy requirements.  The program initially will allow up to 150 kW in the residential customer class, 320 kW in the commercial class, and 290 kW in the industrial class.   The city currently does not have zoning in place for small wind (i.e. generators on rooftops), but that topic is on the Planning Commission’s list for the future.  Solar works now under existing zoning.

Help paying for it 

To help with the cost of the systems, federal legislation offers tax credits for renewable energy systems installed at people’s homes.  A person who installs a wind or solar system can claim a 30% tax credit to help offset the initial investment.  The tax credit can be carried forward into subsequent years if 30% of the cost of the system exceeds the person’s total tax liability the year the system is installed.  

 Further help comes from the Michigan Property Tax Code.  “Alternative energy systems” (which include solar and small wind) certified as eligible by the Michigan Next Energy Authority Act are exempt from city personal property tax unless the city passes a resolution when presented with a request stating the systems will not be exempt.  (The same goes for the school board.)  Traverse City has not been presented with a request yet, but I certainly would support leaving the exemption in place. 

A nice addition to our image 

Imagine visitors driving into TC from the south and seeing solar panels on the roofs of homes and businesses.  They would know that we are generating a little bit of our own energy, and leading the way to a cleaner and more secure tomorrow.

 For more information:

The policy TCLP is considering – http://tclp.org/uploaded_files/PACKET_-_Regular_Meeting_07.27.10.PDF starting at p 17 of the pdf

 MI Public Service Commission info on net metering – http://www.michigan.gov/netmetering 

 Directory of solar and wind energy suppliers:  http://www.michigan.gov/documents/CIS_EO_Inside_broch_solar_and_wind_67997_7.pdf

 Incentives for renewable energy and energy efficiency: http://www.dsireusa.org/ (click on Michigan in the map) 

*Disclaimer – this post is information about a potential program in Traverse City; it is not legal or tax advice.