Introduction

Since the quality of wind available, or wind resource, is the primary factor in determining the success of a site, two opposite settings, rural and urban, have the most potential for on-site electrical generation from individually owned turbines.

Suburban areas are poor wind turbine sites because the consistency and velocity of wind increases with altitude; and in a setting with strict zoning rules on height and high visibility of tall structures it is unlikely that a turbine tower much taller than a house will be permitted.

Since one corner of a property may be better suited for a wind turbine than another, having more acreage increases your siting options and thus your chances of erecting an efficient turbine. Rural landowners can take advantage of this as well as the fact that much farmland has been cleared and is relatively flat and free of objects that cause wind turbulence, decreasing wind energy content.

Sparse rural areas often depend on electricity generated by distant power plants. Inefficient transmission over great distances results in electricity loss and thus increases the amount of power required to meet demand.

On the other end of the spectrum, urban dwellers have almost no acreage, but plenty of height. Urban wind is extremely turbulent and is poor at consistently producing electricity. However, some turbines are designed to handle chaotic wind patterns and have proved useful in urban rooftop settings.^[1] Also, building-integrated turbines can be mounted so the building channels wind to them. ^[2]

Since the energy content of wind varies with the cube (the third power) of the wind speed, small increases in velocity can result in huge increases in energy output.^[3] Site-specific wind-tunnel tests can indicate the proper location for a turbine, and should precede the siting choice.^[4]

State Renewable Energy Credit Purchase Programs

In some instances a state renewable portfolio standard (RPS) policy will allow a residential owner of a small wind turbine (“customer/generator”) to create and sell one renewable energy credit (REC) per mW of electricity produced.^[5]  (See Renewable Energy Credits)

New Jersey, for example, has an aggressive RPS that requires retail energy suppliers to include 22.5% qualifying renewable energy by 2021. The New Jersey RPS rules define a REC as “a certificate representing the environmental benefits or attributes of one megawatt-hour of generation...”^[6] The suppliers demonstrate compliance to the New Jersey Board of Public Utilities (BPU) by submitting to it an annual report of all RECs purchased during the prior year. This has the effect of retiring the RECs so that they cannot be used for compliance again.

Ordinary customer/generators are able to create and sell the RECs associated with their individually owned GUs. The renewable energy from a customer/generator on their premises may be used to meet New Jersey’s RPS requirements as long as the customer/generator is eligible for net metering. According to Section 38 e(1) of New Jersey’s Public Law, a supplier/provider shall not use a REC that is based on electricity generated on a customer/generator’s premises to comply with this subchapter unless the facility is eligible for net metering.^[7]

The issue of REC ownership arises when it or the underlying electricity is exchanged for money. RECs can be quite valuable to wind turbine owners, and ownership issues should be addressed during the initial budgeting of a project.

In terms of small wind generation, it may not be economical for individual system owners to aggregate and sell their RECs, but an aggregator such as an energy cooperative or retailer may be willing to buy the RECs and sell them on the open market. However, GU owners should beware not to sign away their ownership rights to the RECs when they sign a net-metering agreement or accept a subsidy for system installation.^[8]

Net Metering

Net metering is a consumer based renewable energy incentive for consumers/generators who own (generally small) renewable energy facilities such as wind turbines.^[9]

Under net metering, a system owner receives credit for all or a portion of the electricity that it generates. The precise net metering rules vary considerably from state to state, but in its purest form net metering is an accounting procedure ensuring that electricity generated by a utility customer is credited against the electricity they consume.^[10]

Specialized reversible smart meters are able to determine minute-by-minute electricity usage around the clock, and allow utility rates to be determined in real-time cost.^[11] Whether electricity is produced during the day or at night is a huge issue for wind turbine owners. During the daytime peak-price period electricity is the most expensive, and in most regions the wind blows the most consistently at night. This is one area where solar power has a small advantage.

Under §1251 of the Energy Policy Act of 2005, all public utilities are now required to make net metering available upon request of their consumers.^[12] MidAmerican Energy Co. is the defining case on net metering rules, and mandates a single accounting at the end of each billing period.^[13]

Ownership of RECs

Ownership issues often turn on the precise relationship between the utility and the customer/generator in their net metering agreement. Whether the utility or the customer owns the REC is a factual determination that must be assessed case-by-case.

The starting point for analysis is that the RECs generally belong to system owners unless and until they are sold or legally transferred to another party.^[14] Most net-metering agreements are silent on who owns the RECs produced from customer-owned GUs, but many variables can affect ownership.

If the utility is required to offer net metering as a matter of state law and the regulations do not expressly call for the transfer of RECs as a condition of the net metering agreement, the RECs rightfully belong to the generator/customer.^[15] However, if the utility offers net metering on its own volition, it may legally condition the grant of the benefit of net metering on receiving ownership of the RECs.^[16]

For example, NorthWestern Energy in Montana claims its customers’ RECs as part of its interconnection and net-metering agreement.^[17] The utility’s theory is that regulatory approval of the net metering agreement is given in consideration of the transfer of REC ownership.

According to a 2009 net metering report by the Network for New Energy Choices, Montana received a grade of “C” for its net metering and interconnection laws.^[18] In contrast, New Jersey received an “A” for its net metering rules, which explicitly state that net-metered customers own their RECs.^[19]

Missouri’s “net billing” law, for example, provides for interconnection and net metering at the “avoided cost rate,” which is equal to the amount of energy used minus the amount of energy produced, as opposed to giving retail-rate credit for each unit of electricity produced.^[20] The Network for New Energy Choices gave Missouri a “C.”^[21]

References

1 ^ Vertical axis wind turbines (VAWTs) are different from traditional wind turbines in that their main axis is vertical as opposed to horizontal. Vertical orientation makes them ideal for urban settings because VAWTs are not affected by the direction of the wind. This is useful in urban areas where the wind changes direction frequently or quickly. VAWTs are optimized for better performance in areas where tall towers are not feasible, obstacles are nearby, or the wind is more turbulent. See www.UrbanGreenEnergy.com.

2 ^ Bend Weekly News Sources, OSU Develops “Micro” Wind Turbine for Green Buildings (Dec. 22, 2006), available at http://www.bendweekly.com/Schools/1491.html (last visited Jan. 4, 2010).

3 ^ For example, doubling wind speed multiplies energy output by eight. See Danish Wind Industry Association,The Power of Wind: Cube of Wind Speed, available at http://www.talentfactory.dk/en/tour/wres/enrspeed.htm (last visited Jan. 4, 2010).

4 ^ New4old,Integration of Wind Turbines, available at http://www.new4old.eu/guidelines/C8_Part1_H7.html (last visited Jan. 4, 2010). The New4old project is committed to contributing to renewable energy generation and rational use of energy in historical buildings.

5 ^ See Generally - N.J. Stat. Ann. § 48:3-49, and N.J.A.C. § 14:8-1.1 et seq.

6 ^ N.J.A.C. § 14:4- 8.2 (2007).

7 ^ § 38 N.J. Pub. L. 1999, c.23 (C.48:3-87) (2006), available at http://www.njleg.state.nj.us/2006/Bills/AL07/300_.PDF (last visited Dec. 22, 2009).

8 ^ Ed Holt & Lori Bird, Emerging Markets for Renewable Energy Certificates: Opportunities and Challenges (2005), 15, National Renewable Energy Laboratory, available at http://apps3.eere.energy.gov/greenpower/resources/pdfs/37388.pdf (last visited Dec. 9, 2009) [hereinafter “Emerging Markets”].

9 ^ “Net Metering” and “net billing” are generally used interchangeably.

10 ^ Mona Newton, Net Metering is a Win-Win for Utilities and Local Communities, Colorado Renewable Energy Society, April 2007, available at http://www.cres-energy.org/blogs/blogs_newton_07apr.html (last visited Dec. 28, 2009).

11 ^ Variation between day/night and seasonal electricity rates may exist. Typically the production cost of electricity is highest during the daytime peak usage period, and low during the night, when usage is low.

12 ^ Public Utility Regulatory Policies Act of 1978 (PURPA), 16 U.S.C. § 2621(d)(11); “Each electric utility shall make available upon request net metering service to any electric consumer that the electric utility serves. For purposes of this paragraph, the term ‘net metering service’ means service to an electric consumer under which electric energy generated by that electric consumer from an eligible on-site generating facility and delivered to the local distribution facilities may be used to offset electric energy provided by the electric utility to the electric consumer during the applicable billing period.”

13 ^ MidAmerican Energy Co., 94 F.E.R.C. P 61, 340, at 2 (March 28, 2001).

14 ^ Emerging Markets, supra note 8, at 47.

15 ^ Emerging Markets, supra note 8, at 47.

16 ^ Emerging Markets, supra note 8, at 47.

17 ^ NorthWestern Energy, NorthWestern Energy Interconnection Agreement for Customer-Owned, Grid-Connected Electric Generating Facilities of 50 Kilowatts or Less Generating Capacity (PDF) (March 2003), available at http://www.northwesternenergy.com/documents/E+Programs/E+NetMeteringAgreement.pdf (last visited Jan 4, 2009), stating “NWE is solely responsible to apply and qualify for, and shall have the right to receive, the benefits of any and all RECs...created or granted as a result of the net metering arrangement with Customer.”

18 ^ Network for New Energy Choices, Freeing the Grid (PDF) (November 2009), available at http://www.newenergychoices.org/uploads/FreeingTheGrid2009.pdf (last visited Dec. 28, 2009).

19 ^ See note 18

20 ^ See Note 18.  See also 35 Mo. Rev. Stat. § 386.887, and Missouri House Bill 1402, passed in 2002, describes the “avoided cost rate:” Any electricity that is fed back into the grid is credited on the next bill at the avoided cost rate, not the retail rate (as in net metering). Net excess generation at the end of the month is also credited at the avoided cost rate on the following month’s bill. See also U.S. Dept. of Energy, Small Wind Electric Systems: A Missouri Consumers’ Guide (2005), available at http://www.nrel.gov/docs/fy05osti/37711.pdf (lat visited Jan. 4, 2010).

21 ^ Network for New Energy Choices, Freeing the Grid (PDF), November 2009, available at http://www.newenergychoices.org/uploads/FreeingTheGrid2009.pdf (last visited December 28, 2009).