The Hidden Cost of Solar + Energy Storage

Tom McCalmont, President McCalmont Engineering has been working on large solar projects for more than 15 years. The former CEO of Regrid Power, which in 2008 was purchased by Real Good Solar, his six-year old company McCalmont Engineering is fully dedicated to large solar and energy storage projects in California. “We do medium voltage interconnections, we do energy storage, we do NGOM meters, reverse-power relays, SCADA systems — so all of the things that people have problems with, we have expertise in,” he explained.

This expertise means that McCalmont understands what goes into interconnection and utility requirements for permitting and a little-known utility requirement called the NGOM, or “net-generation output meter” is making him very worried about the future of solar + energy storage projects, particularly in California.

What’s the Problem?

“The issue that utilities are absolutely paranoid about is that people will use energy storage to somehow arbitrage energy rates,” explained McCalmont.

Because solar is net-metered and the owner is being paid at retail for exporting power to the grid, utilities are worried that if you add storage, you are going to sell all of your power at retail rates when they are high and buy it back when it is cheap, he explained. In other words, utilities are worried that system owners will sell more energy to the utility than their solar is actually producing because they could, in theory, draw down their energy storage system and put it on the grid.

“The technique they developed to stop this is the NGOM,” said McCalmont.

An NGOM is a second utility meter that you have to install when you have multiple sources of onsite generation, said McCalmont. “So if you have solar and storage or solar and a fuel cell or solar and a generator whatever you might have, if you have multiple sources of generation they want to make sure that that other source of generation can’t be used to get retail credit like you can with solar under net-metering.”

The Problem with NGOMs

McCalmont’s first foray into energy storage was in 2012 when he put storage on his own building and received conflicting instructions from the utility. First PG&E told him to put a meter on the storage system and McCalmont complied. But then when it came time for inspection, the utility had changed its mind and said, no, the NGOM had to be on the solar system. “We ended up spending more money to move it and put a new cabinet in and change the wiring,” he added.

McCalmont said the utility wants the NGOM on the solar output and so they can compare it to the output of the traditional utility meter, which is on the facility. As long as those meters track together, the utility is satisfied that you aren’t getting credit for power that isn’t generated by the array. “They need to see that whatever you export from your main meter is the same or less than what your NGOM says. That way they know you are getting all of the power from your solar array and not from somewhere else.”

In theory it all makes sense but the problem, said McCalmont, is that “it is very expensive to retrofit the NGOM onto your solar.”

McCalmont offered as an example a 175-kW system that he and Geli had done for a school system in California. When the school decided to put on energy storage to enable fast EV charging, they encountered exorbitant costs when trying to place the NGOM on the solar. “We had to put special cabinets in for the power to flow through,” he explained.

For non-electrical engineers, McCalmont explained that in a normal building the power doesn’t flow through the actual meters but instead flows through a current transducer or CT, which measures, but steps-down, the power before it goes to the meter. This is because the amount of power flowing in a large building is greater than the meter could handle. For a residential system, this isn’t necessary.

“That’s how all commercial meters work but most of the public doesn’t know that,” explained McCalmont.

“So you would think because the meter is actually separate from the CTs, electrically there is no reason that those two things couldn’t be in two different cabinets,” he said. “So you would have your big switchgear cabinet with your CTs in it and [since] the output wires from the CTs are very small, those could run through a conduit and they could go over to a little meter cabinet off to the side and that meter cabinet would be inexpensive. You could put one in for a couple hundred bucks.”

However, said McCalmont, the utilities don’t want it being done that way because they are worried that someone might tamper with that conduit and somehow sabotage the meter.

“So the problem with the NGOM — and this is really the core of the issue — is you don’t get to put this little $200 meter cabinet to measure the output of the solar,” he said,  “you have to put in a $10,000 cabinet that the conductors flow through so that the utility can measure the power and know that you will not be able to interfere with it.”

Getting back to the example with 175kWs of solar, Geli had to spend pretty close to $30,000 to put the NGOM cabinets in, said McCalmont.

“So it’s this hidden cost that people aren’t really talking abut and don’t really know that it exists,” he said.

McCalmont said that the same situation occurred in a project his company did with Green Charge Networks. The project was designed, approved by the utility, built and then once the utility conducted the final interconnection inspection, it was rejected because it didn’t have a separate meter cabinet.

“So again, it’s going to another $25,000 bill for these schools to put in the NGOM cabinet,” said McCalmont.

In both of those examples, the projects were already built and the customers had already signed the orders. This was an unanticipated cost and in both cases the storage companies were forced to pay the additional costs.

A More Simple Solution

Because these switchgear cabinets cost upwards of $10,000 and then another $10-15,000 to install, McCalmont thinks the utilities are trying to stop the growth of energy storage with this regulation. He sees a much easier solution.

One simple technical solution according to McCalmont would be to put the CTs in the existing switchgear.

“Then you run the wires from your CTs out through a conduit into your little meter cabinet and it could just hang on the wall,” he said, adding that utilities haven’t been in favor of this approach.

“So far in every project we have done they [the utility] have not been willing to even consider that,” he said.

Another solution would be to allow metering on the new technology that was being installed rather than forcing it to be retrofitted to the existing solar.

“That would seem like a more natural fit to me,” said McCalmont. “So you would know if it is going to export power I’m going to track it.”

“The problem with requiring it to be on the solar is that it is hard to anticipate what the cost will be because it really depends on how big the solar is. The bigger the solar is, the bigger this cabinet becomes and the more expensive this requirement becomes,” he said.

“If you have a 1-MW solar plant, you are going to have a very expensive NGOM because it’s going to be this massive cabinet.”

PG&E did not respond to multiple requests for comment.

Another Skirmish in a Larger Fight

Even though these solutions seem simple, McCalmont doesn’t see any resolution happening anytime soon.

“To me, it feels a lot like the battle over net-metering,” he said, adding, “it’s sort of a ground skirmish in a much bigger battle between our industry and utilities.”

For now the NGOM issue is confined to California however, McCalmont believes that as storage grows across the country, it is certainly one that could emerge in other states.

“We haven’t encountered it yet outside of California but that doesn’t mean it won’t be an issue out of California [down the road]. The name ‘NGOM’ has been adopted by California IOUs and whether the same name will be used by everybody I don’t know.”

For now, McCalmont said he plans to talk about the problem and hopes the energy storage industry will work with utilities to arrive at a resolution that everyone can live with but he acknowledges that it won’t be easy.

“How you resolve that is troubling, I don’t know what the answer is,” he said.

Lead image: Calculator. Credit: Shutterstock.


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