Does TEP buy back power?

Net metering- the concept of buying and selling power from/to your local utility at their current rates is one of the many concepts that go into determining if going solar is ‘worth it’ and also in determining the size and operational concept of the solar system.

For solar, the idea is the system only makes power during the time the sun is shining (duh…). But if we want to make 100% of the power we actually use, that means we will be making much more power than we are using during those sun hours.

The question is, what do we do with that extra power we make. For a home solar power system that usually means some sort of net metering agreement with the power company or a battery (or both).

One way to look at it is the extra power made is fed back to the grid and the home is ‘credited’ with that power. Later, when the sun is down, the home draws power from the grid against the balance of credits that were built up earlier in the day.

At the end of the month, if there was more power pulled from the grid- there’s a bill. If more power was fed to the grid- there’s a payment.

Some utilities (like TEP) carry that end of month credit over to the next month every month until the end of the year when the balance is paid. In TEPs case, they pay a rate based on their ‘Resource Comparison Proxy’ (RCP) which is not the same rate they charge for the power the home draws from the grid.

The ‘reasons’ for paying less than they charge are many- one being that solar is becoming prevalent and is causing an excess of power during sun hours which is actually affecting market prices. Solar is working so well that it is pushing power supply far beyond demand and causing a drop in market prices during those hours.

Bottom line the ‘pay back’ rate will continue to drop in the coming years.

TEP’s RCP, the rate they buy back power, is set for 10 years when a home owner establishes the agreement with TEP. The rate that is available for a new home owner is re-evaluated once per year and can drop by up to 10%.

This means that for a TEP customer looking into rooftop solar, the current RCP is set until the end of September. On October 1st, the RCP will most likely drop (limited to a maximum drop of 10%). So, there’s an incentive to take action prior to the September deadline each year- going over that line means less money earned for excess power delivered back to the grid.

To get an idea of what this has looked like over the recent years and what might be coming, let’s take a look at the recent years for TEP’s RCP

Sept 21, 2018 - Sept 30, 2019: $0.0964 per kWh
Sept 30, 2019 - Sept 30, 2021: $0.0868 per kWh
Oct 1, 2021 - Sept 30, 2022: $0.0781 per kWh
Oct 1, 2022 - $0.0703 per kWh

That last drop in RCP- the rate TEP pays you back was essentially the max drop in rate allowed by the rules (a full 10% drop would be $0.07029) so I think we can all see where that might be heading.

(Source- Rider R-14 at the bottom of this page: https://docs.tep.com/wp-content/uploads/TEP-Statement-of-Charges.pdf)

Now, some folks complain to me that this means solar isn’t ‘worth it’ because if they can’t sell back their power at the same rate the utility charges then it’s a “scam”…

I can appreciate this thought, it is certainly frustrating but I think it is also a very limiting point of view.

Considering a homeowner has no choice but to pay whatever rates TEP can get approved through the Arizona Corporation Commission and also inflation is at play- we know it is probably much better for that homeowner to make their own power.

Currently, the cheapest and easiest way to do that is with a rooftop solar system sized to cover the homes needs and use a net-metering-like agreement to pull power back and forth from the grid.

As long as the system is properly sized to the home and home owner’s power usage (including future upgrades like pools, heat pumps, and EVs)- the power buy back rate doesn’t come into play as much.

Worded differently- if you make as much as you use and don’t over size the system, there will not be very much at the end of the year to ‘sell back’ to TEP.

Even if the system is over-sized, what then? Well, the home owner gets to make their own power all year and benefit from the lower energy costs from their solar power system rather than pay the ever-increasing rates to TEP.

At some point these rules and inter-connection agreements will drive the need for a home owner to consider adding a battery to their solar system and approach the operation in an off-grid style concept. These changes are coming (we can all see it, it has taken shape in California with NEM3.0 already) and many folks would do well to investigate adding batteries as well.

To summarize- Net Metering is gone in Tucson with TEP and the ‘buyback rate’ lowers every year. This drives the need to make sure the solar power system is sized properly and makes adding a battery to the system something that needs to be considered.

If you are looking into rooftop solar for your home or business, I am sure you will enjoy my upcoming book Tucson Solar Insider Desk Guide for Buying Solar- click here to be notified when it is released.

Be Good!
Curtis