Tag: "cpuc"

02/17/21

  08:47:00 am, by Jim Jenal - Founder & CEO   , 927 words  
Categories: All About Solar Power, SCE, Residential Solar, Ranting, SDG&E, Net Metering

The Battle to Preserve Net Metering is Underway - Time to Fight!

TL;DR - We need your help to preserve net metering - Sign the Petition!

Run on Sun has been installing grid-tied solar power system since 2007, and one constant in all of that time has been the hostility towards such systems evinced by the Investor-Owned Utilities (IOUs): SCE, PG&E and SDG&E. Nowhere is that hostility on clearer display than it has been in their efforts to erode, if not eliminate altogether, net metering.  But now, with the IOUs lobbying for the creation of Net Metering 3.0, the battle for the survival of net metering is about to be joined in earnest.  If your right to put solar on your home or business is to be preserved, we are going to need all of you to join the fight.  Here’s our take…

What is Net Metering?

Net Energy Metering (NEM) or just net metering for short, is the basis by which a solar system provides the owner with a significant portion of their financial benefit.  Solar systems on a clear, sunny day produce energy that follows a normal distribution, with the peak energy production occurring around solar noon, and rolling off in a typical “bell curve” on either side.  That energy saves the system owner money twice: first, by directly offsetting the energy usage of the home or business, but secondly, by allowing the excess energy to be exported back to the grid for retail credit.  That retail credit is then applied against energy imported from the grid to power loads at night or on cloudy days.  At the end of the billing cycle, those two values - the amount of energy imported versus the amount of energy exported - are “netted” out, and if the amount imported is greater than what was exported, the difference is charged to the customer.  Conversely, if more energy is exported than imported, the customer has a credit for that period that can be carried forward.

Of course, the energy exported to the grid for which the net metering customer gets credit doesn’t disappear - the utility sells it to another customer for that full retail value.  Moreover, because that energy did not have to be transported from far-off generation facilities, there is less demand to build expensive infrastructure like high-voltage transmission lines - you know, like the lines that have sparked deadly wildfires in the past few years.

So you might think that net metering would be a win-win for everyone - solar clients get a greater financial incentive to foot the bill for installing energy generation systems and the utility gets additional energy without incurring the costs of building or maintaining them.  But you would be wrong.  You see, IOUs don’t make money selling energy.  They make money building things.  In fact, in a stunningly perverse incentive structure, the IOUs get a guaranteed return on investment of 10% for every dollar they spend building stuff: generation plants, transmission lines, etc.  So they see the growth of solar, particularly rooftop solar, as a threat to their antiquated business model, and the best tool at their disposal is to take as big a bite out of net metering as possible.

Where are We Today and Where are the IOUs Trying to Go?

The version of net metering described above actually no longer exists with the IOUs, instead, they transitioned to NEM 2.0 a few years ago.  (Municipal utilities, like PWP, still offer full net metering.)  Under that scheme, a one-time interconnection charge was created, along with what are known as Nonbypassable Charges, which require their customer to pay a relatively small amount for every kilowatt hour of energy imported, even if that energy is actually offset by exported production.  The real kicker was that all solar customers in IOU territory were switched to Time-of-Use rates that made the value of exported solar lower, and energy imported from 4-9 significantly more expensive.

But now, heading into NEM 3.0, the IOUs are going all in!  A recent report by the consulting firm E3 was released by the CPUC and it highlights some options for changing net metering that would seriously impact the value of solar.  In particular, the report proposes fixed monthly charges of between $50 and $70 for all solar customers, combined with a “grid access charge” each month of between $5-$7/kW installed!  That means that under the best case scenario of their proposals, a residential customer with a 4 kW solar system installed would pay an extra $70 per month, every month, just because they have solar - that they paid for - on their home!  That is an $840/year penalty for going green! 

If that doesn’t make you see red, nothing will!

We’re Not Gonna Take It!

To say that the California solar industry is in the fight of its life is an understatement.  But so are all solar customers, who could see the value of their investment greatly eroded by these misguided policy proposals.  And that is where you come in.  We are fighting back and we need you in the fight!  The California Solar and Storage Association (CALSSA - our trade association) and the Solar Rights Alliance are gearing up to organize against the threat.  The first step is in signing a petition to Governor Newsom - we need him as an ally now.  It is super easy to sign on and we are looking to collect 20,000 signatures before April 1.  As of this writing, we are at 923 supporters, so we have a long way to go - and that starts with you!  (We will have more news on ways to fight back in the coming weeks, so watch this space.) 

Please click the big button below and let’s get this done!

Sign the Petition!
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07/17/19

  01:01:00 am, by Jim Jenal - Founder & CEO   , 926 words  
Categories: All About Solar Power, Residential Solar, Ranting, Shortcut Solar

California Solar Consumer Protection Guide Hits the Streets

CPUC Solar Consumer Protection Guide

For the longest time we have been talking about the need for the solar industry to do a better job of policing itself, because the manner in which too many solar companies were doing business was simply unsustainable.  We argued that if we didn’t do a better job, others would step in and do it for us. 

Well guess what, the California Public Utilities Commission (CPUC) has just published a 23-page tome titled, California Solar Consumer Protection Guide.  Now that is quite a mouthful, but come September 30th, every contract in California that is entered into for solar with one of the investor-owned utilities (IOUs) – that is, SCE, PG&E, and SDG&E – requires that the first four pages be initialed, the last page signed, and the whole thing uploaded to the IOU’s web portal!  Moreover, homeowners need to be given adequate time (and patience?) to read the entire document and only wet signatures (i.e., no E-sign) are allowed.  Here’s our take…

Who Will this Deter?

First and foremost, the more information consumers have, the less likely they will be taken in by shady contractors.  Ultimately, that is good for both consumers and the legitimate players in the solar industry.  Frankly it’s too bad that the trade associations didn’t create something like this and require their members to disseminate it to potential clients – I’m confident that they would have produced a better guide.

For Run on Sun, this really doesn’t change anything that we will be doing since we have always covered this type of information with our clients.  (You know, we are “tellers, not sellers.")    But it will be really interesting to see how the bad players respond.  My guess is that they will simple forge signatures – if you are willing to deceive your customer, you will have no qualms about deceiving a bunch of regulators.

Meanwhile, for the Non-Shady Solar Installers…

As to the rest of us, while this will mostly be business as usual, there are some disturbing things.

For example, on page 8, where the CPUC is trying to explain the installation process, they have this bullet point under the heading, After You Sign a Contract: “Installer… performs a home site visit to confirm assumptions and check roof, ground, and electric conditions."  Hold the phone.  If the installer doesn’t know the condition of your roof and electrical service when you sign the contract, that contract is invalid! 

Key terms that are left to a later time means that there was no agreement between the parties, no “meeting of the minds,” and hence the contract is not binding.  So why is the CPUC publishing such nonsense?  Because many of the larger solar companies operate this way and they were no doubt insisting that this language be included. 

But no - before you sign a contract, those assumptions have to be nailed down if you are to avoid costly change orders down the road.  (Oh, and why aren’t change orders discussed here?  Sigh.)

Under Step 3: Find a Qualified Solar Provider they suggest going to the Contractors State License Board and the California DGStats website.  But that’s a lousy way to identify a qualified provider.  For one thing, being listed with the CSLB just means you have a license - but lots of companies play all kinds of tricks to have a license number and you wouldn’t want them anywhere near your home.  And the DGStats site is interesting, but it only shows projects installed in the IOUs territory - locally that means SCE.  But installs done in Pasadena or Los Angeles, Burbank, Glendale, Azusa, or Anaheim (for example) will not show up there at all, since the municipal utilities do not report their projects to that site.

Only under the area of narrowing down your list to they suggest checking the website of certified PV installation professionals provided by the North American Board of Certified Energy Professionals (NABCEP) – which is the only resource listed that actually does anything to qualify installers!  (Check out the NABCEP list here.)  Oddly, the directory of companies belonging to the California Solar and Storage association (calssa.org) was not referenced as a resource at all!

 Under Step 5: Learn About Electricity Bill Savings they have this interesting statement: “Before you sign a contract, ask yourself: if the savings end up being lower than the estimated monthly or yearly savings, does getting rooftop solar still make sense to me?"  Wow - how much did the IOUs have to pay to get that language inserted?  How about adding this in rebuttal: “Before you sign a contract, ask yourself: How much would it mean to me to be able to really stick it to my utility?"  Because we have certainly had many a client tell us that all they really want to do is make SCE feel the pain!

Wouldn’t more useful questions to ask before you sign the contract be: How did your installer calculate your potential savings?  What assumptions did they make, for example,about the rate of growth for future electric bills, or the degradation of the output of your PV system?  What software did they use and how does it work?  Or did they just pull a number out of the ether?

Under Step 8: Sign this Guide we get to explain to our new client why they have to initial 4 pages, check three boxes, and then sign the Guide - in addition to the installer’s contract and the interconnection agreement.  (To say nothing of financing documents if they are foolish enough to buy into a Lease/PPA).  Yet more hoops to jump through before Going Solar.

But you know what, folks?  We have only ourselves to blame.

07/30/18

  08:45:00 pm, by Jim Jenal - Founder & CEO   , 500 words  
Categories: All About Solar Power, Solar Economics, Residential Solar, Ranting

Think Your Solar Investment is Safe? Think Again!

Those of us involved in solar in sunny Southern California generally think that we have it pretty good.  The climate is just about perfect for solar - and by that I mean the political climate, every bit as much as our abundant sunshine.  From the Governor, to the legislature, to the CPUC and the CEC, generally those forces support the growth of not just solar power in general, but distributed, on your own rooftop solar in particular.  But we become complacent at our peril - both to the jobs of those in the industry as well as the investment value of all of those solar installations out there.

A recent story from Columbia, South Carolina brought this peril to mind.  As portions of the state edged closer to the existing 2% cap on net metering installations, the legislature was working on a compromise to lift the cap,  allowing more residents the opportunity to install solar and take advantage of net metering.  The utilities had other ideas - from the Greenville News:

Deep-pocketed power companies outspent the solar industry nearly $3 to $1 as part of an intensive lobbying effort during an S.C. legislative session that included efforts to curb rooftop solar’s expansion in the state.
Electric utilities spent nearly $523,000 from January through May to hire more than three dozen lobbyists to advocate for them at the State House as lawmakers decided what to do about solar incentives.

Yikes.

The result of all that lobbying?  The effort to lift the net metering cap was defeated - and local solar companies are going to be laying off employees (if not closing altogether) while affected residents will either have to forego solar, or find it far less financially viable.

Solar Rights AllianceWe delude ourselves if we think that it can’t happen here.  Utility lobbyists are in Sacramento just as they are in Columbia, and the recent forced change to net metering 2.0 in SCE territory is a reminder that our progress is not guaranteed.

Which brings me to the Solar Rights AllianceWe have written about this important organization before, and will do so in the future.  But I wanted to use this post to show how we are putting our money where our mouth is.  Starting today, we are modifying our solar installation contracts to provide an opt-in checkbox for new clients to be signed up for the Solar Rights Alliance, with Run on Sun making a donation in their name to help support the important work of organizing solar clients statewide.

We are never going to be able to match the money coming from the utilities and their allies.  But what we do have is tens of thousands of happy solar owners all across the state.  If we can organize even a fraction of them, we will be able to speak directly to policy makers and let them know that the value of installed solar power systems must be protected.  That is a fight that we need to take on, and the Solar Rights Alliance (along with our wonderful trade association, CALSSA) is key to winning that fight.

06/30/18

  06:03:00 pm, by Jim Jenal - Founder & CEO   , 529 words  
Categories: Residential Solar, Ranting

Dropping the Ball - CPUC & CSLB Punt Disclosure Document Deadline

Frustrating solar contractsCalifornia law requires that the California Public Utilities Commission (CPUC) and the Contractors State License Board (CSLB) publish a new, “Solar Energy System Disclosure Document” for solar contractors to provide to clients as of July 1, 2018.  We just learned that the CPUC is yet to act on the SESDD draft, and isn’t expected to for months.  Moreover, the draft that we have seen falls far short of what the public really needs to protect them from those Shady Solar Contractors.

We received an email yesterday from the CSLB advising us of the delay in finalizing the SESDD, and highlighting the law’s requirements.  Frankly they are pretty meager:

  • The SESDD has to be provided to the client “prior to completing a sale, financing, or lease of a solar energy system to be installed on a residential building” - presumably as part of the contract itself.  Gee, what about disclosures as part of the sales proposal?  (More on that below.)
  • The SESDD has to be in the same language as the sales proposal - and you might say “yeah, duh!” but we have heard of companies targeting Spanish-speaking consumers with the proposal in Spanish, but the contract in English!
  • If PACE financing is used, then the PACE-specific proposal should be provided.

Interestingly, those are the only requirements called out in the CSLB email.  Unstated, but a part of the bill, is the discretion granted to the CSLB under the law to add any additional requirements that it deems “appropriate or useful in furthering the directive described” in the law.  Apparently CSLB doesn’t see a need to go any farther.

The CSLB has a draft document on its website, and if that is all that is mandated, this whole exercise will have fallen woefully short.  (You can find CSLB’s draft here.)  In a nutshell, all that one-page document discloses is the total system cost, how to contact the CSLB if you have a complaint, and your “three-day right to cancel."  Not surprisingly we have always provided all of this information in our contracts, and it is pretty shocking that some contractors have to have a mandated disclosure of how much the bloody thing costs!

So what should be here that isn’t?  How about:

  • A disclosure of the specific equipment that is going to be put on your roof. (Can we please eliminate “generic” solar systems?)
  • The proposed start date.
  • The expected duration for the project.
  • Any known contingencies or delegation of work to third parties (such as trenching, tree removal, etc.) that could delay or disrupt the project.

And while we are at it, where are the disclosure requirements for solar proposals? Such as:

  • Equipment specifics down to model numbers that can then be compared to the contract disclosures.
  • Savings analysis methodology and assumptions including:
    • Anticipated annual increase in utility costs
    • Means by which system performance was computed and annual degradation
    • Utility rate structure used to compute Year 1 savings
    • Assumed discount rate for valuing future cash flows
  • Proposed system layout on the roof.

We have a long way to go before homeowners can be assured that they are being treated fairly by solar contractors.  This delayed SESDD is but a tiny step in the right direction.

04/13/18

  11:10:00 am, by Jim Jenal - Founder & CEO   , 2082 words  
Categories: All About Solar Power, Solar Economics, Residential Solar, Ranting

My Electric Bill is So High! Will Solar Help? Part 3: Evaluating Competing Solar Proposals

Editor’s Note: This is the third installment in our three-part series:
My Electric Bill is So High! Will Solar Help?  
You can read Part One, How High is High, here, and
Part Two, How Do I Find Someone to Trust, here.

With apologies to the Lovin’ Spoonful, eventually you have to make up your mind between those competing bids you’ve received, but how?  Let’s walk through the proposal evaluation process and see if everything that you need to see has been included!

What’s in the Proposal?

Solar proposals come in all shapes and sizes.  Some are very short – just a listing of what will be provided, a price, and a place to sign.  On the other end of the spectrum are proposals that are twenty pages long, most of it boilerplate about what is solar and how does it work, and what a great company this is.  But strip away the boilerplate and are they really giving you much information that is specific to your situation?

What were the inputs?

The old saying, GIGO: Garbage In, Garbage Out, applies to solar proposals too.  In this case, the inputs are your past energy usage, and a detailed site evaluation that looked at your service panel and your roof.  Omit any of those inputs, and the output is likely to be of dubious value, or worse, it will mask the true cost of installing solar at your home, leaving you exposed to costly change orders down the road when the contractor “discovers” something that should have been addressed at the proposal stage!

Your energy usage for the past year is the key input – without it you’re flying blind.  If you are in SCE territory, your potential installer should be asking for access to your  interval data.  For most residential clients, that is hourly usage measurements over the entire year, and that is important to accurately model your savings under now mandatory, time-of-use rates.  Where interval data is not available, monthly, or worse, bi-monthly billing records can be used, but they will not provide the granularity needed to see how the proposed PV system will actually operate to offset your daily loads.

Seasonal load profile comparison

Assuming that interval data is available – we ask our clients provide it through a secure service called UtilityAPI – it is the installer’s responsibility to properly analyze it to know how large a system you need.  As we mentioned in Part One, we use Energy Toolbase for our data analysis as it is the most authoritative tool on the market.  The chart above shows the average seasonal usage for one particular client as processed by Energy Toolbase from the raw interval data.  This shows the average hourly usage over spring and summer, with a very dramatic peak on summer weekends around 5:30 p.m.  Recall from Part One about “low-hanging fruit” – what you are seeing here is an excessive A/C demand that, if it can be addressed, would greatly reduce the size of the PV system needed for this client.

Ideally, this analysis takes place before the site evaluation so that the installer is able to advise the potential client about actions to be taken to reduce their overall usage, and thereby end up with the most cost-effective solution tailored to their needs.

Detailed equipment line items

One of the things that we see on competitors’ proposals that never ceases to amaze us is the total lack of detail regarding the actual equipment that is going to be installed!  It is as if the homeowner is expected to pay thousands of dollars for a generic solar power system – but you wouldn’t spend thousands on a generic car, would you?  Moreover, how can you assess the value proposition of a generic system?  A company that proposes a generic system intends to install on your home whatever is on sale that week.  Maybe you get lucky, more likely you don’t, but in either case, you simply don’t know, and that is no way to make a major investment.

Your proposal should have line items for all of the major components of your system: the solar panels, microinverters, racking, and installation costs.  And those items should be specific, down to the model being selected and the per unit cost.  Only that level of detail allows you to see what you are getting and for how much.

Utility savings analysis

Determining how much your proposed PV system will save you in Year 1 is the key to the entire analysis of the proposal, and it is a two-step process.  First, your historical usage data is analyzed against your current billing rate to determine what your energy costs will be over the next year.  There are a couple of assumptions built into that assessment, namely that both your usage and your billing rate will stay the same.  If you have been in your home for awhile, your usage last year is probably a pretty good predictor of your usage next year.  On the other hand, if you moved in rather recently, or made a major purchase like a new EV, that will skew your usage going forward.  Similarly, last year’s bills were predicated on the exact details of your billing rate structure in effect at that time – and those are subject to change without notice.  So look at what the proposal projects for your bill next year without solar, and see how that compares with last year.

The second part is the more important piece - assessing how  your bill will change now that you have added PV.  Here’s where things get complicated, and a tool like Energy Toolbase becomes essential.  The proposal should show a model of your past usage overlayed by the production of the PV system.

PV production overlayed on historical usage

As you can see in the graph above (click for a larger version), the darker blue is the historical usage (we are looking at two days in July), the green is the modeled production from the proposed PV system, and the pale blue is the net energy demand.  At the peak on the right, the PV system is producing 5.22 kW at a time when the historical demand was 11.95, meaning that the net demand from the utility is 6.73 kw – and that is the basis for what the client will be billed.  You can also see that there are periods in the morning when the system is producing more power that the client historically used, resulting in power being exported out to the grid – for which the client is compensated due to net metering.

This is the analysis that must underlie your savings analysis – anything else is simply guess work.

Cash flow analysis – payback over time

Part of any cash flow analysis is the cost of the transaction.  If you are making a cash purchase you know exactly what your transaction costs will be.  But if you are financing through the solar company, or heavens forbid leasing, those transaction costs may well be obscured, it not hidden altogether.  Make certain that you have all the information you need to determine exactly what that deal is going to cost you.

For the sake of discussion, we will assume that this is a cash purchase.  What other assumptions go into a proper cash flow analysis? To start, how long is the period of the analysis?  Ten years?  Twenty years?  Thirty years?  Beware of an analysis that simply says how much money you will have saved in the end, without calling out the period in question!  In our view, ten years is too short, and 30 years is too long.  But whatever the number is, make sure you are aware of it as you compare “total savings!”

Another key assumption is how much will utility rates go up over the lifetime of the analysis?  It used to be common to see rate escalators of 6-7% per annum, but there was no real data-driven basis for that number.  (In fact, long ago we used 6.7% based on a website that claimed that the California Energy Commission had published that figure.  But when we went digging for the source, we discovered it didn’t exist - there was just this circular linking of sites each claiming to have gotten this from the CEC!) 

Over time we have consistently reduced the value that we use for our models, so that now we are using 3%, which we think is reasonably conservative.  But this is really a matter of just throwing darts at a board, and no one really knows what that number will be. Keep in mind that for comparison purposes, you should be able to see what value was used, and the higher the number, the rosier the prediction!

PV systems degrade over time, and that output diminishment should be accounted for in the analysis.  Modern solar panels degrade less than 1% per annum (the LG panels that we use are around 0.5%), but in any event, make sure that is incorporated in the model.

Finally, the value of money in your hand today is, generally, worth more than money you will have at some point in the future.  How much more valuable is a function of the discount rate applied to those future savings.  If the model ignores that, your future savings are likely artificially high.  Again, no one knows what the right number is, but a proper model will account for it and allow you to know what you are comparing.

What’s in the Contract?

Strictly speaking not a part of the proposal, it is not a bad idea to ask to look at the contract before you pick a contractor.  Many solar contracts are very long, written in tiny fonts, with lots of legalese – all designed to make you throw up your hands and simply ask, where do I sign?  But slow down, friend, the devil may be lurking in those details!  Indeed, we have had clients who were ready to sign with another company until they looked at what was in the contract!

Ideally the contract should be written in plain English, it should clearly set forth what will happen, when, and how, and it should be even-handed.

An Important Caveat

Finally, it is important to call out what even the most carefully considered proposal cannot address - future uncertainty; in particular, what will utilities try to do, and what will the CPUC let them do!

Things outside of our control - CPUC & Utilities

If you follow this blog you will know that the solar industry is under constant assault from efforts by utilities – particularly the investor-owned utilities like SCE – to reduce if not altogether eliminate the economic value of adding solar.  Whether it is by lobbying for changes to the net metering rules (which just this past year imposed additional fees, charges, and mandated time-of-use rates), or designing utility rates that make solar production less valuable, there is a constant struggle behind the scenes to undermine the solar investment of thousands of California homeowners.  (And this is not at all limited to California – attacks on net metering and efforts to impose pernicious rate structures are a nationwide phenomenon.)

Things we can control - SolarCitiSuns & CALSSA

Fortunately there are a couple of entities out there that are working hard to preserve the value of going solar.  If you are a California homeowner with a solar power system, there is an organization specifically for you.  California SolarCitiSuns is perhaps a corny name, but its mission is crucial: to organize the political power of California’s thousands of citizens with solar on their homes or businesses, or anyone who wants to be part of advocating for a clean, renewable future.  If you have solar on your home or business, click here to join!   The investment that you are protecting is yours!

 And finally, solar companies, are you a member of the California Solar & Storage Association?  We are, and you should be.  Click here to join CALSSA today! 

Beyond that, rank and file solar workers – installers, designers, finance people, anyone whose livelihood depends on the solar industry – there is an action group that you can join, even if your company is not a CALSSA member!  Joining means that you will get alerts when a crucial vote is upcoming in Sacramento or San Francisco, and give you the opportunity to reach out and show your support for the industry that provides your livelihood.  It’s easy and important. Every solar worker in California – click on this link to join the CALSSA Action Network – the job you save will be your own!

So there you have it - everything you need to know about going solar – look forward to hearing from you soon!

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California Utilities are trying to kill rooftop solar on your home by gutting net metering - but you can stop them!
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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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