Thoughts on Solar

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!

As a reader of this blog, you care about solar policy making, and are no doubt aware that the utilities are constantly trying to erode the value of solar.  Recently we notched a big win, but at the same time the need for vigilance is ever greater.  Here’s our take…

An Historic Win

First the win - as you have no doubt heard, starting in 2020, California will require that all new single-family homes include a solar power system.  (At present, about one in five new homes has solar added when built.)  This will help California meet its ambitious goals regarding greenhouse gas emissions, and will continue California’s leadership in home energy efficiency.

An Ongoing Challenge

As exciting as that news was, it makes it far to easy to overlook the constant, ongoing efforts of utilities, particularly the Investor-Owned Utilities (IOUs), like SCE, to erode the value of solar.  Case in point, SCE has a rate case before the California Public Utilities Commission that attempts to create rate structures that are blatantly hostile to solar power systems.  That means that SCE customers who installed solar in good faith, could see the value of their investment diminished thanks to a concerted effort by SCE to do just that!

Fortunately you don’t have to take this lying down.  The Solar Rights Alliance (formerly known as Solar Citisuns) is working to organize solar system owners into a potent political force to push back against the army of lobbyists employed by the IOUs.  There are over 700,000 solar system owners in California - that is an interest group that needs to be heard.  By joining the Solar Rights Alliance you will help to make sure that your interests are being heard by legislators and regulators alike.

It is easy to join: just follow this link to become an active member of the Solar Rights Alliance.  The IOUs have the lobbyists, but we have the people!  Be heard - join today!

Regular readers of this blog will know that solar-friendly policies are under constant attach by the utilities, especially the three Investor-owned utilities (or IOUs as they are known), PG&E, SDG&E and our own SCE.  Well they are at it again, with rate proposals before the California Public Utilities Commission (CPUC) that could harm both solar and energy efficiency measures alike.  Fortunately, we have an opportunity to have our say - here’s our take. (H/t our friends at CalSEIA.)

Current policies in California, most notably net metering, along with a tiered rate structure (whereby you pay more for electricity as you use more) have provided powerful incentives not only for consumers to install solar, but to also take proactive measures to reduce their energy consumption.  As a result, energy use in California over the past twenty years has grown slower than the growth in population despite the explosion of new electronic devices in homes and businesses during that time.  Indeed, California has lead the way for the rest of the Nation, proving that you can have a twenty-first century lifestyle and still reduce your energy demand.

In other words, these policies have been a success.

The proposals being floated at the CPUC would change rates throughout the three IOU service areas (i.e., much of California) and threaten that success.  In particular, they are seeking to add a flat, monthly fee to everyone of $10 to all bills, regardless of use and to reduce the number of tiers from four to two.  In addition, the rate for the lowest tier would increase, making this a double-whammy not just to solar owners, but to the poorest electric customers who will see a rise in their rates.  (So much for the utilities’ concern over hurting the poor!)

Fortunately these changes are not yet cast in stone and the public, particularly advocates for solar and energy efficiency, have a chance to have their voices heard.  The CPUC is holding a series of public hearings, some in the Run on Sun service area, as well as others around the state.  Here are the upcoming hearings:

We are planning on attending the hearing in Temple City.  If you attend one of these important hearings, please let us know about your experience in the comments.

Amidst the continuing sturm und drang between the solar industry and the Investor-Owned Utilities (IOUs), we came across this interesting piece over at REWorld documenting some revealing observations by Duke Energy’s CEO, Jim Rogers. Duke - the nation’s largest utility owner, sees the writing on the wall and is not sanguine about what it portends:

“It is obviously a potential threat to us over the long term and an opportunity in the short term… If the cost of solar panels keeps coming down, installation costs come down and if they combine solar with battery technology and a power management system, then we have someone just using us for backup,” Rogers said.

Rogers’ observation comes at a time when the conventional energy industry is facing “anemic” growth in power demand - due to increased efforts at energy efficiency and the growing impact of consumer-owned generation.  Since IOUs make a guaranteed return on investment in building, mostly, added power generation capacity, if there is no need for additional capacity, there is no basis for future returns.  Not a promising prognosis for an industry that has grown accustomed to those sweet, sweet guaranteed returns.

And that, in a nutshell, is the IOUs’ dilemma - as renewables become ever more cost-effective, and particularly once intelligent storage solutions become a part of standard solar offerings, the justification for the guaranteed existence of IOUs becomes weaker and weaker.  Contrast this with the municipal utility model which is owned by the city in which it is based and which exists for the benefit of its residents.  If their preference is for distributed generation, then the muni’s goal should be to facilitate the adoption of such systems.  Since its customers are also its owners, the interests are aligned.

But not so with IOUs who exist to make a profit for their shareholders and those interests are not necessarily aligned with those of the monopoly-provided customers they “serve".  Not surprisingly, it is the IOUs leading the charge against net metering and questioning the “fairness” of local solar power.

Which raises the question: Can we as a society afford to have IOUs anymore?  In an era of carbon-driven climate change, are IOUs a dinosaur determined to fight their extinction to the bitter end, even if they take th rest of us with them?

Three years into an ambitious ten year plan to install 3,000 MW of solar power on California rooftops, the State of Solar in California is surprisingly good - despite a difficult economy.  The California Solar Initiative covers that portion of the program under the auspices of the California Public Utilities Commission (CPUC) and involves the three Investor-Owned Utilities in the state - PG&E, SCE and SDG& E.  The CPUC issued its Annual Program Assessment last week.   The CSI program, which is targeted to install some 1,940 MW of solar by the end of 2016 is already 42% of the way there.

More highlights from the Assessment after the break.

• CSI Incentives have Economic Leverage - For every dollar spent on incentives, there has been another $2.62 invested in solar power systems from other sources.  The CSI incentives have leveraged an additional $5.06 billion in other capital investments.
• System Costs are Declining - using inflation adjusted data, costs for systems smaller than 10kW (i.e., most residential systems) have fallen by 15% from January 2007 to December 2009.  For larger systems, system costs declined by nearly 10% over the same period.
• Backlog in Projects - Completed projects make up 20% of the goal while pending projects (i.e., projects for which a rebate has been reserved but the project is not yet complete) account for another 22%.
  • There are some concerns that this is not an accidental condition.  We will have more to say about this in a future post.
• 2010 is the Strongest Year Yet - In just the first six months of this year, nearly 300 MW of project applications have been received by CSI and nearly 60 MW has already been installed.  April of this year saw the highest MW total for new applications of any month in the program - over 134 MW.
• Solar Systems Work - for both the grid and their owners:
  • California has over 600 MW of solar power connected to the grid at nearly 65,000 customer sites.
    • But here is an eye opener - 598 MW of that is installed in IOU territory - only 11 MW is installed in publicly owned utility territory!  (I.e., the so-called “Muni’s” which include LADWP, PWP, BWP & GWP!)
  • In 2009, CSI projects generated more than 390,000 MWh of energy - three times the amount produced in 2008.
  • Based on a review of actual performance data, both large and small CSI-funded systems are performing above estimates and solar customers rank their systems at a ‘9′ on a scale from 1 to 10 for system performance satisfaction.

It would be nice to see similar analysis coming from the Muni’s - which up until now tend to keep their data to themselves.  That too is grist for another post.