Thoughts on Solar

While you weren’t watching, SCE - the same SCE that is trying to kill off rooftop solar - just raised their Time-of-Use rates for residential customers. We will break down the increase and show you what it might mean for a couple of potential solar clients.

What are Time-of-Use Rates?

Time-of-Use (or TOU) rates are exactly what they sound like: a rate structure where how much you pay for energy is tied to when you use that energy.  (We wrote a lengthy blog post explaining the differences between TOU rates and Tiered rates, in gory detail!) 

The most common TOU rate for SCE’s residential customers is titled TOU-D, with the 4-9 p.m. window having the highest rates overall.  Compared to a tiered rate -  where your monthly bill is divided into steps based on the volume of energy that you use, with each volumetric step, or tier, bringing you a higher rate - a TOU rate does not increase on volume but on the time of day.  As a result, rates during peak periods can be 50% or more higher than the lowest periods.  Of course, that peak period - either 4-9 or 5-8 with SCE - corresponds to when people generally use the most energy!  Gotcha!!! (Those rate differentials are what provide the economic benefit of adding storage, and make simple strategies - like delaying the dishwasher or EV charging until out of peak rates - effective at saving money.)

How is SCE’s TOU Rate Changing?

Needless to say, SCE’s rates are very complex, with the energy charge being comprised of some eleven different components!  I will spare you those distressing details and just focus on the overall energy charge and how it has changed, as shown in this table:

SCE’s TOU-D Rate change for the 4-9 p.m. option.

On average, we see that rates here have increased between 3.67 and 3.80% over the prior rate, but there are some special gifts to solar customers buried in the rates.  When the Net Metering rules were changed a few years ago, it introduced the concept of Non-Bypassable Charges (or NBCs) - components of the rate structure that solar customers paid for every killowatt hour pulled from the grid, even if that same kWh was netted back by energy exported to the grid.  Far and away the largest NBC is the Public Purpose Programs charge, and in this rate increase it jumped from 1.323¢/kWh to 1.622¢/kWh - a whopping 22.6% increase! 

Another fun fact for SCE customers who have endured so called public-safety shutdowns, is that they are paying 0.6¢/kWh toward the “wildfire fund charge"!  That’s right, SCE’s customers are helping to pay for an insurance fund against wildfires caused by SCE, PG&E, and SDG&E - now isn’t that almost enough to get one hot enough to, well, burn!

Use Case Impacts

We decided to examine how potential clients would see their bills, and potential savings, change under the new rate structure.  As always, we made use of the wonderful tool Energy Toolbase to do our calculations. 

Our first example is a pretty average user in the Run on Sun service area, consuming approximately 30 kWh of energy per day, pre-solar.  Under the old TOU rate their annual bill pre-solar was $2,946, but under the new rate (including things like utility user taxes, etc.) their bill would go up by nearly 5%, an extra $144 for the year.  However, their post-solar savings also increase, by 5.42% or an extra $143 per year.  For this average user, adding solar ended up being a nearly perfect hedge against the SCE rate increase!

Our second user does not fare quite as well.  This is a significantly larger user, consuming more than 50 kWh/day.  Their pre-solar bill increases by 4.29%, or $228. Unfortunately, while their overall savings increases, it is not as dramatic as it is for the smaller user, reducing the differential from $228 to $92, compared to reducing it to just $1 for the average user.

Bottom line - adding solar helps hedge against rate increases, and as energy costs get higher, your annual savings will increase!

Meanwhile, SCE is Trying to Kill Rooftop Solar

It is one thing for SCE to be seeking, and getting, rate increases from the CPUC - that is their business model.  It is quite another thing for them to try and gut the value of net metering, thereby eliminating the economic value of adding solar - but that is precisely what they are trying to do!  We are fighting back, starting with a signature campaign targeted at a petition to Governor Newsom. 

There will be lots more to do in the coming days to fight against SCE’s attack on solar, but for now there is something simple that you can do - mash that button below and go sign the petition!

Please join us in welcoming Amanda Watson as the newest member of the Run on Sun team!

Amanda is new to the solar industry with roots in nuclear energy, bicycles, politics, and piñatas. Originally from the mountains of central PA, Amanda obtained a bachelor’s degree in International Relations from Fordham University. Despite an addiction for NYC’s energy and architecture, Amanda’s love of government and (slightly) warmer weather lured her south to DC after graduation, where she spent the next 16 years arranging international shipments of uranium, racing bicycles, and developing her own style of piñata engineering and artistry.      

 In 2018 Amanda finally migrated to LA, where she is happily putting down roots on its hilly east side. When she is not climbing a roof (or, as here, servicing a combiner box from a scissors lift), she can be found climbing (& descending) mountains on her bicycles, hiking treacherous trails, and hitting the skatepark. On the rare chance she is sitting still, Amanda is likely covered in dirt and tending to her many plants, or covered in glue and making a piñata, while talking about politics.  

Amanda is our newest Projects Coordinator, so you are likely to hear her voice on the phone asking for a year’s worth of usage data, or scheduling our next site evaluation or installation!

Welcome aboard, Amanda!

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!

We recently received PTO for a new project in Altadena, and part of what made this interesting was that we decided to modify the project mid-stream so that we would be positioned to add an Enphase Ensemble Storage System down the road.  We wanted to configure the layout so that when the storage was added, we could just “plug-and-play” - so here’s how that turned out…

Oh County, Why do you make EVERYTHING so Hard?

Our approved plans from LA County showed the solar disconnect adjacent to the service panel, but that really wouldn’t work out if we were going to add storage.   Instead, we were going to install a backup subpanel near the main panel and the Enphase Enpower switch next to that.  Then we would run conduit to a gutter box on the wall, above which the storage device(s) would eventually be installed, and then we would have our combiner box and PV disconnect.  So I redrew the site plan showing the location of the revised equipment, and a new single line drawing to show how everything would be interconnected, crossed my fingers and hit “Submit".

Nope.

County would not allow us to revise our existing solar permit to incorporate the Enpower switch.  Instead, we had to revise our solar site plan to just show the new location for the disconnect, and leave off the Enpower switch.  Then, we needed to pull a second permit - a complex electrical permit - that included a site plan with all of the equipment (all solar components designated as Existing!), and the full single line drawing.  And, yeah, pay for it.  Seriously?

Patience Carries the Day!

Ultimately we were able to overcome all of County’s complaints and get the project approved.  Happily, SCE issued PTO almost immediately, so we came back to go live with the system.  Our client, Sean, decided to memorialize the process, so here is an edited version of that footage that let’s you see how we designed for the future, and the process of bringing the system online.  Check it out!

Ok, so of course it took some last minute drama - this is 2020 after all - but the extension to the federal tax credit for solar and storage has been signed into law!  Read on to see what that means for you!

State of the Law Going into Deliberations

This new project will get the full 26% tax credit next year!

As readers of this blog would surely know, the federal tax credit that had been set at 30% for several years, dropped down to 26% in 2020 (just the first of many not-so-desirable outcomes for a year that would see so many!), and was scheduled to decline to 22% for 2021, before expiring completely in January of 2022 for residential solar projects. 

We have written before that the solar tax credit was quite popular on both sides of the aisle, so there was always some hope that the current credit rates might be extended, but that was by no means a sure thing.  Fingers crossed and all that!

A Bill is Born!

As the negotiations between the Trump Administration and Congressional leaders progressed to try and provide economic stimulus at a time when many are out of work, too many facing potential evictions, and state and local governments facing severe challenges, word came out from CALSSA that the extension of the tax credit was in the draft bill!  Then on December 21st we learned that the extension was in the final bill that was being sent to the President!  (For those who are true gluttons for punishment, here’s a link to the Bill, and the language for the residential extension is on page 4,915!  Crazy, right?)

Excited by this most welcome development at the end of a dark year - and just in time for Christmas! - I was ready to write this blog.  But hey, this is still 2020, so I resolved to keep my powder dry until the Bill had actually been signed!

Drama

Seems my hesitation was warranted, as the President declared the Bill - negotiated by his Administration - a “disgrace” and threatened to veto it!  Instead insisting that the relief payments be substantially increased (something his own party rejected) and the “pork” in the bill be removed.  (News coverage of the President’s displeasure focused on exemptions for “three-martini lunches” (who is doing that these days?) or depreciation schedules for race horses!  The solar tax credit did not seem to be part of the pork in question.)  Of course, one man’s pork is another man’s livelihood, and besides, you cannot really take an agreement that took literally months to hammer together and then redo it in days.  Didn’t the President ever see, “I’m Just a Bill?”

All’s Well that End’s Well

So after much Sturm und Drang, on Sunday the Bill became a Law!  Which means we can tell you exactly how things will progress going forward on the tax credit front:

The 26% credit will now continue for projects “placed in service” between now and the end of 2022.  The 22% credit will apply to projects placed in service between January 1, 2023 and December 31, 2023.  Projects that go into service after January 1, 2024 will receive no credit under this new law.

Given the stimulus value of solar and storage projects - to say nothing of their environmental benefits - this is a most welcome development.  And for projects that got delayed due to the pandemic, the full 26% credit will still be available next year - a relief to many homeowners and solar installers who have been up against the clock.

In the end, the process was messier than it needed to be, but the job got done.  Here’s hoping that 2021 and 2022 can be real boom years for the solar industry, and the broader economy as well!