Keeping the Sizzle in California Solar

Pacific sunset by Reed Galin

Photo: Pacific sunset by Reed Galin

California, as I noted last fall as part of the series “Solar Realities,” has more solar self-generation than any other state in the nation by far. Now, if you ask the folks in the solar division of the California Public Utilities Commission, this state of affairs has a lot to do with three policies:

  1. The California Solar Initiative (CSI) provides rebates to cover about a fifth of the cost of installing solar systems.
  2. Simplified Interconnection exempts solar customers from interconnection fees and the cost of the studies required to connect their equipment to the electricity grid.
  3. Net Energy Metering allows solar power generators, who run the meter backwards as well as forwards, a credit on their power bills at “full retail electricity rates”–as opposed to the wholesale power price.

The policies were designed to encourage civilians to install solar for their own use; not necessarily to create an incentive for thousands of home power plants to serve the grid (depending on the size and location of your home, you may not be able to meet all your own electricity needs, let alone deliver surplus to the grid).

But if you can generate more solar power than you need, why not?

Adam Browning of the Vote Solar initiative, put it this way to the San Jose Mercury News: “Why are we talking about stamping on the brakes when we should be talking about pushing on the accelerator?”

Enter Assembly Bill 560. Net metering is currently capped at 2.5 % of the system’s peak energy demand or “load.” Once the stream of solar electrons coming onto the grid reaches that level,  the utility is not obligated to sign more net-metering contracts. AB 560, courtesy of Assemblywoman Nancy Skinner (D-Oakland), would provide some more headroom for that program by raising the cap to 10%.

AB 560 has passed the Assembly. Tomorrow, it comes up before the state Senate Energy, Utilities, and Communications Committee.  No doubt, a staff report due out the same day from the CPUC on the status of the California Solar Initiative will give the discussion some extra “juice.”

Meanwhile another bill, AB 920, from Assemblyman Jared Huffman (D-San Rafael), would change the way customers with solar installations are paid for surplus power. As I noted, they now get credited on their monthly bill at the full retail rate. Some of that credit is offset by “regular” power the solar customer uses at night or on cloudy days. Then, at the end of the year, leftover credits are zeroed out. AB 920 would require utilities to pay for credits left over at year-end, albeit at a lower rate–or allow the extra to be rolled over to the next year.

The CPUC, by the way, has come out in support of AB 560, but not AB 920.

The state’s three investor owned utilities dislike both bills; especially Pacific Gas & Electric, which is closest to approaching that 2.5% cap. About 30,000 of PG&E’s 6 million customers have solar systems.

PG&E contends that expanding its home solar program would burden the rest of its customers, who bankroll the state rebates for solar installations. And because solar customers buy less electricity from the utility, PG&E argues they don’t contribute as much as others to cover the costs of transmission and generation.

PG&E has said it would support raising the net-metering cap to 3%–but wants to see a cost-benefit analysis from the CPUC before supporting any further home solar expansion. That report’s due out in January.

There are those outside the industry who share PG&E’s concerns. Framing it as a class issue, the non-profit Utility Reform Network opposes raising the cap unless changes are made to allow non-solar ratepayers to share in the benefits.  Even with the current subsidies, going solar requires an often daunting up-front investment. As green becomes the color du jour for businesses and politicians, an increasing number of projects pair solar with low-income housing. But more often than not, your typical solar-powered household in California is likely to be well heeled.

As utilities enthusiastically pursue their own large scale solar projects, some solar advocates suspect that the companies are really worried that wide-scale residential solar would cut into their income. PG&E counters that state regulations eliminate the financial incentive for investor-owned utilities to simply sell more power to make more money.

All this raises a key question: Without lifting the cap on net metering, can California achieve its goal of 3,000 solar megawatts by 2016?

Rachael Myrow is host of The California Report, produced by KQED and heard on public radio stations throughout the state.

Editor’s Update: The CPUC’s latest report shows a near doubling in the rate of  installed capacity, from 2007 to 2008, and so far, data would seem to indicate a continuing trend this year. Installed  capacity to date puts the CSI at 13 percent of the total program goal, with another eight percent pending.

  • http://www.votesolar.org/CAnetmetering.html Rosalind

    Great overview of a very misunderstood but absolutely critical piece of renewable energy policy. We absolutely hear those concerns about making sure policies like this don’t hurt those members of our communities who need can afford it least. Here are just a few reasons Vote Solar thinks net metering makes the grade:
    1. Net metering is not a subsidy: it’s a billing arrangement that gives solar energy customer fair credit for electricity that they’re delivering to the grid. There’s some excellent cost analysis from Crossborder Energy that shows that the avoided costs of net metered solar actually stack up well against a utility’s retail rate. See, no subsidy here: http://www.votesolar.org/netmetering_costs.pdf
    2. Net metering benefits all ratepayers: having those who are able and willing to invest their own dollars in solar energy generation is a good thing for everyone. As those systems add up, they reduce overall peak demand on the grid, so utilities don’t have to invest in new capacity and pass those costs onto rate payers in the form of more expensive electricity.
    3. Net metering creates green opportunities: In 2008 between 14,500 and 17,000 Californians were employed in solar-related jobs. A recent Vote Solar survey counts over 5,400 more currently enrolled in training programs, many of which are specifically geared up to give underserved individuals the skills they need to find new promise in the growing solar energy industry. Without net metering we won’t have a healthy rooftop solar market providing those much-needed green collar jobs. Simple as that. http://salsa.democracyinaction.org/o/1179/blog/comments.jsp?key=538&blog_entry_KEY=23381&t=

  • J.A.Turner

    I’m one of the 30,000 PG&E customers with net metering and solar PV. The benefits to PG&E of motivating customers to provide extra power (and to conserve!) at peak times are worth more than the benefit that the net-metered customer receives. The power that my PV system pushes out onto the grid reduces the amount of expensive peak power PG&E has to buy or generate, and the benefit is magnified by the lack of transmission losses. And the combination of time of use and net metering motivates customers like me to move as much power use from peak time to off-peak, which further cuts peak power load. I accept the fact that indifidual homeowners can’t be paid for any excess power generation, although I think that the policy might not be good in the long run.
    Raising the limit on net metering is an essential part of ramping out solar PV as quickly as possible. It would make it even more difficult a decision for individual homeowners to install PV without net metering, and the power company really does benefit from it.

  • Craig Miller

    We’ll be looking into some of the big-picture power grid issues in our next Quest/Climate Watch TV special, which will air on KQED Pubic Television Tuesday evening, August 25th.