Net metering

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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.