The Future of Solar PV in California

An update on incentives and net metering

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As you have probably heard by now, the 30% federal tax credit (ITC) has been extended to 2019 before it gradually declines to 10% by 2022. The California Public Utilities Commission (CPUC) also released their new net metering (NEM) proposal in December and here are the positives:

  • The CPUC Rejects demand charges, fixed charges and standby charges proposed by the utilities and the Office of Ratepayer Advocates that would apply only to solar customers, and finds that none are reasonable or cost-justified.
    • We get to keep the current retail rates!!!
  • Ensures customers who go solar under new NEM can stay on that tariff for 20 years from date of interconnection
  • Removes utility imposed road block to virtual net metering requiring that the utilities’ virtual NEM tariffs must allow one solar array to serve multiple service delivery points

As well as the negatives:

  • One time interconnection fee (likely ~$75-150).
    • Not the worst thing if we incorporate this into the gross system cost at time of bid
  • Obligates residential customers who go solar in 2018 or later to go onto utility’s existing TOU rate schedule or participate in TOU pilot program.
    • Also not the worst thing seeing as paybacks with a TOU rate structure have proven to be more optimal than the standard residential tiered rate in SDG&E territory
  • Requires solar customers to pay non-by passable charges on all the energy they consume from the grid, regardless of how much clean energy they export back to the grid. Non-bypassable charges are used to fund low income and efficiency programs. They are the equivalent of approximately 2-3 cents per kilowatt-hour of energy consumed. Historically, NEM customers have only paid for non-bypassable charges if over the course of a year they consumed more electricity from the grid than their installation produced. The Proposed Decision finds that NEM successor customers should pay for non-bypassable charges on all energy they consume from the grid, regardless of the amount of energy they have exported to the grid.
    • Reasoning Behind Decision as Stated in the CPUC’s Actual Proposal: Since a NEM customer’s self-generated electricity does not come from the utility, the customer’s self-generation is by definition not subject to nonbypassable charges. NEM customers should, however, pay nonbypassable charges on each kWh of electricity they consume from the grid in each metered interval (for residential customers, the metered interval is one hour.) This will eliminate the reduction in available kWh on which to pay the nonbypassable charges that now occurs when such charges are assessed only on the netted-out volume of electricity consumed from the grid, and mandate payment of nonbypassable charges on the full amount of electricity the NEM successor tariff customer receives from the grid, as it is with other customers.
      • This is where things become worrisome. These nonbypassable charges will make solar project economics very difficult to determine. I found an article that attempts to project the effect this may have on solar economics. I strongly suggest everyone reads through this.

Many solar industry groups such as Solar Industries Association, CAlSEIA, and The Alliance for Solar Choice have argued against these non-by passable charges, but the CPUC determined that they’re reasonable steps to ensure fair cost-sharing between net metered and non-solar customers. The CPUC proposal was open for public comments until 1/7 and could be voted on by the full commission as early as 1/28.

 

That’s the update!

 

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