Distributed PV Installations Fall in Era of Lower NEM Rates

7 Feb 2017

Two of the three investor-owned utilities, which offer less favorable net energy metering rates to customers with new solar rooftop systems, have seen installations drop by up to a third.

The revised rates paid to new distributed photovoltaic customers “changes the value proposition for solar,” said Daniel Sullivan, president of Sullivan Solar Power. “It’s the equivalent of boiling a frog, one degree at time.”

San Diego Gas & Electric hit its net metering cap of 617 MW at the end of June, 2016  and then launched a less beneficial rate for excess power sent back to the grid from new solar rooftop systems. Since last July, monthly customer installations fell by about one third, from about 3,100 in June 2016 to about 2,000, according to Amber Albrecht, SDG&E spokesperson.

Pacific Gas & Electric, which hit its 2,240 MW net metering cap on Dec. 15, saw a similar drop in customer applications for interconnecting new PV systems to utility power lines. During the two years the initial net metering rate was in effect, average monthly PG&E ratepayer solar rooftop installations ranged from 5,000 to 6,000.  As of the end of January, there were 4,200 new solar customers, said Ari Vanrenen, PG&E spokesperson. She attributed the lower number to the end of the year holidays and post early adopter surge of solar rooftop customers.

Sullivan agreed that the drop in installations at the private utilities is impacted by the “generally cooling solar market.”

Southern California Edison has not reached its solar peak cap. It is expected to fall short of its 2,240 MW cap by the July 2017 deadline. As of the end of last year, 1,703 MW of new behind-the-meter solar systems were installed in Edison territory. This July is the statutory deadline under AB 327 for hitting the cap, and/or switching to less customer friendly rates.

In the first six months of 2016, while SDG&E’s initial net energy meeting rate was in effect, there was a surge in customer installations. According to utility data, there were 18,256 customer installations, representing 113 MW. That compares to a total 27,208 new customers installations in 2015, representing 168.7 MW.

To illustrate how the new net metering terms are working, SDG&E’s successor rate for small solar systems adds a $132 connection charge. It also includes higher fees for the public purpose, nuclear decommissioning and left over charges from the deregulation era, known as the competition transition charge.  The latter fees alone represent about a 2 cent/kWh hit on distributed solar ratepayers.

Another minus will be the requirement that new San Diego net metering rate customers switch to time-of-use rates in five years.

SDG&E and other utilities seek changes to the peak time interval, which pays the highest rates for solar power feeding the grid, to later in the day. Moving it to 4 to 9 p.m., as proposed by the San Diego utility, for example, is less favorable because it captures fewer hours of sunshine and increases what solar home owners pay for power from the grid as solar production wanes in the early evening.

PG&E’s new net metering rate includes a $145 interconnection fee. It also includes higher public purpose, deregulation and nuclear decommissioning fees, estimated also at a loss of 2 cents/kWh for solar rooftop owners connected to the grid. Time-of-use rates are mandatory.

Sullivan estimates the impact of Edison’s revised average net energy metering rate, which starts in July, to cost customers about $200 a year and equal a loss of about $4,000 in savings over a solar project’s 20-year life. The followup net metering is to include $75 connection charge, higher public purpose, nuclear decommissioning and deregulation fees, as well as requisite time-of-use rates.

Sullivan Solar Power now includes battery storage with its customer solar installations to counter the impact of time-of-use rates.

The California Public Utilities Commission is to reconsider net energy metered rates in 2019.

Elizabeth McCarthy

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