GUEST JUICE: Smart Solar Reform is within California’s Grasp

by V. John White and Ed Smeloff

New appointments by the Governor to the California Public Utilities Commission create an opportunity to revisit the controversial proposed reform to California’s main customer-oriented solar program, net energy meeting.

Net Energy Metering, which pays solar rooftop owners for excess power sent to the grid, has made the state a leader in rooftop solar production, but this success has led to concern over cost shifts to non - solar customers. Successful reform must emphasize making solar accessible to low- and moderate-income customers while encouraging the solar industry to adapt its business model to create more value for customers who are unable to put solar on their homes.

In short, California needs a smarter solar policy that rewards residential and business customers for reducing greenhouse gas emissions while reducing dependence on high-priced natural gas and strengthening grid reliability.

California’s ratepayers face rapidly rising electric bills, mostly due to the escalating damages caused by wildfires, rising natural gas prices, and the need to make the electric transmission and distribution grid more resilient in the face of the changing climate.

The costs of fixing the grid to prevent future catastrophic wildfire damage require the CPUC to take a much more comprehensive look at utility costs and electric rate design. But trying to lower utility costs by imposing a solar tax, as the current proposal does, is ill-conceived. The proposed average $600 per year tax on solar customers will simply put solar out of reach for most homeowners, including low income, without reducing bills for non-solar customers.

CPUC needs to support clean energy use

Customers are adapting to higher utility rates by putting solar panels on their roofs, batteries in their garages, installing smart thermostats and programmable appliances and shifting energy use away from the most expensive time periods. The CPUC should be encouraging all of these activities rather than penalizing them by adding discriminatory charges.

Reforming the state’s net metering program in a fair way should not be difficult.

The value that is credited to customers for power they export back to the grid needs to be adjusted. It should be done in a way that encourages customers to add batteries so that less solar power is exported at mid-day and instead shifted for use in the evening when it is most needed. These customer-owned solar and storage resources should be paid for providing reliability services.

Stand-alone solar systems now produce an abundance of electricity during the midday hours while the electric grid is increasingly stressed in the evening as the sun goes down and households ramp up their air conditioning and turn on appliances.

California’s success in promoting solar has changed the supply and demand equation for electricity. Electricity is now less valuable during midday and more valuable in the evening.

California’s utility regulators should reform rooftop solar by changing the underlying residential rate structure to incentivize pairing battery storage with existing and new solar systems. Allow residential customers to choose a peak pricing option, which would lower rates for most hours of the year while increasing prices only during the hours when the grid is most stressed. Such a rate option would encourage customers to add battery storage that would be discharged during high-cost hours of the evening.

Municipal utilities, like the Sacramento Municipal Utility District, have adopted multiple levels of battery incentives. SMUD offers incentive packages for solar customers who want to pair storage with a solar system with the goal reducing grid costs for non-solar customers.

The CPUC says that its proposed solar reform package is designed to help low-income customers obtain access to solar energy, a goal the solar industry supports. However, the CPUC will not be able to target more solar installations to low-income customers if the companies that are needed to do the work are put out of business.

An effective solar reform should fund community solar programs for customers who live in multi-family dwellings. Solar systems do not need to be on individual roofs to benefit a community.

These three initiatives: peak pricing, battery incentives and targeting solar projects for multi-family dwellings, will help assure a thriving solar industry in California and create a more equitable distribution of the benefits of solar energy.