California utility regulators’ proposal to increase the costs of small solar rooftops and lower payments for excess power sent to the grid was yanked Thursday morning and replaced with a more moderate plan. The revision follows months of solar advocates protesting over the Net Energy Metering (NEM) plan draft released in December.
The California Public Utilities Commission’s newest NEM proposal would set aside the highly controversial monthly fee on small photovoltaic systems, with the change resulting in system paybacks of up to nine years for newly installed PV units. For new solar systems paired with batteries, the payback in the Nov. 10 proposal is estimated between four-and-a-half to six-and-a-half years, according to the CPUC.
Both new solar and solar-plus-energy storage systems will be on time-of-use rates that fluctuate throughout the day to reflect when lots of renewables are flowing into the grid, driving down costs, and when solar power falls off and grid costs rise. The proposal seeks to encourage owners of the PV systems to take advantage of those shifting prices and incentivize energy storage additions. Connecting batteries to distributed solar allows them to store the unit’s energy when the grid is flush and to discharge when the sun sets.
“Highly differentiated time-of-use rates encourage electrification and help California reach its greenhouse gas emissions reduction goals” by lowering the amount of needed fossil fueled power, states the CPUC proposal.
The proposal also ties credits for power fed to the grid to the Commission staff’s Avoided Cost Calculator, which would drop 20% a year to reach zero in five years. The cost calculator represents an average avoided per MWh marginal cost for all 8,760 hours in all California climate zones. Its calculation considers avoided costs for key attributes like energy, reliability, infrastructure, and emissions.
The CPUC says it aims to align customer incentives with grid conditions, bolstering reliability.
Homes and small businesses with PV systems covered by the NEM 1 and 2 programs would not be affected by the latest proposal.
The new NEM proposal addresses equity issues and the “requirements that the tariff ensures that customer-sited renewable distributed generation continues to grow sustainably,” according to the CPUC. There are currently about 1.5 million customers with solar systems covered by the NEM program, representing 13 GW of distributed energy.
A report from last July by Vibrant Clean Energy found that growing distributed storage to 60 GW, and pairing it with 65 GW of small-scale solar by midcentury, would create $120 billion in savings by 2050. It would also avoid 4.1 million metric tons of carbon dioxide and create about 374,000 jobs.
Few are pleased
Neither protestors nor supporters of the earlier NEM proposal welcomed the revisions.
The California Solar and Storage Association, which was still reviewing the NEM revision, estimated it would slash the average export rate from $0.30 per kilowatt to $0.08 kW, a 75% reduction, starting in April.
“If passed as is, the CPUC’s proposal would protect utility monopolies and boost their profits, while making solar less affordable and delaying the goal of 100% clean energy,” Bernadette Del Chiaro, executive director of the California Solar & Storage Association, said in a Thursday statement. “California needs more solar power and more solar-charged batteries, not less.”
Supporters of last December’s NEM proposal, including the investor-owned utilities, also were not happy.
“[L]low-income families and all customers without solar will continue to pay a hidden tax on their electricity bills to subsidize rooftop solar for mostly wealthier Californians,” said Affordable Clean Energy for All spokesperson Kathy Fairbanks. She added the revision “is particularly troublesome given the billions of dollars in new federal clean energy subsidies that will ensure continued growth and healthy profits for large solar corporations for the next decade.”
The CPUC acknowledged that cost shifts from the earlier two NEM programs, estimated between $1 billion to $3.4 billion a year, are not tackled by the new revision. Instead, it seeks to avoid increasing them.
But Sunrun, a national installer of solar rooftops that saw its stock shoot up following the proposal’s release, was far less critical. “We note that customers will not be unduly penalized for generating and storing (in batteries) local clean energy to both participate in modern ways to power their lives and contribute to the fight against climate change, which is an important move in the right direction,” said Sunrun’s CEO Mary Powell.
The new proposal would set aside the proposed fixed rate of an average $57 a month on PV systems, which was to avoid shifting costs to those without solar, particularly low income. Last December’s decision with the monthly fee was set for a vote in January of this year but the record was re-opened in May in the face of continued protests. Last week, a Lawrence Berkeley National Laboratory report found more low- and medium- income residences were adding solar rooftops.
The latest export rate paid to new NEM customers would lock in rates starting in April for new systems for nine years if the CPUC approves the proposal at its Dec. 15 meeting.
The revisions would also add funding to help increase solar and solar-plus-battery installations in low income and disadvantaged communities.
A new law approved in September, AB 209, provides $900 million for subsidizing distributed energy storage, with 70% for financially struggling customers.
But Vote Solar warned that the CPUC proposal curbs low-income access to solar roofs by restricting who qualifies. The advocate said that “more than 2 million customers have household incomes below 80% of the area median income, but do not qualify for low-income incentives under the CPUC’s definition.”
The CPUC will hold oral arguments on Nov. 16.