Ben Christopher and Julie Cart, CALMATTERS
The utilities commission reduced payments to apartments, schools and businesses selling solar power to the grid despite a barrage of criticism. Commissioners say it reverses unfair subsidies.
After months of debate and two postponed votes, California’s utility regulator unanimously voted today to overhaul incentives for owners of apartment buildings, schools and businesses that install solar panels.
The new regulations are the second major step that the California Public Utilities Commission has taken in the past year to reduce power companies’ financial support for rooftop solar. In December, the commission reduced payments to homeowners who sell excess power from newly installed solar panels on single-family homes.
Still, for solar advocates, it could have been worse.
Thanks to a last-minute regulatory tweak, the new rules today stop short of a previous proposal that solar industry groups and housing-related interests warned would result in the “evisceration” of the multifamily solar market.
California utilities and solar advocates presented widely different views on the approach the state should take to change its net energy metering framework in comments filed with the California Public Utilities Commission on Friday.
The parties’ comments came in response to a May ruling from a CPUC administrative law judge, which asked them to weigh in on multiple issues, including how to transition from one net energy metering tariff to the other and how to collect public purpose charges under the new framework.
The ruling essentially reopened the record in the commission’s net energy metering proceeding, so that regulators can accept new information to evaluate the best course of action, according to Seth Hilton, partner at Stoel Rives. After this, “we’re likely to see a revised proposed decision come out which will respond to the proposed changes in the comments in some fashion — either adopt those changes, or [it] won’t,” he said.
Utility regulators are under heavy pressure to change their net-metering proposal — but there’s little agreement on what should result.
The Sierra Club’s new compromise proposal also addresses the issue of the roughly 1.3 million customers who already have rooftop solar. Current policy allows these customers to remain on their preexisting net-metering rates — both the original net-metering regime and the “NEM 2.0” regime put in place in 2016 — for 20 years after they installed their systems.
The battle over how to update the policies on compensation for rooftop solar systems in California has only grown more heated in recent weeks. A few groups have proposed new compromises, but the two camps are still far from agreement. Meanwhile, California regulators have postponed their decision on the issue, so the debate will rage on for the time being.
The California Public Utilities Commission’s proposal last month to slash the value of energy exported to the power grid from future rooftop solar systems and impose monthly fees on customers who install them has sparked a massive public and political backlash.
Thousands of people have joined protests organized by the solar industry to demonstrate against the proposal over the past month, and polling indicates a hefty majority of California residents oppose it. Major political figures including U.S. Senator Dianne Feinstein (D) and former California Governor Arnold Schwarzenegger (R) have publicly blasted the plan, painting it as a threat to the state’s push to decarbonize its electricity supply. Actors Edward Norton and Mark Ruffalo have joined the fray on Twitter.
California Governor Gavin Newsom (D) said earlier this month that “changes need to be made” to the current CPUC proposal, but he didn’t offer specific fixes and said he won’t interfere in the commission’s decision-making process. Since December, two of the commission’s five members have departed and been replaced by Newsom appointees, including new commission President Alice Reynolds, a former senior adviser to Newsom’s administration.
Walker Wright, vice president of public policy at San Francisco-based Sunrun, the nation’s largest rooftop solar installer, said in a written statement that Guzman Aceves’ decision would “impose the highest discriminatory charges on solar and energy storage customers in the U.S., putting rooftop solar and batteries out of reach for countless families in California just as more households are demanding that the state do more to combat climate change and provide them with reliable, sustainable energy.”
California officials want to slash payments for rooftop solar power while adding incentives for homes and businesses to install batteries, saying the changes will help the state achieve 100% clean energy in a way that keeps the lights on, prevents electricity rates from spiraling out of control and also encourages people to drive electric cars.
The proposal from Martha Guzman Aceves, one of five members of the California Public Utilities Commission, would revamp an incentive program called net energy metering that has helped the state become a national solar power leader, with more than 1.3 million rooftop and other small-scale systems installed. The solar industry and climate change advocacy groups have lobbied Gov. Gavin Newsom and his appointees on the utilities commission to keep the program’s basic tenets unchanged.
But in an interview, Guzman Aceves said net metering needs to evolve to reflect California’s changing energy needs. The Golden State’s power grid is increasingly flooded by solar energy during the afternoon but strained on hot summer evenings, when millions of people throttle up their air conditioners to cope with high temperatures made worse by the climate crisis.
A coalition of 347 organisations has warned that potential changes to California’s policy support for rooftop solar could set back climate change progress and harm low-income residents’ access to solar energy.
An open later sent by campaign group Save California Solar to state Governor Gavin Newsom and the California Public Utilities Commission (CPUC) calls on policymakers to keep solar affordable as the Newsom Administration considers changes to net energy metering (NEM), a policy that defines how solar users send energy back to and interact with the grid.
NEM allows customers with rooftop PV systems to receive a financial credit on their electric bills for any surplus energy fed back to their utility.
According to the coalition, proposals by California utilities “would drastically reduce the credit solar consumers receive for the excess energy they produce”. The group said: “We are concerned that ill-informed changes to net metering, such as slashing solar bill savings or imposing new fees on solar users, will set back California’s climate change and environmental justice goals.”
A high-stakes battle is under way over the future of rooftop solar energy in California. On one side: Current and future rooftop solar consumers in the nation’s leading solar state. On the other, the state’s big three investor-owned utilities — PG&E, Southern California Edison and San Diego Gas & Electric.
The utilities have petitioned the state Public Utilities Commission to slash by more than half the credit they must pay customers for excess energy generated by rooftop solar panels. They also want to charge new rooftop solar customers nearly $70 a month just to hook up to the grid.
The PUC will hold hearings on this petition beginning July 26. The final decision, due by the end of the year, could cost solar ratepayers millions, essentially destroying the rooftop solar market in California.
Rooftop and other small solar projects are an important part of the state’s future energy grid, not just benefiting their owners, but providing stability, resilience and key services to everyone. Given rooftop solar’s importance to us all, it is extremely disappointing that the California Public Utilities Commission unanimously voted last month to significantly reduce the value small-solar owners are credited for their energy contributions to the grid.
The decision will discourage — or even destroy the market for — rooftop solar on existing roofs. It also raises the question of whether it will keep the state’s electric grid from reaching its goal of distributing 100% clean (nonfossil fuel) energy by 2045, as required by law.
The commission maintains an incentive structure that pays Pacific Gas and Electric, Southern California Edison and San Diego Gas & Electric to do the wrong thing. The commission needs to rethink what is best for California and encourage more rooftop installations, which provide essential benefits, such as keeping energy flowing locally during outages. They are the fastest route to 100% clean energy in the state.
These millions of rooftop systems can act in concert to supply energy during peak demand, eliminating the need to power up or build new, inefficient, “peaker” electric generation plants. Less dramatically, rooftop systems allow solar owners to reduce their own grid use during high electric demand.
Some of the slowdown in smaller-scale rooftop solar has come in maturing markets in states like California, where rooftop solar companies are having trouble expanding their customer base beyond early adopters.
Over the past six years, rooftop solar panel installations have seen explosive growth — as much as 900 percent by one estimate.
That growth has come to a shuddering stop this year, with a projected decline in new installations of 2 percent, according to projections from Bloomberg New Energy Finance.
A number of factors are driving the reversal, from saturation in markets like California to financial woes at several top solar panel makers.
But the decline has also coincided with a concerted and well-funded lobbying campaign by traditional utilities, which have been working in state capitals across the country to reverse incentives for homeowners to install solar panels.
Utilities argue that rules allowing private solar customers to sell excess power back to the grid at the retail price — a practice known as net metering — can be unfair to homeowners who do not want or cannot afford their own solar installations.
Geoffrey Smith, CENTER FOR CLIMATE PROTECTION
The fate of rooftop solar has been a cliffhanger for the last few months.
On January 28, the California Public Utilities Commission (CPUC) voted on the future of Net Energy Metering (NEM) and its impacts on rooftop solar in California.
The consequences of a ‘bad’ CPUC decision are proven. We need only look at rate decisions recently made in Nevada and Hawaii, which devastated the rooftop solar industry. Would California go the way of Nevada? Thankfully, that was not the outcome.
In a 3-2 vote, the CPUC helped secure a future of growth for rooftop solar by adopting a NEM successor tariff largely resembling the original tariff (or “rate structure”), that governs how rooftop solar generators are compensated for the energy they produce.
What does this mean for you, the rooftop solar generator? First and foremost, it means you will continue to be paid full retail rate (rather than a lower wholesale rate proposed by the utilities) for all of the power you produce and send to the grid. Additionally, no monthly fixed or transmission access charges were imposed, and only a ‘reasonable’ one-time fee will be charged for connection to the grid. Overall, the outcome was a big win for rooftop solar.
The Center for Climate Protection attended the CPUC session to show our support and bring to you a report of the day’s events.
Despite months – years, in fact – of aggressive lobbying and grassroots organizing from the solar industry and climate activists, the prevailing sentiment on January 28 was one of tension and uncertainty.
More than twenty audience members presented public comments from a variety of perspectives, almost all supporting strong NEM rules favoring rooftop solar. Only one spoke against such rule-making: The California Chamber of Commerce.
At the close of the public comment period, CPUC President Michael Picker opened the discussion among the commissioners. He noted that the proposed decision (PD) from December to extend NEM would give customers more choice as well as responsibility, and that the PD was moving in the right direction. He voted YES (1-0).
Commissioner Liane Randolph also spoke in defense of NEM, saying that the PD strikes the right balance in a complicated process. She voted YES (2-0).
Commissioner Catherine Sandoval had enthusiastically supported the PD leading up to the previous day’s amended proposal in which transmission access charges were removed. She said she could not support the proposal without those charges in place. She voted NO (2-1).
Commissioner Michael Florio largely echoed Sandoval’s comments, and voted NO (2-2). The tension in the room escalated as the 2-2 vote and ultimate decision moved to the last commissioner. ‘What if’ scenarios were playing out in everyone’s minds.
Commissioner Carla Peterman opened her remarks by acknowledging the wide range of views on the matter and endorsed the PD as moving in the right direction. She said she looked forward to working on the future of NEM, which the CPUC takes up again in 2019. And then she cast a YES vote for the 3-2 final vote in favor of NEM.
Rooftop solar lives to power our communities for another day! The mood in the room as the (mostly) rooftop solar supporters stood to leave the chamber was one of relief. This was a hard-fought battle over a complex set of issues governing an individual’s right to choose how they power their lives. But the real winner was the climate. With new certainty now established around rooftop solar rates, greenhouse gas reductions will accelerate. Go solar!
Alison Seel, SIERRA CLUB
January 28. Today, the California Public Utilities Commission adopted its final, hotly anticipated decision on the future of rooftop solar compensation in California. The Commission voted to keep net metering, allowing new rooftop solar owners to receive compensation for every kilowatt hour of energy they export to the grid at their retail rate.
The big change is that new solar customers will soon be required to be on a time-of-use rate, where electricity is more expensive to buy (and extra solar energy is more valuable to sell), at times of high electricity demand. New net metering customers will be required to start signing up under time-of-use rates as soon as the current net metering program is filled to capacity (expected to happen in six months to a year, depending on the utility).
Time-of-use-based net metering is a wise first step in the evolution of rooftop solar policy. As California takes bold and necessary steps toward a fully decarbonized power system, we’ll need to create a more dynamic relationship between electricity supply and demand. Today’s decision helps us achieve this goal: the simplicity and familiarity of net metering will keep rooftop solar expanding, while time-of-use rates incentivize net metering customers to save solar power for later in the day through adaptations both cutting-edge (battery storage and smart thermostats) and mundane (west-facing panels). This shift can reduce our evening reliance on gas-fired generation, decrease air pollution, and position rooftop solar as a tool to address, not exacerbate, the much-ballyhooed duck curve.
But this isn’t the end of the road. The Commission only narrowly approved the decision, with two Commissioners feeling it didn’t reduce solar compensation enough. The discussion made it clear that rooftop solar policy can and should evolve further, as we’re better able to quantify the locational value of power exports, and as we begin to harness the features of (soon-to-be-required) smart inverters. The Commission will reconsider the issue in 2019, with Commissioners suggesting they’d favor a shift to a model based on a set price for power exports.
Overall, it’s refreshing to see a time- and resource-intensive, high stakes debate result in a balanced outcome (we’re looking at you, Nevada). This decision models how states with high levels of rooftop solar penetration can begin aligning solar compensation with its value in a measured way. Tens of thousands of people weighed in, and in the end, rooftop solar in California is positioned to keep growing, bringing cleaner air, more jobs, and a more resilient power system to California.