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Clean Power solar-to-sunset-in-California-5-percent-limit

Published on May 2nd, 2012 | by Susan Kraemer

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California Utilities Balk as Home Solar Producers Near 5 Percent Limit

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May 2nd, 2012 by  

solar-to-sunset-in-California-5-percent-limit

California solar produced on rooftops is about to breach the next limit of 5 percent of aggregate customer peak demand. The effect could be to sunset the incredible growth of distributed solar rooftop power in the state, as utility payments are ended for future rooftop solar production.

Why is there a limt? Because utilities in California must pay homeowners who generate clean power for the grid. “Net metering” gives solar customers fair credit on their utility bills for the power they generate. There is a five percent cap on the amount of net metering that utilities must make available to customers. That limit was already raised once a couple of years ago, from about half that amount.

The state regulators at the CPUC have proposed closing that loophole and requiring utilities to calculate net metering participation in a way that permits more participation by more customers. Once there is more than five percent provided there’s no guarantee that utilities will continue to credit new solar customers for their contribution to cleaning the grid with their rooftop solar.

Most solar in California – like most urban states – is on grid: that is, the grid is the battery. Everyone who puts solar on their roof contributes to the grid, and is credited for their contribution, and takes from the grid, for example, at night, and is debited for that. It’s like rollover minutes for solar.

What is left after the resulting balance of the energy “credits and debits” is what the customer pays the utility. After you go solar, that is not much, to be honest.

My own energy habit (550 kWh a month) was costing me about $110 a month to PG&E before I went solar, and about $4 – $9 after. So you can see where the utility might balk at letting this go unchecked. Especially as, at least in PG&E’s case, they not only taught me everything I know about solar for free in their truly outstanding solar classes at the PEC in the first place. (I took their solar classes to sell solar, but turned out to have no sales ability.)

PG&E also provides all their solar customers with the most incredibly informative and helpful solar call center for answering customers’ solar questions. Both of these services are world class. They seem like a really good faith attempt to encourage solar, and ironically, they helped get us to this situation that is bad for them.

Its very success has meant that the increasing numbers of smalltime solar generators impacts the three big utilities in the state. Obviously they lose a lot of money if too many people like me go from paying them over $100 to under $10 a month. (Of course, on the other hand, all those solar rooftops also mean they don’t have to build or buy that power elsewhere.)

According to Vote Solar, the big three utilities which must participate in the CSI are lobbying to have that percent limit retained.

But solar homeowners are becoming a sizable lobby ing force in their own right. An amazing 34,000 of them have contacted the CPUC to allow the limit to be raised. You can  join Vote Solar’s action to support solar rooftop development.

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About the Author

writes at CleanTechnica, CSP-Today, PV-Insider , SmartGridUpdate, and GreenProphet. She has also been published at Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow, and Scientific American. As a former serial entrepreneur in product design, Susan brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention, solving climate change is the mother of all necessities! As a lover of history and sci-fi, she enjoys chronicling the strange future we are creating in these interesting times.    Follow Susan on Twitter @dotcommodity.



  • http://www.FuturaSolar.com/ Patrick

    There was a blog on linkedIn about a report from the EU that Solar had a downward effect on peaking power rates (wholesale). It contradicted my expectation that solar and peaking power would be a wash, financially. Maybe there is a reason that Futura has run into resistance.

  • GaryReysa

    Hi,
    I’m a fan of PV and have my own grid-tie system, but I have to say that from the utility point of view a met metering arrangement where the utility has to pay full retail price for the PV generated electricity, and buy that electricity when its available whether they need it then or not seems like a not very good deal for the utility.
    If the utility buys its electricity from one of the regular wholesale suppliers, they pay about half of retail, and they can specify exactly when the electricity is to be delivered.
    The utility loses money on net metering, which is essentially a subsidy to PV owners that ends up being paid by the other utility customers. I’m OK with this myself, as I think PV is a good thing to subsidize. But, lets be honest about what it is.
    Gary

    • Bob_Wallace

      Depends on the price spread between peak and off-peak prices.

      Peak wholesale can be quite high. Off-peak wholesale can drop incredibly low. Accepting “free” peak power and giving back “free” off-peak power on a 1:1 basis could be profitable for utilities.

      The peak late afternoon/early evenings could cause a problem.

      If it’s net metering – a balance in kWhs in/out – then some adjustments to the overall price of power in order to let utilities recover their distribution/management costs plus a fair profit should make things fine.

      Smart meters should bring us to a point at which utilities could purchase rooftop at a wholesale price and then sell other hour power at retail. That, to me, would be a fair system.

      Any subsidy should be provided by government agencies, not forced on the utility companies.

      • RobS

        You’ve missed a few important points, first when pv is available is exactly when demand is peaking, PV output is NEVER begging for a taker. Second is that in the afternoon at peak demand the wholesale price of electricity is regularly 50c to $1 per kwh and sometimes peaks far higher then that, the way electricity is priced all generators receive the peak market price for their power, ie on a hot afternoon coal power plants will be payed upwards of $1 per kwh if that’s where the market pricing goes, the only people who don’t get this advantage are customers with small scale distributed generation who just get paid the retail rate. So even though solar produces peak output on hot sunny summer afternoons when demand and cost to utilities is highest the utilities only have to buy it at the base retail rate, this means that utilities are quite often getting a bargain when they ONLY have to pay retail rate for that solar power instead of having to buy as much wholesale power at 5-10 times retail.

        • Bob_Wallace

          It’s not quite so black and white.

          There are times of the year when there’s lots of hydro and wind available and at the same time demand low. It’s not summer year ’round.

          Peak demand hours extend past the hours in which PV produces.

          • RobS

            We are nowhere near having more wind or solar on the grid than can be consumed and hydro is a despatchable power source so I’m not sure I see your point, even at times of lowest demand solar and wind output never go begging because demand is still higher then their output, and even if with hydro power it did overshoot demand hydro is the most despatchable power source able to ramped up and down within seconds to meet demand fluctuations so it’s not in even vaguely the same boat.
            Peak demand hours do extend a few hours past solar peak, which is why storage will be a big player if solar is to increase its penetration beyond 10-20%.
            My point was that there are several months of the year where frequently they are paying fossil fuel generators many times more then their retail rates for power at exactly the time when their customers solar arrays are producing at their peak output, as it stands at the moment at those times buying solar power at the retail rate is VERY cost effective for them.

          • http://muckrack.com/dotcommodity Susan Kraemer

            California’s case might be different because only 1% (PG&E anyway) is coal – maybe a bit more for the 2 LA/San Diego
            area utilities

    • GaryReysa

      Thanks for the responses.
      In trying to find out a bit more about this, I ran across this interesting report: http://d-bits.com/tou-rates-favor-pv/

      Seems to indicate that solar in CA should indeed fetch a premium price, but also indicates that peak demand appears to be after solar PV peaks out and is declining.

      Also wondering why the CA utilities are dragging their feet on the 5% limit if the solar PV generation is such a good thing for them?

      Does anyone have links, books … that cover this whole area in more detail — I’d like to learn more about it.

      I’m also wonder for us northerners (I’m in Montana), how the correspondence of peak demand and solar PV output match up (or don’t)?

      Gary

      • http://importantmedia.org/author/susan Susan Kraemer

        I will look into it more, talk to more of the stakeholders. I am not sure that they are really dragging their feet, in the way that I am sure – say, when utilities in Arizona, the Republicans in congress, the Koch brothers, the Chamber of Commerce and so on are full-on resisting the slightest clean energy victory.

        It is kind of a murky area, since California utilities actually do earn more when California ratepayers use less energy. The CPUC set up a good incentive that thus encourages them to save (fossil) energy, back when it was only (pretty much) fossil sourced. Does that apply to solar (distributed) reducing the other energy that solar homeowners need? Be good to find out.

        Re your regional peak/your output. Do not be afraid to contact a solar co. in your region to get a free quote. They are free, and local guys would have that local info, and did I mention it IS free. Solar estimators do about ten free quotes a day. It is no sweat for them to do yours, there is no obligation.

      • http://muckrack.com/dotcommodity Susan Kraemer

        I will look into it more, talk to more of the stakeholders. I am not sure that they are really dragging their feet, in the way that I am sure – say, when utilities in Arizona, the Republicans in congress, the Koch brothers, the Chamber of Commerce and so on are full-on resisting the slightest clean energy victory.

        It is kind of a murky area, since California utilities actually do earn more when California ratepayers use less energy. The CPUC set up a good incentive that thus encourages them to save (fossil) energy, back when it was only (pretty much) fossil sourced. Does that apply to solar (distributed) reducing the other energy that solar homeowners need? Be good to find out.

        Re your regional peak/your output. Do not be afraid to contact a solar co. in your region to get a free quote. They are free, and local guys would have that local info, and did I mention it IS free. Solar estimators do about ten free quotes a day. It is no sweat for them to do yours, there is no obligation.

  • Anzactwo

    Just curious. The guy who put solar on his roof is saving $105 a month, or $1260 annualized. What was his investment in the installation? Presumably it was of the order of a 3KW installation, rather small and possibly costing in the $20-30K Range Pretty crummy economics given extra costs for maintenance, added insurance etc.

    • http://netmetering.co.za/ David Lipschitz

      Prices in 2009 were $10 a watt for Grid Tie Installs in the USA. In South Africa they were R100 a watt ($12.50). Prices have decreased 75% in South Africa since 2009 and I’m wondering how much they’ve decreased in the USA? (Under $10,000?)

      • Bob_Wallace

        Most recent average for rooftop solar in the US I’ve seen was $4.60/watt. Germany was down to $2.40/watt last summer IIRC.

        • GaryReysa

          Hi Bob,
          Can you tell me where you saw the $4.60 per watt. Solar Today ran a US wide survey a couple months ago and came up with $6.80 a peak watt for US average.
          Gary

          • RobS

            http://www.wholesalesolar.com/gridtie.html
            They have grid tie systems priced between $2.00 and $2.80 per watt. Not including delivery installation and roof mounting hardware, rule of thumb is those balance of system costs are about 50% of the total so $4.60 seems smack in the middle of their system prices.

            http://www.mrsolar.com/page/MSOS/CTGY/CE
            Similarly have systems not including installation for ~$2 per watt.

            Both of these examples are before a 30% federal tax rebate. System prices fell ~40% last year so if today’s numbers were a few months old t the time of publishing then a fall from $6-7 to $4-5 is exactly what you would expect.

          • Bob_Wallace

            I might have screwed that up. $4.60 might have been for large commercial roofs and not residential roofs.

            (Or it could have been a post-subsidy average price.)

            Looking around on the web I’m seeing all sorts of “averages”, generally falling from quarter to quarter.

            $6.42 for residential, $3.75 utility Q2 2011.

            http://www.greentechmedia.com/articles/read/average-system-price-of-5.20-w/

            $6.20 for residential, Q3 2011.

            http://www.cleanenergyauthority.com/solar-energy-news/report-says-cost-of-solar-declining-091911/

          • http://importantmedia.org/author/susan Susan Kraemer

            Yeah, there are so many variables. I do know from personal experience that by far the biggest part of the cost has to be everything but the panels themselves and the few hours of labor they need to get them on the roof.

            Rather than fretting about “efficiency gains” in the lab, we need to simplify the logistics more. I really think that the best way to get costs down now is the boring side: nationwide universal building department rules on solar.

            One example of a fiddlier aspect of solar estimates is contacting each different town’s city hall to find out what their firefighters’ setbacks etc are. San Francisco might require 3 ft front and sides, San Mateo two ft in each side of ridgeline, 2 ft at edge, Daly City not yet decided…and each new customer is ALWAYS in a different city.

          • http://muckrack.com/dotcommodity Susan Kraemer

            Yeah, there are so many variables. I do know from personal experience that by far the biggest part of the cost has to be everything but the panels themselves and the few hours of labor they need to get them on the roof.

            Rather than fretting about “efficiency gains” in the lab, we need to simplify the logistics more. I really think that the best way to get costs down now is the boring side: nationwide universal building department rules on solar.

            One example of a fiddlier aspect of solar estimates is contacting each different town’s city hall to find out what their firefighters’ setbacks etc are. San Francisco might require 3 ft front and sides, San Mateo two ft in each side of ridgeline, 2 ft at edge, Daly City not yet decided…and each new customer is ALWAYS in a different city.

          • Bob_Wallace

            Setbacks from edges and peaks.

            I didn’t know that was an issue. Can you explain why firefighters would want setbacks? (I assume it has to do with being able to climb the roof, but that’s just a guess.)

            Out here in the country we don’t pull no stinkin’ permits…. ;o)

          • http://muckrack.com/dotcommodity Susan Kraemer

            Cannot reply to the below comment, but in answer, yes, firefighter’s setbacks are where they prefer to walk on roofs.

    • http://muckrack.com/dotcommodity Susan Kraemer

      (I’m not a guy.) For us our total paid out or 3.15 KW was about $10,000.

      We got ours through a SunRun contract, so technically we don’t “own” the solar panels, but rather got an 18 year contract in a PPA. (Then last year we sold our house, and the new owner has assumed the contract)

      Through the contract SunRun owns, maintains, insures and guarantees the performance of the system. If they fail, SunRun must pay the difference to the new owner of our house.

      Though we chose to pay the 18 yr contract in one lump sum, most people pay them monthly.

      • http://muckrack.com/dotcommodity Susan Kraemer

        When you pay monthly on a PPA or a lease, they are usually still lower than the utility bill you were paying.

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  • http://netmetering.co.za/ David Lipschitz

    Thanks Matt. You are correct. If the companies looked at the big picture, they would see that they actually benefit from Net Metering which allows them to sell expensive electricity to people who want it at the time they want it. Homeowners are flexible. Also see Jevon’s Paradox: http://en.wikipedia.org/wiki/Jevons_paradox

    • Bob_Wallace

      Don’t get too carried away with Jevon’s Paradox when it comes to energy. People are not going to add extra lights or TVs to their houses just because electricity becomes a bit cheaper.

      Electricity is already so affordable that few people deny themselves much outside of extra heating/AC (if they live on a limited budget).

      • http://netmetering.co.za/ David Lipschitz

        Hi Bob

        My understanding of Jevon’s paradox is that the more energy efficiency there is and the more renewable energy is introduced into an economy, the faster the economy grows and the typical fossil fuel suppliers can’t keep up – and therefore are actually enhanced by the EE and RE economy and no dis-served.

        • Bob_Wallace

          From Wiki –

          “Jevons paradox (sometimes Jevons effect) is the proposition that technological progress that increases the efficiency with which a resource is used, tends to increase (rather than decrease) the rate of consumption of that resource….”

          Let’s assume that the efficiency of light bulbs increases (incandescents -> LEDs). Except for the frugal and financially struggling people will have been turning on as many lights as they wanted. If use per bulb drops 75% it’s unlikely they will now turn on 3x as many bulbs.

          Same for TVs. My old tube 20-something inch TV pulled over 150 watts. My sister just bought a 52″ TV that pulls 80 watts. I don’t think the increased efficiency will cause her to purchase/turn on a second TV.

          Then cars. You might have held back a bit on driving with your 18MPG gashog, but will you almost triple your driving if you get a 50MPG hybrid?

          Jevon’s holds when supply is limited and that forces prices high. Our supply of electricity is not limited to any extent.

          Average US monthly electricity use is around 1,000 kWh with an average price of $0.12/kWh. That’s not much over $100 per month for the average household.

          I doubt many people are significantly curtailing their electricity use due to cost of power. People living on a tight budget may turn on an extra light, but they’re not likely to buy a second refrigerator, etc.

          New more efficient devices may cause a small portion of the population to increase their electricity use, but the greater portion of the population is probably already running as much stuff as they want to run. The small uptick by the financially restricted will be greatly hidden by the greater efficiency of those who won’t increase number of lights/devices used.

          • http://netmetering.co.za/ David Lipschitz

            Thanks Bob. I appreciate your responses. So Jevon’s paradox applies in South Africa where in Cape Town our electricity price for a house using 1,200 kwh per month will be $0.19/kWh. And where we are about 40 GW behind on building power stations; assuming CAGR at 3.6% over the past 18 years, ie South Africa has about half the capacity it should have.

          • Captivation

            Thanks Bob,

            I would like to point out that many of these paradoxes disappear when people become aware of them. For example, there was a safety paradox a few years ago where people with abs brakes drove more recklessly because of the increased safety of the brakes. But once I became aware of this effect, I compensated by being extra careful. Thus the effect was nullified by my own awareness of it.
            Same thing with Murphy’s Law. The moment you become aware of it, you take steps to prevent it.

  • Edward Kerr

    It’s beginning to appear that large producers are resisting “distributed” power production as it will obviously diminish their ‘pricing power’ in the future. Anything that threatens profits (the environment be damned) is to be fought. A sad comment on humanity.

  • Matt

    And there is benifit to the distribution company also. I bet the net meeting does not takeinto acount time of day. So homes with PV produce extra during peak demand hours (when it cost the most to by power) and then draw from the grid during off peak (when power is cheap to by). The distribution company keeps to keep the difference in cost.

    • RV

      The thing is that it doesn’t work that way. You can already see it in Germany where the (solar) electricity generated during peak hours lowers the prices so much that electricity is cheaper during the day than it is at night. That means that utilities do have lots of coal etc. plants sitting “idle” not earning any money. They also cannot reduce their fossil power plant capacity because you cannot rely on the sun shining every day.

      • Altair IV

        “They also cannot reduce their fossil power plant capacity because you cannot rely on the sun shining every day. ”

        They could if they started replacing them with energy storage systems. Capture the surplus solar and wind generation whenever it outstrips demand, and feed it back out when it’s needed.

  • Luke

    Wow – I didn’t realize rooftop solar was so big in California! 5% is a non-trivial portion of electricity generation.

    • http://muckrack.com/dotcommodity Susan Kraemer

      Well, this is just 5 percent of peak demand. So it is not quite what you are thinking. We are not there yet!

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