NEM 2.0 Begins In San Diego

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Originally published on the ECOreport.

California’s original rooftop solar program, Net Energy Metering 1.0 (NEM 1.0), continues in each utilities’s area until homeowners supply more than 5% of the peak load. The first city just passed that threshold. NEM 2.0 starts in San Diego.

NEM 2.0 Begins In San Diego

There have been 93,076 solar installations in San Diego Gas & Electric’s (DG&E) territory.  This represents 611.4 Megawatts (MW) of solar capacity in the city and county of San Diego. That number goes up to 617.2 MW, if you include homeowners waiting for authorization.

“Think about the magnitude of that number, 617 million watts of renewable energy being put on the grid. This is electricity the utility didn’t have to build anything for, they just benefit from it. This is a massive power plant San Diegans put in place at their own expense to the benefit of themselves, other ratepayers and ultimately the utility,” said Daniel Sullivan, of Sullivan Solar Power.

“Transitioning new private solar customers to the next phase of the Net Energy Metering program is another sign that our region is a leader in the clean energy movement,” said Caroline Winn, chief energy delivery officer, SDG&E.

“Rooftop solar is a billion dollar business in San Diego County and increasing, on an annual basis, between 30% and 60%. It is a fast growing industry that represents a lot of activity and jobs that can’t be outsourced to other countries,” continued Sullivan.

Installation Photo - Courtesy Sullivan Solar Power

Hitting The Cap Is A Good Thing

“Finally hitting the cap is a good thing. Market confusion over. We all know where we stand. In reality the financial impact of NEM 2.0 impact is only $3 – $15/month for the average rate payer. The lifetime savings of a PV system will always dwarf the minor public purpose program fees represented by NEM 2.0. Solar customers will now have to pay as all rate payers do. NEM 1.0 was a slightly better deal, but solar represents incredible savings over the life of the system, mitigating any downside of the new NEM structure,”added Keith Randahn, Baker Electric Solar Director of Engineering.

“Under the new rules, there is no limit to the amount of people who can go solar. We’re going to continue our transition away from fossil fuels, and everything connected with fossil fuels, to the new energy future,” said Sullivan.

Produce More Solar Than They Consume

Sullivan describes the last twelve years as a “solar coaster.”

He started business in 2004, when a typical system cost between $45,000 and $50,000. After that, customers received a rebate of about $10,000 and a tax credit of $2,000.

“Today, the cost is about half of what it was then and the electricity rates are probably about 50% higher. This explains why NEM 2.0 starts in San Diego,” said Sullivan.

His company has installed approximately 5,000 systems, two-thirds of which are in SDG&E’s territory.

The vast majority of those solar systems produce more electricity than the owners consume during the course of a year. A limited number store their surplus energy on batteries, enabling them to be totally independent of the grid.

“There is no reason San Diego can’t be 100% renewable. That’s where we want to go, that’s where the city wants to go, and that’s where San Diegans want to go. The only organization, that I can think of, that doesn’t want to see this happen is SDG&E. The only reason they wouldn’t want it to happen is that it is not in their best financial interests,” said Sullivan.

Daniel Sullivan in front of a Sullivan Solar Installation - Courtesy Sullivan Solar Power

For Their Own Benefit

SDG&E has repeatedly denied this allegation.

“The company will continue its efforts to make solar more accessible and affordable for all customers.”

“Barring some exceptions, everything SDG&E has done in the space of rooftop solar has been because the state legislature made them do it or because whatever they chose to made it easier for them,” countered Sullivan.

Q: What about SDG&E’s Renewable Meter Adaptor (RMA), which eliminates the necessity for costly electrical panel upgrades when installing solar? They say it saved customers millions of dollars. 

“When you look at the amount of rooftop solar being deployed in the region, it made sense for them to develop an RMA. That meant they have to do less service upgrades, which means less demand on their time and their linemen. They charge us money for these devices, while reducing their costs and allowing solar to be installed with less disruption to their day. It helped industry, allowing us to make installations faster, but it is also for their own benefit. For them to make it sound like they are doing this as a favor to us is disingenuous,” said Sullivan.

SDG&E's Renewable Meter Adaptor - Courtesy of Baker Electric Solar

50% From Renewables By 2030

California’s utilities must obtain 33% of their electricity from renewable sources by 2020, and 50% by 2030.

SDG&E’s response has been to build massive wind and solar plants in eastern San Diego and Imperial counties. It built the 117-mile Sunrise Powerlink transmission line to convey electricity from these rural areas.

A recent press release boasts:

“SDG&E was the first, and is currently the only, investor-owned energy company to source 33 percent of its energy from renewable resources—well ahead of California’s mandate. And SDG&E isn’t stopping there. The energy company is on track to deliver more than 40 percent clean renewable energy by 2018, and 50 percent by 2030.”

Only its invasion of the back country sparked a determined resistance.

As San Diego County Supervisor Dianne Jacob explained, “I hear concerns all across my district, in many communities, that these mammoth projects threaten to destroy natural resources, heighten the risk of wildfire and rob rural communities of their quality of life,”

“We don’t need a $2 billion power line bringing power into our region,” adds Sullivan.

Rooftop solar can provide the electricity where it is needed.

Ocotillo, in Imperial County, is surrounded by wind turbines – Jim Pelley photo

It Hasn’t Been Easy

Sullivan says the utilities had multiple opportunities to come to the table and be part of the energy transition. Instead they have fought it. He described SDG&E’s opposition as particularly intense the last three years.

“They are doing everything they can at the Public Utilities Commission to restructure electricity rates to make net metering less attractive. It hasn’t been easy. One of the largest corporations in the region wants to shut down our organization and every organization like it. They, quite frankly, despise the solar industry and anyone who speaks out for it,” says Sullivan.

“What we need is a utility that supports rooftop assets and rooftop ownership. In SDG&E, we don’t have that and I don’t think we ever will. If SDG&E keeps going down this path, what they are ultimately going to do is bring about their own demise. People are going to start installing advanced energy storage because it makes financial sense to cut the cord. That’s when you have a real solar revolution,” said Sullivan.

He added that while the technology is available, storage is still expensive. Once prices go down, Sullivan Solar Power will be asking customers if they wish to be “dropped off” the grid.

“By 2020, I think you’ll see advanced energy storage being installed at the sites that got us to the cap today,” he said.

Installation photo - Courtesy Baker Electric Solar

Customers Under NEM 2.0

For the time being, at least, almost all of San Diego’s solar panels are connected to the grid.

Customers obtained panels prior to the beginning of NEM 2.0 will continue under their original terms. Twenty years after the anniversary of their original installation, they lose this privilege.

“Although NEM 2.0 has caused customer uncertainty, I believe Baker has done a great job setting realistic expectations for our homeowners. As a result, sales are good and we continue to be the leading regional player in the San Diego County market in 2016 and we fully believe, for years to come,” said Randahn.

SDG&E writes that customers who install solar under NEM 2.0 will:

  • pay a connection fee, unless they obtain solar through a low income housing programs
  • “contribute to support state-mandated low-income and energy efficiency programs and other non-bypassable charges”
  • In 2017, new solar customers will pay Time of Use Rates, paying for energy based on the time of day the energy is used.

Installation photo - Sullivan Solar Power

Photo Credits: Installation photo – Courtesy Baker Solar Electric; Installation Photo – Courtesy Sullivan Solar Power; Daniel Sullivan in front of a Sullivan Solar Installation – Courtesy Sullivan Solar Power; SDG&E’s Renewable Meter Adaptor – Courtesy of Baker Electric Solar; Ocotillo, in Imperial County, is surrounded by giant wind turbines which do not give any benefit to the town’s residents – Jim Pelley photo; Installation photo – Courtesy Baker Solar Electric; Installation Photo – Courtesy Sullivan Solar Power

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Roy L Hales

is the President of Cortes Community Radio , CKTZ 89.5 FM, where he has hosted a half hour program since 2014, and editor of the Cortes Currents (formerly the ECOreport), a website dedicated to exploring how our lifestyle choices and technologies affect the West Coast of British Columbia. He is a research junkie who has written over 2,000 articles since he was first published in 1982. Roy lives on Cortes Island, BC, Canada.

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