Guest Commentary: CPUC Decision on Net Energy Metering Should Be Set Aside

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Credit: Getty Images

By Gerald Braun

(Editor’s note: The Davis City Council approved a resolution on Tuesday “requesting the California Public Utilities Commission to place a hold on the recent proposed decision related to net energy metering until more information is gathered and analyzed.”)

The California Public Utilities Commission (CPUC) is considering a proposed decision (PD) to repurpose California’s retail solar industry under the guise of encouraging solar adopter investments in on-site energy storage.  The PD is based on several invalid assumptions.

CPUC staff assumes that by distributing a customer’s rooftop solar electricity in a neighborhood and community, an electric utility incurs costs that add up to several times the price it pays its customers for solar electricity.

Only after solar generation capacity on a distribution circuit reaches a significant portion of circuit capacity are grid upgrades required.  Transmission upgrades are not required because rooftop solar electricity affects demand profiles but does not physically enter the transmission system.  The utility’s generation costs are lowered during some hours and are impacted in other hours to the same extent they would be if locally generated solar electricity were not available and had to be made up by increased production in solar power plants.

CPUC staff assumes that low income customers now substantially subsidize residential rooftop solar installations owned by other customers.

Subsidies actually go in the opposite direction.  In California rate subsidies in the range of 25 to 35 percent are available to low income customers and are funded by other customers.  By making rooftop solar less affordable, the proposed decision erects new barriers to making solar power accessible to low income customers and renters.

CPUC staff assumes that a complex system of incentives and penalties, the most important of which are to be quantified at a later date, will sustain the current rate of solar adoption decisions.

The CPUC is considering whether to mandate a more complex, less understandable and less attractive rooftop solar value proposition.  Doing so will cause electricity customer confusion and hesitation.  Solar adoption rates will plummet.  Many retailers and installers currently specializing in residential solar installations will elect not to participate in a market for solar paired storage. They will close their doors, leaving former customers with no place to turn when advice, support, upgrades and equipment replacement and service needs arise.  Erosion of competition will result in higher prices.

CPUC staff assumes that it is possible to bring about increased investment in solar paired energy storage by making investments in rooftop solar much less attractive to homeowners.

Hopes that a shift of economic rewards from solar ownership to storage ownership will increase investment in solar paired storage are unrealistic.  Rather, California’s retail solar industry will be decimated, and neither significant additional customer-owned solar nor customer owned storage will be available to “give the grid what it needs.”

CPUC staff assumes that California’s solar industry will “keep growing,”  and solar installers can continue to experience revenue growth by installing both rooftop solar arrays and battery storage units.

The proposed decision aims to make rooftop solar and solar paired batteries into economically neutral options rather than, as now with rooftop solar, investments that pay back.  This approach will result in payback periods too long to be of interest to electricity customers, and in some cases even longer than the 20- to 30-year expected life of rooftop systems.  The value proposition for solar per will no longer economically attractive.  Rooftop solar adoption rates will plummet.

The life cycle economic value of solar paired energy storage cannot be accurately estimated based on information in the PD.  As a result, adoption of on-site battery storage will not increase.  Adoption will depend, as now, on the design and stability of time of use pricing schemes.

CPUC staff assumes that retail solar installers and local permitting authorities are ready to install and service on-site battery storage,

Lack of training and experience is a barrier.  Until a stable and profitable stationary battery market is established, inexperience on both sides of the local permitting process will drive cost increases and retard fulfilment of sales.  National solar retailers may see an opportunity to gain experience with solar paired battery sales and installation, but local installers and customers will face costly permitting delays.

CPUC staff assumes that the current benefits of rooftop solar accrue only to the solar adopter and are limited to avoidance of grid electricity costs.

Other (non-solar) customers benefit from rooftop solar because it reduces the need for new transmission investments.  Communities benefit because rooftop solar adoption strengthens local economies in multiple ways:  1) freeing up funds for local purchases, 2) increasing property and sales tax revenues, and 3) creating resilient local electricity supply to power school-based emergency centers during disaster recovery and to power resilient neighborhood microgrids in low income areas.  The state benefits to the extent on-site solar adoption reduces carbon emissions and increases its inventory of local resilience assets.

The proposed decision sets aside a long-standing bipartisan policy regarding on-site solar energy.  The policy should remain in effect because it is foundational to creation of a just and affordable state-wide renewable energy eco-system.  Its underlying assumptions are valid.  The underlying assumptions of the proposed decision are not.  Better informed and more robust on-going and future consideration of the benefits of rooftop solar can be a positive outcome of the current policy tug of war between electric utilities and local clean energy advocates.

Gerald Bruan is an appointed member of both the Davis Utilities Commission and the VCE Community Advisory Committee

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Disclaimer: the views expressed by guest writers are strictly those of the author and may not reflect the views of the Vanguard, its editor, or its editorial board.

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4 thoughts on “Guest Commentary: CPUC Decision on Net Energy Metering Should Be Set Aside”

  1. Richard_McCann

    Thanks Gerry for the report.

    For those who currently have solar installed on their rooftops, the CPUC has proposed to cut the period for net energy metering that credits solar at the retail rate from 20 years to 15 years. In other words, the CPUC proposes to change the terms that customers relied on to choose to invest in renewable power.

    I write more about this issue here: 
    https://mcubedecon.com/2021/11/30/why-are-we-punishing-customers-for-doing-the-right-thing/

  2. Alan Miller

    If I am hearing correctly, PG&E is behind this.  Why should we listen to what is good for PG&E, of all entities?  Reward them, for . . . what?

    Payment for power to the grid has always seemed a good incentive.  It incentivizes local solar, it gives power in the peak when it is needed most, you pump directly into the grid, not haul it with line loss from a distant mega-plant in the (now ruined) desert.

    The ads for this imply grass-roots support and that solar benefits the rich.  Well, who else but those with means have money to invest in solar — and who in heck is gonna invest if it doesn’t pay off?  And why encourage battery storage, when giving to the grid supplies peak power?

    This sounds like government staff supporting a quasi-government organization they may be too close to.  I’m not saying that’s what’s going on, just that it sounds suspicious.

    1. Richard_McCann

      PG&E and SCE are using the utility union, IBEW 1245, to push its political allies to shut down competition with utility-owned and controlled facilities. Unfortunately, NRDC has also become complicit in this effort. Your suspicions are well confirmed.

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