ORIGINAL REPORTING: The Value Of Solar Debate Heats Up

CPUC Avoided Cost Calculator for Solar Fails to Avoid Controversy

Herman K. Trabish, July 5, 2021 (California Current)

California’s success at building utility-scale solar has lowered the value of local rooftop solar to the system, threatening its present economics. The California Public Utilities Commission’s 2021 avoided cost calculator update quantifies the costs avoided by using distributed energy resources. The avoided cost for local solar is the lowest it has been in a decade, said Arne Olson, Senior Partner with Energy and Environmental Economics (E3), the commission’s ACC consultant.

The drop in the newly calculated avoided cost of distributed solar is “a success story about the improving economics of utility-scale solar and storage, and feedback on the economics of rooftop solar,” CPUC Energy Division Director of Cost, Rates, and Planning Simon Baker said.

click to enlarge

But rooftop photovoltaic advocates are concerned the reduced avoided cost could lead to a lower successor tariff in the net energy metering 3.0 decision later this year, impeding the growth of rooftop solar. Net energy metering is the compensation rate paid to rooftop PV owners. The NEM 3.0 proceeding is grappling with how to grow solar resources without shifting system costs to customers who don’t own PV projects.

“If the commission uses the 2021 Avoided Cost Calculator for the new NEM 3.0 compensation rate, it would not produce the distributed solar growth the state needs to meet its climate goals,” said Solar Energy Industries Association Senior Director and Counsel for California Rick Umoff.

click to enlarge

But former commission staffer and Independent Energy Producers Association Policy Director Scott Murtishaw pointed out that the cost calculator is not a final measure of value but a way to inform commission decisions. The problem for solar advocates is that the NEM 3.0 decision will come before the 2022 cost calculator revision, and that could make the decision on compensation for distributed solar generation “less favorable,” he added.

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… click here for more

click to enlarge

Tweet