ORIGINAL REPORTING: California Debates Rooftop Solar’s Real Value
State Regulators Face Solar Dilemma
Herman K. Trabish, Nov. 3, 2020 (California Current)
Editor’s note: The new NEM has not been set but ideas are proliferating.
“…California’s proceeding to update net energy metering has highlighted regulators’ dilemma of how to grow solar resources without shifting system costs to customers who don’t own solar energy projects…Nationally, hopes are high that California’s proceeding will offer breakthrough solutions to the troublesome successor tariff complexities that have emerged in other states as well as California.
One is the perceived shift of system costs to non-solar-owning customers when solar owners’ bills, which include system costs, fall. The second is the grid supply-demand imbalance when solar supply drops off as the evening peak demand spikes.
Net energy metering is the compensation rate paid to rooftop solar owners for generation their systems send to their investor-owned utilities. Senate Bill 656 passed in 1996 required owners of distributed solar in California to be paid the retail electricity rate. But there was no analysis of solar’s actual value to the private utilities. It also capped net-metered solar at 53.3 MW, a trivial part of the state’s 55,700 MW electricity supply in 1996.
By mid-2020, California had 28,471.5 MW of solar, including 9,356 MW of net-metered projects. In response to that rapid growth, especially after 2008, the AB 327-driven 2015-2016 NEM 2.0 proceeding required a fluctuating time-of-use rate of all new solar customers. It also ordered the missing analysis of distributed solar’s value to private utilities, including for load reductions. The bill also directed the development of a successor tariff in the Net Energy Metering 3.0 proceeding, which launched with a Nov. 2 hearing.
The CPUC-commissioned August 2020 draft evaluation of NEM 2.0 concluded that bill reductions to net metered residential solar owners impose costs on other customers. But net metered non-residential solar owners pay more than the cost to serve them. These conclusions drove a re-examination of the retail rate used for compensation.
One of the key things a successor tariff would do is give distributed solar owners an incentive to invest in storage. That would make it a more flexible resource to help address the growing curtailment of renewable generation, especially of midday solar oversupply, and the increasing challenge of meeting the sharp evening demand ramp as that midday solar fades. Protecting all customers and sustainable solar growth are the commission’s priorities in the proceeding, Commissioner Martha Guzman Aceves, who is overseeing the R.20-08-020 proceeding, said at the Nov. 2 hearing… click here for more