GET ON BOARD WITH NET METERING 1.0 OR MISS THE SOLAR BOAT
The way residential solar is credited to homeowners (this is called Net Energy Metering, or NEM) is about to change, and this will have a major impact on the economic benefits of solar energy for customers who connect after the deadline. Existing solar customers, and NEW customers who connect PRIOR to the deadline, are credited FULL value for the kilowatt hours (Kwhs) they produce, and this is grandfathered in for 20 years, even if the system changes hands (such as with the sale of the home). PGE proposes to credit NEW solar customers only PARTIAL value for the Kwhs hours they send back to the grid. The new rules kick in once total utility power production comes from at least 5% renewables (solar/wind/etc.). This is anticipated by PGE and our industry experts to happen early next year.
WHAT NEW “NEM” MEANS FOR YOU
Connect now and you will be able to withdraw a full Kwh from your “bank” for every one you deposit, for the next 20 years. Wait too long, and you could lose half or more of the value of the energy you produce. This is a major shift in policy that will solidify the PGE monopoly and the utility ability to push their rate structures down the customer’s throat with no viable competition. The new NEM will affect lease, financed and cash purchase solar metrics, because the value of solar is based on the percentage of utility power you can offset with a system, and this is directly related to net metering policies. Higher residual utility bills and increased payback timeframes is the anticipated result of NEM 2.0. Many young, fragile solar companies will fail in this environment, and the roofers, HVACs, cabinet builders, general electricians, pool cleaners and everyone else who threw their hats in the solar ring during the recent bubble will abandon solar in favor of their core businesses. For SunPower and Alternative Energy Systems, solar has been our core business for the past 12 years, and we have been through the solar ringer before. We are well positioned to ride out the fight while the pendulum swings yet again, and we will be here for our customers for the long haul.
30 PERCENT FEDERAL TAX CREDIT SET TO EXPIRE END OF 2016
The 30 percent federal tax credit is the only federal or state solar incentive still standing, and it is set to expire at the end of 2016. As it currently sits, solar customers have two tax filing periods (2015 and 2016) to monetize the value of the solar tax credit (which reduces your tax liability 1:1 and allows you to pay yourself for solar instead of paying the IRS for 30 percent of the gross value of the system up to your total tax liability for the year). No matter your opinion on the fairness of the solar tax credit versus the billions in tax breaks enjoyed by the carbon and extraction industries (coal, oil, fracking), the full expiration of the solar tax credit will definitely negatively affect lease rates and purchase payback metrics of residential rooftop solar. The point at which you can legitimately claim your tax credit is when your system is installed and creating electricity.
TIER FLATTENING AND RATE INCREASES
If the financial benefit of solar is going to decrease next year, on the other side of the coin is a new PGE rate structure that will allow the utility to enjoy its largest revenue increase in decades. This structure was approved by the California Public Utility Commission in July. It consists of reducing the number of tiered rates from four tiers to three, and significantly increasing the cost for power in those three tiered rates. Over the past 10 years, we have seen an increase of 4% to 5% percent per year historically within the tiers, and a 71% increase in the five year average cost of power across all the tiers.* In the next five years, PGE proposes to increase average cost of power in the tiers from 6% to 9% percent per year, with an 84% increase in the five year average cost of power. Higher energy users -- such as we see with families that use residential water wells, or have larger homes with more A/C, or run businesses from their homes – may suffer in a new “super energy user” tier, that PGE is asking to be $.047 per Kwh in five years. Your lowest cost for power today is $.016. The solar value proposition of security from future rate increases and independence from a monopolistic utility has never been more attractive.
SUNPOWER BY ALTERNATIVE ENERGY SYSTEMS ADVANTAGE
To reiterate the SunPower by Alternative Energy Systems points of comparison and superiority:
- AES is the area's only Master Level SunPower dealer
- Highest efficiency panel technology
- Longest, most inclusive warranties
- Most flexible and competitive purchase and leasing options
- Longest standing local exclusive solar team
- Most local installations
- High accountability and most trusted solution
Sunny Days and Warm Regards!
Jim Mikles
