CPUC Adopts New Rules for Solar

Solar providers across the state are breathing a huge sigh of relief today as the California Public Utilities Commission finalized its rules for how new solar customers will be credited for power they produce on the grid for the next 20 years. There are a few parts of the decision that are not as solar friendly as we would have preferred, but if the art of governing is negotiation and compromise then consumers and solar advocates can say they got more than they gave. 

Key decision components (according to California Solar Industries Association briefing):

• Maintains full retail credit for net metering (one Kwh in -- one Kwh out). A partial credit feed-in tariff, as was recently adopted in Hawaii and Nevada, would have been the death knell for California solar. That ain't happening.
• Creates an interconnection fee. This one-time fee of between $75 - $150 speaks to the "solar pays its fair share" argument and seems a reasonable request to cover the utility time for processing applications and connecting solar customers. 
• Assesses new fees per Kwh that a customer feeds back to the grid of 2.3 cents/Kwh (for PGE customers) to cover expenses such as subsidized low income electricity rates, DWR bond payments, nuclear decommissioning costs, and other miscellaneous fees that current utility customers all pay. This is one of the things we gave up. It is not unreasonably on its face I suppose, but the rate seems high and I have always contended that the CARE program needs closer supervision so that customers who do not meet the spirit and intent of the discount rate program don't get it.
• Rejects utility proposals for a bunch of charges they wanted to glomp onto to solar customers, including demand charges, capacity fees, grid access fees, standby charges and monthly netting. 
• Requires immediate time of use rate structure for all new NEM 2.0 solar customers. We were hoping for a few years of phase-in, so I guess you could say this is another thing we gave up, However time of use fundamentally makes sense for grid power management and at the end of the day is one of the arguments in favor of solar (we produce a lot of power during the peak of the day when third party contract rates are really high, so utilities actually save money by not having to acquire as much power during these peak periods).
• Rejects utility proposals to end or restrict virtual net metering. In our experience the utilities are not very good implementing or managing  this program yet, but it does make sense that multiple meters on the same property can each take advantage of a single installed solar system.
• Existing NEM 1.0 customers are grandfathered in with their existing program for 20 years, and NEM 2.0 customers will also not be subject to future changes to these rules for years.

When you consider this decision along with the extension of the 30 percent federal tax credit adopted in Dec., all in all it's been a very good month for solar. Shine on!

Nevada Illustrates Perils of State by State Net Metering Policies

Recent decisions by state regulators in Nevada to take solar out by the knees shows with stark clarity what can happen to residential solar when state regulators, legislators and investor owned utilities dig in to fight for the carbon status-quo. 

Homeowner choice is eliminated and the clock gets turned backwards on significant progress in energy policy. VOX has the best account I have read on the Nevada fiasco. In California we seem to be moving in the other direction, with new proposed net metering rules that make better sense for solar, but constant vigil is required.

Solar Tech Advances Won't Leave Today's Customers in the Dark

A common question from my solar customers goes something like "As technology advances, will my solar system become obsolete?" It's a great question, and it turns out that solar is an interesting animal because unlike computers, phones, bikes, or pretty much any other product that can become obsolete in just a few years, solar will not. This one of the main reasons I like it. Here's why:

It's All About the Power

Solar is first and foremost a vehicle to produce electricity. As long as you can rely on the system to produce the energy you need, it will never become obsolete. It can get cheaper, or it can get smaller, but if you can always expect it to produce a quantifiable amount of electricity (at least for the next 25 years, and as long as you have a good reliable system), it won't go out of date like a computer that suddenly won't run a new operating system, or a flip phone that doesn't have a touch pad or camera. 

So in two years, when there's a 25% efficient solar panel available (while yours is today's best at 21%), it won't really affect you that much. You might need one more panel on your roof to generate the same amount of electricity than someone who is just installing their system, but your system should be custom-sized for your electricity needs today, and if it's meeting those power needs as designed, how could it become obsolete?

Panels Are the Rooftop Form Factor for the Foreseeable FutureThat's not to say there isn't innovation in solar power generating technology. There is. There's thin film, and concentrated, and even solar roadways and paint. It just happens these are focused on commercial and utility scale. For residential rooftop solar, everyone agrees that the solar panel is the best form factor for the far foreseeable future, and solar panels have about reached their maximum efficiency. As they do improve incrementally by a couple percent in efficiency, they will simply become incrementally smaller in footprint by a couple percent in size, which will hardly be enough to notice or matter in most applications.

The Future is in Storage and Energy ManagementThe real work in solar innovation is in storage and energy management, and a good solar system will support new iterations of these technologies as they get released and adopted. Storage is a nut destined to be cracked. Elon has his in limited release. SunPower has theirs in limited release. I've looked what appears to be at a pretty good from a startup called JuiceBox. 

When you add a lithium-ion battery bank, a charge controller, and most important, the software brains to tell your home system where is the most efficient place to get power at that moment in time -- panels, battery or grid -- you are now squarely at ground zero of the future of grid energy management. You can upgrade your existing system and bolt on new technology as it becomes available because you won't have a continuously escalating electricity bill due to your solar system providing you energy independence, so you will have more capital to invest in these new smart-grid technologies. Ah the virtuous cycle of it all. 

Price MattersPrice is a slightly different story, but your risks of missing a huge future breakthrough by going solar today are still minimal. Solar will continue to come down in price as manufacturing processes improve. However as long as solar continues to be subsidized in the form a 30% federal tax credit (now extended through 2019), true supply and demand market forces will not drive the solar price into the ground. Also, the cost of solar is maintained as much by the cost of the commodity it replaces -- utility electricity -- as it is the cost to manufacture. So as long as utility electricity rates continue to increase to the tune of 5 to 7 percent per year (12.5% baseline increase in the past 12 months in PG&E BTW), the price of solar will remain relatively consistent.

Takeaway

There is little reason to think that future technology innovation will leapfrog your rooftop solar system and leave you in the dark.

SunPower vs. the Competition

disclaimer: This is an expicit promo for SunPower solar panels. I am a solar design consultant for a SunPower Master Dealer (Alternative Energy Systems), and this post outlines the some of the reasons why SunPower should be on any solar consumer's list to compare.

SunPower Wins in Solar Competitive Landscape

In solar, not all systems are created equal. With cheap systems using commodity solar panels, you will often get what you pay for. Sometimes customers are understandably enamored with a lower day 1 out of pocket expense, neglecting to appropriately value the risk of panel or company failure. A 10-year product warranty standard in most solar panels is already a weak competitor to SunPower’s 25-year bumper-to-bumper warranty. Throw in a very real chance the manufacturer or the contractor will fail in the next several years, and your payback and return on investment calculations get extremely dicey. A panel warranty is only as good as the company that backs it, and in solar, your panel company and your contractor experience and track record count for A LOT. A common commodity-panel competitor to SunPower in our area is SolarWorld. Compare for yourself the overall health of the two companies:

http://www.oregonlive.com/business/index.ssf/2013/01/solarworld_shares_plunge_28_pe.html

SunPower Differentiation

If we have already met to discuss solar for your home, then you already know that SunPower differentiates on its panel being the most powerful, longest lasting, and most reliable, reflected by the industry’s best warranty.  Did you also know that SunPower is also the healthiest solar company in the world by every measure, with global utility, commercial and residential scale projects and the tradition of Silicon Valley technology innovation? With a true 25-year panel product warranty, you can accurately calculate your energy return on investment. Savvy customers understand that SunPower has a faster payback, higher retained value and a true 25 year horizon for energy production. This translates to greater value, greater peace of mind, lower total cost of ownership and the best solar panel investment in the industry.
http://www.fool.com/investing/general/2015/10/31/sunpower-flexes-its-muscles-and-regains-top-effici.aspx

New Rules for Solar Net Metering Coming to California This Year

Net Energy Metering in California stayed largely intact
 under new proposed rules at the CPUC

We planned for the worst and hoped (and lobbied) for the best for the new Net Energy Metering (NEM) rules coming down the pike this year in the major utilities in California. It seems like the hoping and lobbying paid off. New net metering rules currently in their comment period before the California Public Utilities Commission will slightly change the calculus for how solar power is credited on the grid for the homeowner who generates it. It appears the systematic dismantling of the net metering program advocated by PG&E and the other major utilities will not come to pass as it has in Nevada, Arizona and Hawaii. 

NEM 2.0 will come into effect in California sometime this year (in the March to September timeframe most likely). Current solar customers, and those who get signed up and installed before then, will be grandfathered on NEM 1.0* for 20 years from their interconnect date. NEM 2.0 includes additional application fees to connect to the grid, a new monthly fee to subsidize low income utility customers akin to what non-solar customers pay today, and a new time of use rate schedule. The most onerous components of PG&E proposal did not make the draft rule, however, and this represents a major win for solar customers and the solar industry. This includes feed-in tariffs (partial credit for Kwhs fed to the grid instead of full credit), peak demand charges and high monthly minimum charges. NEM 1.0 is still a better deal so if you’ve been sitting on the fence now is still the time to move, but we are all breathing a sigh of relief because the solar industry looks to stay strong well into the future.

http://calseia.org/press-releases/2015/12/15/brown-administrations-puc-proposes-to-reject-anti-solar-proposals-from-utilities

* Residential Net Energy Metering (NEM) is the way solar electricity production is credited to the homeowner when it feeds back to the grid. NEM 1.0 is the current program. Solar produced by the system goes to the home first. Excess electricity produced beyond what the home can use at any given point in time feeds back to the grid and the utility sells it to the neighborhood. The utility credits the homeowner's account for every kilowatt hour (Kwh) that feeds back to the grid. At night and at times when the solar system is not producing enough to cover the home's needs, such as dead of winter, the home gets electricity from the utility as always. The key to net metering is the home uses all the credits in the account before it buys any from the utility. The Kwh credits roll over day to day and month to month for one year. At the end of the year is an annual accounting, called the True Up, when the homeowner either pays for Kwhs purchased beyond what solar produced, or receives a credit from the utility (wholesale rate -- not retail) for surplus Kwhs remaining in the account. The True up clock starts ticking on the day the system receives permission to operate (PTO) from the utility, so customers always get a full year of sunlight to work with, and the customer receives a monthly statement that shows the running total net Kwhs either produced or consumed so they know where they stand as the year progresses. There is a monthly minimum fee capped at $10, and customers still buy natural gas (if applicable) as they do today.

Tax Credit Extension Reflects New Political Era for Solar

Before the U.S. Congress retired for the year, lawmakers gave the renewable energy sector a big thumbs-up endorsement and extended the 30% federal tax credit* on renewable energy through 2019, with phased step-downs in subsequent years. 

This is a big win for solar consumers and the solar industry. From my experience, the average NorCal solar system has a payback period* of 6 to 9 years, depending on the customer usage, roof orientation and the amount of solar production the system can generate. Add 30 percent to this payback period, and the solar value proposition would be substantially reduced.  

This is great news for everyone but utilities and carbonites, and it represents how solar has transcended political gridlock in its broad appeal to varied environmental, job creation, free-market and corporate constituencies. More evidence if you needed it that harvesting your energy from the sun makes the most sense, no matter whether your political color is red, blue or green.

Read this interesting account from the blog GreenTech Media for background on how the deal went down.

http://www.greentechmedia.com/articles/read/inside-the-solar-industrys-successful-bid-to-pass-the-investment-tax-credit

* The residential renewable energy tax credit is not a rebate or a write-off, rather a direct one-to-one reduction in a homeowner's tax liability. So it's great if you have a job and not a lot of write-offs, and you pay quite a bit each month from your paycheck towards your end of year tax obligation. If you are retired or on a fixed income, it can be harder to take advantage of the tax credit because you don't have such a large tax obligation. (Lack of enough individual tax liability btw is one great reason many people lease solar instead of purchase.)

* Payback Period is the amount of time it takes for a system to pay for itself, based on the amount of utility electricity offset by the system if you applied the subsequent avoided cost of that electricity to the solar system purchase cost. For accuracy, payback calculations should include an estimate of panel degradation (no panel produces as much electricity Year 25 as Year 1), and an estimate for utility rate escalation (see my 1/5/16 post on 2016 PGE rate increases and trends).

PG&E Rings in 2016 with the Largest Baseline Rate Increase in Modern History

We knew it was coming, and here it is. Happy New Year! Enjoy your 2016 PG&E electricity rate increase. According to the PG&E Tariff record, this year’s rate hike represents a one-year 12.5% increase in the baseline Tier 1 cost of electricity and a 17% increase in Tier 2 power since Jan. 2015. This is the highest rate increase ever recorded in the baseline cost of PG&E electricity in the past 20 years, and it represents a fundamental shift in how most Californians pay for their electricity. During the first 12 years of the century, the baseline cost for power was essentially locked in, and higher users paid a punitive premium by using power in Tiers 3, 4 and 5. Starting in 2012, backlash from utility customers with larger use profiles necessitated a shift in policy toward a more equitable rate schedule. Over the past four years, more and more of the rate paying burden has shifted toward the lower tiers. Everyone buys Tier 1 power. Most people buy Tier 2 power. Not everyone buys Tier 3-4. If you choose to NOT go solar, you can expect more of the same rate treatment from PG&E for the far foreseeable future with no control and no relief.