California solar: Use it or lose it [updated]
When Californians purchase solar power, one of the selling points is net energy metering. It’s a billing arrangement that allows a customer to get credit for the electricity fed into the grid and pay only for the electricity he is taking from it above and beyond what he makes on his own roof. A customer who contributes 3,650 kilowatt-hours a year to the grid, for example, and uses 4,000 kilowatt-hours would pay for only 350 kilowatt-hours.
Under California law, so-called customer-generators are credited at the same retail rate at which they are charged, which helps customers recoup the significant upfront costs of their solar-power systems more quickly. The California Solar Initiative passed by the Legislature in 2006 made net energy metering available to customer-generators on a first-come, first-served basis until the generating capacity of those customer-generators reached 2.5% of an electric service provider’s energy-producing capacity, or "aggregate customer peak demand."
But with Californians installing more solar systems, utilities are edging closer to that 2.5% cap, which could force future buyers of solar power into a use-it-or-lose-it scenario. Once the 2.5% cap is reached, solar buyers wouldn’t get the benefits of net energy metering. Instead, they would have to use the energy they make at the time their systems are making it – during the day, when many residential customer-generators are not around; buy an expensive battery system to store the energy off-grid; or, if they don’t use it as they make it, donate their extra electricity to the utility and also purchase utility-generated power when needed.
San Diego Gas & Electric could reach the 2.5% cap by the end of 2011, according to utility spokeswoman Jennifer Ramp, and Southern California Edison by the end of 2011, according to the Solar Alliance, a trade association that is backing AB 510, a net energy metering bill that would raise the limit to 5% and is now before the state Legislature. Pacific Gas & Electric, estimating it would meet the 2.5% cap in the latter half of 2011, voluntarily raised its cap to 3.5% last October. [Updated 2/3/10, 12:30 p.m.: An earlier version of this post cited the Solar Alliance estimate that San Diego Gas & Electric would reach the 2.5% cap by the end of 2010.]
PG&E President Peter Darbee says the utility "remains committed to addressing the issue of climate change, increasing the amount of renewable energy that is delivered to our customers, and the success of the California Solar Initiative program in California." However, spokeswoman Cindy Pollard said PG&E has not yet taken a position on AB 510 and is concerned that its non-solar customers are paying for the benefits of its solar customers. In addition to net metering, solar customers receive installation rebates from the utility, as well as waivers from standby chargers and interconnection fees -- fees that non-solar customers pay.
"What PG&E is looking for is to determine the right level for the net metering cap and/or some type of alternative means of compensating the solar customers for their surplus power in a manner that’s fair to all of the other customers," Pollard said.
Supporters of AB 510, including the solar advocacy group Vote Solar in San Francisco, say "net metering is a key enabling policy to bring solar into the mainstream," according to Vote Solar Executive Director Adam Browning. "Without this policy, customers would probably be forced to either put in a much smaller solar system or to put in large battery systems and store the electricity. With net metering, you’re lending electricity to a neighbor who needs it. It’s a real cooperative way of making solar work for everybody."
Browning said keeping the net metering cap at 2.5% runs the risk of stalling the state’s nascent solar power industry because it eliminates a major incentive for buyers. Raising the cap would not only save solar installation jobs but also employees in the many budget-deprived civic agencies that are using the money saved through solar to offset other costs, he said.
A spokesman for Assemblywoman Nancy Skinner (D-Berkeley), author of the bill, said the 2.5% cap could also hamper the many cities, counties and school districts that are installing solar to reduce their electricity costs at a time when many organizations are facing drastic cuts.
While residential solar systems currently account for 94% of all installed systems, non-residential systems generate 57% of currently installed solar systems’ capacity.
The Los Angeles Unified School District, for example, estimates it will save $20 million to $24 million annually on utility fees paid to the Los Angeles Department of Water and Power and Southern California Edison once it has installed 50 megawatts of solar power at several L.A. schools. LAUSD is currently spending $85 million annually on electricity.
"What we’re trying to accomplish is savings to the utility fund," said Randy Britt, director of sustainability initiatives for LAUSD, which is eligible to receive $120 million in federal Clean Renewable Energy Bonds to help it go solar. "Those savings to the general fund are dollars that can be allocated for other things, such as payroll." [Updated 2/4/10, 2 p.m.: A previous version of this post said LAUSD would definitely be receiving the bonds. According to Britt, LAUSD is eligible for them.]
AB 510 could be on the Senate floor for a full vote as early as Thursday.
-- Susan Carpenter
Photo: Anne Cusack / Los Angeles Times