Solar companies in San Diego and elsewhere have long sold the technology as an investment that pays off for both the environment and pocketbooks.
A trio of impending policy changes could collectively change the game.
One is a federal rebate facing extinction. Here’s the second one.
Your relationship with San Diego Gas & Electric changes when you get solar panels. The utility starts buying power from you, too.
The state-mandated arrangement – which requires SDG&E to pay retail energy prices for the power the panels produce – allows solar customers to shrink or eliminate their electric bills. That arrangement is called Net Energy Metering,
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Just imagine how much less solar and/or storage will be in 10, 15 and 20 years!
This is why Utility “Death Spiral” is a clear and present danger to Big Utilities and their shareholders profits, especially in the near term and beyond. This is yet another reason that Big Utilities are trying to add their own Solar capacity so that they can buy Solar energy from themselves instead of buying it from their Residential and/or Commercial “customers” that choose to install their own Solar.
It is past time for all ratepayers to demand that both their Utilities and those that regulate them offer to enable as much non-Utility (aka privately owned) generation as possible, since then ratepayers could not only help provide a solution to our future Energy needs, but also reduce our dependance upon distant generation that has shown itself to be problematic especially during earthquakes, wildfires and other disasters.
In 2011 SDG&E submitted a proposal to substantially raise rates for net-energy metering (NEM) customers based on its assertions and justifications about costs created by those customers. That provoked community concern due to the potential negative impact on existing incentives for customers to convert to solar energy, along with financial impacts on those who had already done so. To deal with the broad-based reaction, SDG&E created a Solar Stakeholder Collaboration group, which included a wide range of governmental, nongovernmental, and private interests. I was the only solar homeowner in the group. The group conducted a series of meetings over a two year period. The key question to be answered, in my view, was whether homeowner generated solar is a net benefit or cost to society and in what magnitude.
In my view, solar homeowners should be charged no more than they cost society in general; or alternatively should be compensated for the degree to which they benefit society in general. The key is figuring this out and it turns out to be enormously complicated, which allows experts on each side, using different approaches, to arrive at different results. One example: Since solar presumably reduces air pollution (versus burning fossil fuels for electric generation), what value should be ascribed to the benefit to all people in the area (i.e. not just the “grid” but society generally)?
The Solar Stakeholder Collaboration group ultimately agreed to engage an independent private consultant to address five objectives:
1. Identify the services that utilities provide solar customers.
2. Identify the services that solar customers provide to the electrical system.
3. Develop a transparent methodology determine the cost (both positive and negative) for each of the services identified at different levels of penetration.
4. Determine whether the existing net energy metering rate structure allows the utility to recover the costs they incur for PV customers.
5. Understand how future scenarios including several photovoltaic penetration conditions and Smart Grid infrastructure affect the results of the analysis.
Unfortunately, two problems arose. One was that funds to pay the consultant (which were provided by SDG&E) ran out before objectives #4 and #5 could be accomplished. Second was that SDG&E failed to provide key bits of data they had agreed to provide the consultant early on. Specifically, from the final report of the study:
“The study team relied on SDG&E to provide utility‐specific data that is not generally publicly available. This included data on utility retail loads, PV system interconnection costs, distributed PV program costs administrative costs and projected marginal distribution system costs for voltage regulation. Black & Veatch [the consultant] prepared and submitted a data request to SDG&E in March 2013, with several subsequent follow‐up requests. Over the ensuing several months, SDG&E provided some limited information in the requested format, which the study team incorporated into this analysis where possible and feasible. For instance, Black & Veatch approached the interconnection cost analysis by requesting a detailed breakdown of costs by discrete tasks required for the customer interconnection process and supporting SDG&E activities, however SDG&E provided generally high‐level information on organization function and program administration costs. Similarly, instead of providing forecasted distribution upgrade costs for voltage regulation as SDG&E had initially offered in a stakeholder meeting, they provided a projection of the PV NEM capacity by feeder circuits through 2020. In these cases where the study team did not receive the data it was expecting, we used the information that was provided by SDG&E and developed additional necessary assumptions based on our professional judgment. The result of this is that the study results will not mirror SDG&E costs for these services, nor has the study team validated the SDG&E cost information.”
I cannot know why SDG&E failed to provide necessary data to the consultants, but I was left with a feeling that participants in the process (including me) had been used and that very possibly when the data began to look favorable to solar customers, SDG&E stonewalled the consultant. In any case, there is little question that, nationwide, utilities, particularly investor owned utilities like SDG&E, are very concerned about solar and its impact on their current business model. Thus the “facts” coming from utilities should be judged with a jaundiced eye and the studies floating around should be carefully vetted to see who funded them. There are no easy answers.
Solar customers typically generate more power than they use during the day and therefore are subsidizing regular customers by reducing demand during the daytime hours when regular customers use the majority of their electricity. There is a far greater capacity for power in the evening due to reduced demand as AC and other high users are turned off.
I don't know where the $.42/hour reimbursement figure comes from, the most I ever received for excess power was $.034/kwh.
Solar customers have reduced the load on the grid making more power available for regular customers without building additional power plants.
@SDResident "Solar customers typically generate more power than they use during the day and therefore are subsidizing regular customers"
Actually, as the MIT report points out, when residential solar owners get compensated at retail rates, such as what happens with the current net metering scheme, the higher cost to the utility (compared to the wholesale costs that the utility pays for other energy) is passed on to non-solar owners. So no, solar customers are not subsidizing "regular" customers.
@SDResident As an early-adopter solar customer, I've never felt that I was subsidizing anyone. Nor do I feel that others suffer higher rates because I happen to generate most of my own electricity. I pump excess power into the grid during the middle of the day, which is when my neighbors need it most. At night, when demand is less and the utility shuts down its most heavily-polluting sources, I draw power from the grid and offset the cost with credits from my daytime contribution. It's a deal that works for everyone.
Please let's not let the utility frame this debate. It is not "solar customer" versus "non-solar customer". I am not at war with my next door neighbors.
It's the "evil manipulative greedy ill-regulated monopoly" versus this community!
I appreciate the informative artilce. I just wish you had asked someone from the solar industry to respond directly to SDG&E's main criticism that regular customers are subsizing solar customers at night when the panels can't generate anything. I don't know much about solar, but I was under the impression that these systems included batteries designed to store power for times when the panels don't produce power. If SDG&E is correct, I would have to agree that the financial aspects of the solar industry need revising.
@Geoff Page The vast majority of solar owners are connected to the grid and do not have batteries supplying them power when the solar panels are not producing. Therein lies the problem. Solar owners want all of the benefits of subsidies, buy-back programs, etc, but don't want to own up to the cost of their connection and the fact that their unpredictable production of power puts a strain on the entire system. I don't have solar because my total bills rarely exceed $80. I just don't use that much electricity, even with a backyard spa that runs continuously. The friends of mine who do have solar talk mightily about generating "green" energy, but admit that the real reason is to reduce their monthly bills as much as possible. One example of that? They put the panels exclusively on south-facing roofs to maximize their ROI, while it's well-known that the system's best use of solar includes west-facing roofs to take advantage of the sun during the last few hours of daylight when people return home from work and usage peaks. West-facing panels produce less energy overall, but they continue to produce at a time when the need is greatest. Truly green owners put in both south and west facing panels if they can, or use tracking.
I'm all for residential solar. Scraping huge swaths of desert land and covering them in panels or mirrors is unconscionable. But let's be honest. Many (not all) solar owners are a typical case of "wanting their cake..." and the prior pricing schemes to subsidize both the purchase and operation cannot continue. Some kind of adjustments have to be made.
@msginsd @Geoff Page Good point about the panel direction, Geoff. Half of my panels face east for the morning sun, half face west for the evening. Net result is nearly the same daily output versus orienting them southward.
I love your comment regarding the huge centralized solar power plants in the desert. Sempra reaps its 8% not only from the generating station, but also from the power lines that are necessary to connect the station to population centers. Residential solar requires no new infrastructure. The wires and transformers are already installed!