Electricity and the means to generate it depend on a variety of rapidly changing resources: the water behind dams, factory workers in China, the sun and clouds, and the recently published rooftop solar billing rules by State Utilities. Commission (CPUC). . While the rules aim to advance California's goals to reduce greenhouse gas emissions from fossil fuel sources, the decision has been contested from all sides: The solar industry says fewer incentives mean fewer homes will choose to install expensive solar panels. Consumer groups say subsidies for existing solar roofs will continue to be unfair.
Judge Kelly Hymes, who wrote the CPUC's lengthy decision, believes the cost of solar energy is coming down. In fact, he estimated that prices were falling so rapidly that five years would be enough for the solar industry and customers to need less subsidies. The details are as complicated as buying electricity on the futures market, but these are new residential installations as of April 2023. Your home solar bill won't change, Judge Hymes wrote.
A fact sheet compiled by the CPUC estimated that the new net bill rate would reduce the average monthly electric bill by $100 and as much as $136 if the battery were installed. To calculate what consumers will receive per kilowatt-hour of power output, the CPUC uses something called an Avoided Cost Calculator (ACC), which is based on the value of electricity on the grid, or wholesale price, which changes over time. day But Hymes also acknowledged that ACC could be a major blow to the solar industry if little money is spent over the next five years. In total, the installation will have to be paid for over nine years. (The price of commercial solar depends on the ACC, because costs are amortized in nine years or less, according to the CPUC.)
This is a big change from the previous net energy metering plan, known as NEM 2.0, which paid 90% of the retail price for exported electricity. SoCal Edison's Ron Gales explained that the retail price includes costs such as transmission lines and employee salaries or utility overheads that are not included in the wholesale price. For the utilities, this was of great importance, as they could not recoup the full cost of maintaining and renewing miles of line. Energy imported or sold to customers at sunset is at full sale price.
Stephen Honikman works in the solar industry and grew up in Goleta in a solar powered home. He's also quick to seek permission to install roof panels to lock in NEM 2.0 prices, as he doubts direct costs will continue to fall. He's pretty sure the NEM 2.0 price is better for him than the new rate the CPUC will set in April.
"The biggest change to the avoided cost calculator is that instead of paying near the retail price for exported electricity, you get the price utilities charge to buy it from the wholesale market," Honikman said. He then explained that utilities pre-purchase in large wholesale lots at the best prices and calculate what future needs will be. “The amount that will be paid is the wholesale rate that was avoided, or that the customer should not have purchased. It is no longer a credit to the retail rate.
The other difficult part of the energy discussion was whether or not the dollars saved by solar homeowners by exporting electricity were paid for by those without a solar roof. Justice Hymes said in his ruling that yes, NEM 2.0 is unfair, but also that greening the energy grid is ultimately good for society as a whole. To somewhat level the playing field, more cents per kilowatt-hour will be added to the Avoided Cost Calculator Plus, or ACC Plus "bagger," for households in the CARE and FERA billing assistance programs. Interestingly, ACC Plus and the "add-on" are for SoCal Edison and PG&E customers only. California's third-largest energy producer, San Diego Gas & Electric, already pays a hefty royalty for electricity exported by its solar energy owners and didn't need the extra subsidy, Hymes wrote.
In addition, the California Legislature passed and Governor Newsom signed Assembly Bill 290 in September, which added $900 million to the 2022-23 budget for solar and battery installations: 70%, or $630 million, is for low-income clients for inheritance. The reasons The decision includes a review after three to five years to see if the new rules achieve fairness or affordability. In addition, during the five years of VAC Plus, premiums are reduced by 20% each year.
Doing the math, a $100 or $136 discount on your monthly electric bill could cover solar panel and battery costs (about $15,000 to $10,000) if the federal subsidy is added. The Biden administration's Inflation Reduction Act (IRA) extends the 30 percent tax break for solar system owners through 2032. Nonprofits and municipalities can convert what would be a tax break into cash under the IRA, although details are not yet known. IRS
For anyone living in the home, the credits will barely cover high-power needs for air-conditioning during the summer months and heat year-round, Honikman said. Permission and site issues can significantly alter energy costs and production.
State Senator Monique Limón was also concerned about the bigger picture. "I wonder if the right balance has been struck because California needs more sources of clean energy rapidly. Rooftop solar has yet to be part of our climate goals," she said. “Last year the California Energy Commission projected that by 2025 we would have a deficit of 1,800 megawatts. That's why the California legislature took important steps last year to optimize new incoming energy projects and extend the life of other plants. »
Last summer's extreme heat underscores California's dependence on electricity and the importance of battery storage incentives in the new rules. Wholesale energy prices rose $2,000 per megawatt hour in September as the Independent System Operator urged California to keep its thermostats at 78 degrees. Electricity consumption increases steadily between 4pm and 9pm when solar energy sources stop producing. In contrast, the wholesale price was between $200 and $300 on a balmy winter morning this week.
The city of Santa Barbara was among those adopting municipal solar panels and establishing its own electricity purchasing system, overseen by Alelia Parenteau, director of sustainability and resilience. He agreed that the batteries were essential to fill the void that had formed in the evening. “We need to strike a balance between renewable energy incentives and fair sharing of the costs of the electricity distribution system,” Parenteau said. “A lot of attention is being paid to the decision to combine solar with battery storage, so tariffs can be attractive if batteries are installed. We agree this is a critical step.”
"We're used to a 24/7 network," said Stephen Honikman. "It's a wonderful socialized investment system." And when the sun sets on California's solar panels, he said, "We all want our electricity at night, too."
Support the Santa Barbara Independent with a one-time or long-term contribution.
