Utility Backlash to Net Metering Gains Traction
California Utility Customers Getting All-Solar Option
> WHEN RESIDENTIAL ROOFTOP SOLAR and other distributed
generation (DG) technologies began making headway, it was
seen as a win-win situation. Residents would win by generating
their own power more reliably and less expensively than their
local utilities. Utilities would win because they would be under
less pressure to build large new generation units.
However, utilities started feeling they were getting the
short end of the stick. They were being required to buy back
power from net-metering customers at full retail rates, which
were higher than the costs of their own generation and paying
wholesale rates.
Furthermore, non-DG customers were also getting the short
end of the stick. That is, each customer’s utility bill reflects
not only the direct cost of the energy consumed but additional
charges to “keep the utility running”—overhead costs and repair,
maintenance, upgrade costs for the grid, etc. With increasing
numbers of DG customers paying zero on their bills, these overhead costs have been shifting to non-DG customers—those who
do pay the full rate on their utility bills.
As pressure mounts from utilities to reduce these inequities,
it could spell a challenge for solar installers. That is, if and when
DG customers are no longer able to take full advantage of the
cost savings associated with net metering, fewer customers in
general may find solar as appealing.
One of the first utilities to fire a salvo in this direction is
Hawaiian Electric. In January, the utility petitioned the state’s public utility commission (PUC) for permission to eliminate its current
net-metering program and replace it with a program designed to
be fairer in cost to the utility and its non-DG customers.
“At the end of 2013, the annualized cost shift from customers
who have rooftop solar to those who don’t totaled about $38 mil-
lion,” said Jim Alberts, senior vice president at Hawaiian Elec-
tric, in a press release. “As of the end of 2014, the annualized cost
shift had grown to $53 million. And that number keeps growing.
Change is needed to ensure a program that’s fair and sustainable
for all customers.”
The PUC is likely not unfriendly to the concept. In an April
2014 statement, several months before Hawaiian Electric’s
petition, the PUC itself noted that, “It is unrealistic to expect
that the high growth in distributed solar PV capacity additions
experienced in the 2010 to 2013 time period can be sustained
in the same technical, economic and policy manner in which it
occurred, particularly when electric energy usage is declining,
distribution circuit penetration levels are increasing, system
level challenges are emerging, and grid fixed costs are increas-
ingly being shifted to nonsolar PV customers.”
—WILLIAM ATKINSON
> CALIFORNIA HAS LONG been a champion of solar power, and solar installations
in the state have been growing at a rapid
pace. Many consumers would like to use
solar power but are still unable to do so.
Now, one California utility is giving these
customers the option to embrace solar.
In January, Pacific Gas and Electric
(PG&E) announced that it had received
regulatory approval to offer its custom-
ers a clean-energy option that includes
up to 100 percent solar power. Referring
to the program as its “green option,” the
utility said it is “all about giving custom-
ers the power to choose.” Expected to
unroll in the fourth quarter of 2015, the
green option will let customers choose to
receive either 50 or 100 percent of their
power from solar. They will pay the in-
cremental cost of the power they choose,
at an initial rate of two to three cents per
kilowatt-hour. That cost is expected to
drop over time.
PG&E, which already boasts about
25 percent power from renewables, will
buy energy for the program from newly
developed small and mid-sized solar
projects within its service area.
In its announcement, the utility refer-
enced research from the National Renew-
able Energy Laboratory, which finds that
only a quarter of residential rooftop area
is suitable for solar installations due to
structural, shading or ownership issues.
The research supports what PG&E states
is a clear need for community options “to
expand access to solar power.”
The green option is not the only
way that PG&E customers can choose
solar. At the same time, the utility also
unveiled a new program to let custom-
ers contract directly with a third-party
developer for a share of the output of a
solar project.
—RICK LAEZMAN
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