The lens we view the expansion of solar programs in California must be the ability to pencil out the cost of installation. How do we realign the subsidies that PG&E receives so that smaller local producers can be competitive? The model that makes sense is something simple like Germany's or a combination of all the programs, if we want to get beyond the rich and profitable. We may also want to get beyond the RECs. PG&E is just not going to get them from this governor as he said in the SB451 veto in October 2007.
Our objectives here are:
1- There is a sense of urgency to transition to clean fuels. We are over-reliant on foreign oil to the detriment of our national security, peak oil, green house gases are impacting critical infrastructure like water and fire, petrochemical in the food supply and competition with ethanol are impacting prices, cancer, asthma, pollution, oil wars, burden public health- all because of the costs of using fossil fuels. If we want to make the transition to clean sources of energy, we have to STOP obsessing about our past investments in a fossil-fuel based infrastructure. Trying to recoup rate-payer investments in T&D will only hobble our efforts to make the switch. T&D, if it remains an issue, should be based on what the market will bear.
2- The governor wants to expand solar in CA and has provided many programs to do so including SB1.
3- MPR does not pencil out. It is the COMBINED EFFECT of the present set of programs – Accelerated Depreciation, Federal Tax Credit, PGE rebate, and Retail Net Metering (32c/kWh on-peak) – and bank financing that gets rich, profitable, and creditworthy companies to install solar. If any of the subsidies are withdrawn, then the amount of solar installed will also decline because the returns on investment in solar become less attractive compared to alternate investments. We need more, not less, subsidies if we are to expand to more users. Looking at the various bill in the 2008 legislative calendar we can see that PG&E's opposition stems from their stated intent to recoup sunk costs in T&D.
4- The legislature recognizes the need to expand solar installations and the benefit of locally produced power for efficient transmission. That is why we got feed in tariffs and equal access to the grid. We copied Germany which in addition to feed in tariffs and equal access also passed a guaranteed rate of about $70c per kWh for 20 years. That made people go out and rent roofs to install solar so that they could have access to the income. Germany became the largest installer of solar in the world.
5- The legislature promotes efficiency by charging variable rates so that high users pay considerably more for making the system unstable. If a solar electricity producer is NOT compensated for his excess electricity production (beyond retail net metering), he is being discouraged from implementing energy efficiency measures as they become technically viable. This contravenes California’s loading order of paying for energy efficiency before energy generation.
Friday, March 21, 2008
The renewable energy case for net metering
PG and E's basic argument against net metering is that solar producers didn’t pay for Transmission and Delivery (T and D) and have already been subsidized by rate payers with rebates. Paying for over production is thus an unfair subsidy to producers which puts additional burden on rate payers.
This is a false argument because it starts out by assuming that solar producers materialized out of thin air instead of being rate payers themselves subsidizing the system all along until they became producers. When did PGE become this charitable institution that looked after the rate payer? The history of utility reform in California has been the ability of consumer lawsuits to force PG and E to comply with its function as a public provider of power. And within the public interest the legislature has granted PGE access to charge Californians to build the grid and land to install it on. In other words PGE functions much like a landscaper I would hire using plants and labor I pay for to install a garden on my property. The landscaper can't come back and ask a fee of my guests who are using my garden. The grid belongs to California and access to the grid means that any CA producer can use it.
Now if PGE has a maintenance cost to upgrade and upkeep, that cost should also be viewed within the confines of our objectives. Renting the grid is ok for surplus power without any division of the RECs. But let’s rent it proportionally since the surplus power is produced in the summer when the demand is largest and the need greatest. Thus PGE should pay the peak rate for surplus power and charge a maintenance rent for supplying it on the grid per kWh at the Market Bearable Rate. New Mexico pays a surplus rate of $1KWH. And Florida uses the Utility Avoided Cost by allowing producers to act as producers! Craig Morris in Truthout discusses the case of Germany with respect to CA.
Upgrades costs need to be distributed by low and high users. The goal of the legislature in requiring variable rates is to discourage high users from maintaining consumption patterns that destabilize the system. Solar producers on the other hand represent the lowest need since they offset consumption patterns elsewhere. In this case PGE should be paying, and one can argue that the rebate meets this requirement, solar installers for reducing the upgrade cost.
This is a false argument because it starts out by assuming that solar producers materialized out of thin air instead of being rate payers themselves subsidizing the system all along until they became producers. When did PGE become this charitable institution that looked after the rate payer? The history of utility reform in California has been the ability of consumer lawsuits to force PG and E to comply with its function as a public provider of power. And within the public interest the legislature has granted PGE access to charge Californians to build the grid and land to install it on. In other words PGE functions much like a landscaper I would hire using plants and labor I pay for to install a garden on my property. The landscaper can't come back and ask a fee of my guests who are using my garden. The grid belongs to California and access to the grid means that any CA producer can use it.
Now if PGE has a maintenance cost to upgrade and upkeep, that cost should also be viewed within the confines of our objectives. Renting the grid is ok for surplus power without any division of the RECs. But let’s rent it proportionally since the surplus power is produced in the summer when the demand is largest and the need greatest. Thus PGE should pay the peak rate for surplus power and charge a maintenance rent for supplying it on the grid per kWh at the Market Bearable Rate. New Mexico pays a surplus rate of $1KWH. And Florida uses the Utility Avoided Cost by allowing producers to act as producers! Craig Morris in Truthout discusses the case of Germany with respect to CA.
Upgrades costs need to be distributed by low and high users. The goal of the legislature in requiring variable rates is to discourage high users from maintaining consumption patterns that destabilize the system. Solar producers on the other hand represent the lowest need since they offset consumption patterns elsewhere. In this case PGE should be paying, and one can argue that the rebate meets this requirement, solar installers for reducing the upgrade cost.
SB451, Key existing solar programs, and proposals
2007, 2008 CA legislative summary- This is complicated. Call your legislative office for help. Senator Yee's office is one of the best. So is Simitian's.
1. AB 1969 Expansion
AB 1969 (2006, Yee) was adopted and expanded by the PUC at the end of
2007. This means that now, any customer of a utility in California may
sell renewable energy (solar, water, etc.) back to the utility at a
predetermined rate, called “feed-in tariffs”. The feed-in tariff is
offered at the Market Price Referent (MPR) to renewable facilities up to
1.5 megawatts. Customers that opt for the feed-in tariff cannot receive
CSI (CA Solar Initiative) or SGIP (Self Generation Incentive Program)
funds to subsidize the building of their renewable facilities.
2. Net Metering
“Net metering” is the process by which the collection of solar or
other renewable energy runs your energy meter backwards. It can only go
back to zero. This is the best deal for solar in California, as opposed
to other forms of renewable energy, because the customer’s meter runs
backwards at “full retail” value. PG&E after a year’s true up does not compensate producers for excess generation. This has been a major liability for school districts and local government because each building requires its own installation. Belmont, through current Vice-Mayor Dickenson and CCAG unsuccessfully carried SB 451 last year to change this- essentially allowing an authority to put solar where it would be best, for example Nesbit, and generate enough for the entire district including foggy Fox.
ftp://ftp.cpuc.ca.gov/puc/aboutcpuc/2007+final+legislative+wrap+up.ppt and search for 451
Other net metering programs in California run at the generation rate, which accounts for the utility’s transmission and distribution (T&D) charges.
3. California Solar Initiative & Self-Generation Incentive Program (SGIP)
Cash incentives combined with federal tax incentives to build renewable; can cover up to 50% of costs.
Legislation this year:
4. SB 451 (Kehoe, 2007). Vetoed.
This bill would have required electrical corporations to buy renewable energy from any customer at the feed-in tariff rate. This bill was vetoed and is now unnecessary due to the CPUC’s AB 1969 (Yee) implementation.
5. AB 2820 (Huffman): Excess metering
This bill will allow local public agencies to transfer renewable electricity from the public agency’s renewable energy generation meters to offset the energy demand at the public agency’s other offsite facilities. This bill requires a local public agency to pay the investor owned utilities (IOUs) for use of its transmission and distribution (T&D) facilities, as well as any applicable standby charges for renewable energy technologies that are not already exempted under current law.
6. AB 1223 (Arambula): Excess metering for agriculture
Would have allowed agriculture to utilize net metering: one-site production of renewable energy to offset costs at other sites. Issue at the core of the debate was the T&D charges.
7. AB 1807 (Fuentes): Renewable electric generation facilities: feed-in tariffs
This bill would require the PUC to develop feed-in tariffs for eligible renewable energy resources of more than 20 megawatts
8. AB 2573 (Leno): San Francisco Model: Net/Excess Metering. Chaptered.
Options for 2008 to allow compensation for excess production after the True Up:
1. Propose alternatives to AB 2820, AB 1223, or AB 1807 in case they fail. This could be legislation for excess metering for local public agencies. However, challenging points in this area will be the T&D charges and the matter of who gets to keep the Renewable Energy
Credits (RECs) which was the basis of SB451's veto.
2. Propose similar legislation to the San Francisco model provided by AB 2573
3. Change the law so that CSI and SGIP-funded facilities sell the excess energy back onto the market. This would allow them to size to capacity instead of on-site electricity load, and would increase the amount of renewable energy use in California. Key issues: ratepayer subsidies the facilities then also pays for the electricity, and who keeps the RECs.
1. AB 1969 Expansion
AB 1969 (2006, Yee) was adopted and expanded by the PUC at the end of
2007. This means that now, any customer of a utility in California may
sell renewable energy (solar, water, etc.) back to the utility at a
predetermined rate, called “feed-in tariffs”. The feed-in tariff is
offered at the Market Price Referent (MPR) to renewable facilities up to
1.5 megawatts. Customers that opt for the feed-in tariff cannot receive
CSI (CA Solar Initiative) or SGIP (Self Generation Incentive Program)
funds to subsidize the building of their renewable facilities.
2. Net Metering
“Net metering” is the process by which the collection of solar or
other renewable energy runs your energy meter backwards. It can only go
back to zero. This is the best deal for solar in California, as opposed
to other forms of renewable energy, because the customer’s meter runs
backwards at “full retail” value. PG&E after a year’s true up does not compensate producers for excess generation. This has been a major liability for school districts and local government because each building requires its own installation. Belmont, through current Vice-Mayor Dickenson and CCAG unsuccessfully carried SB 451 last year to change this- essentially allowing an authority to put solar where it would be best, for example Nesbit, and generate enough for the entire district including foggy Fox.
ftp://ftp.cpuc.ca.gov/puc/aboutcpuc/2007+final+legislative+wrap+up.ppt and search for 451
Other net metering programs in California run at the generation rate, which accounts for the utility’s transmission and distribution (T&D) charges.
3. California Solar Initiative & Self-Generation Incentive Program (SGIP)
Cash incentives combined with federal tax incentives to build renewable; can cover up to 50% of costs.
Legislation this year:
4. SB 451 (Kehoe, 2007). Vetoed.
This bill would have required electrical corporations to buy renewable energy from any customer at the feed-in tariff rate. This bill was vetoed and is now unnecessary due to the CPUC’s AB 1969 (Yee) implementation.
5. AB 2820 (Huffman): Excess metering
This bill will allow local public agencies to transfer renewable electricity from the public agency’s renewable energy generation meters to offset the energy demand at the public agency’s other offsite facilities. This bill requires a local public agency to pay the investor owned utilities (IOUs) for use of its transmission and distribution (T&D) facilities, as well as any applicable standby charges for renewable energy technologies that are not already exempted under current law.
6. AB 1223 (Arambula): Excess metering for agriculture
Would have allowed agriculture to utilize net metering: one-site production of renewable energy to offset costs at other sites. Issue at the core of the debate was the T&D charges.
7. AB 1807 (Fuentes): Renewable electric generation facilities: feed-in tariffs
This bill would require the PUC to develop feed-in tariffs for eligible renewable energy resources of more than 20 megawatts
8. AB 2573 (Leno): San Francisco Model: Net/Excess Metering. Chaptered.
Options for 2008 to allow compensation for excess production after the True Up:
1. Propose alternatives to AB 2820, AB 1223, or AB 1807 in case they fail. This could be legislation for excess metering for local public agencies. However, challenging points in this area will be the T&D charges and the matter of who gets to keep the Renewable Energy
Credits (RECs) which was the basis of SB451's veto.
2. Propose similar legislation to the San Francisco model provided by AB 2573
3. Change the law so that CSI and SGIP-funded facilities sell the excess energy back onto the market. This would allow them to size to capacity instead of on-site electricity load, and would increase the amount of renewable energy use in California. Key issues: ratepayer subsidies the facilities then also pays for the electricity, and who keeps the RECs.
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