California regulators on Thursday proposed changes to the state’s residential solar market designed to encourage more home battery systems that can help make the power grid less reliant on fossil fuels at night, especially during heat waves.
It is the second attempt by the California Public Utilities Commission to update the state’s incentive program for home solar systems. Last December, the commission proposed new fees for solar customers and reduced subsidies for installing panels on roofs, something utilities wanted but solar companies warned would cripple the booming industry. and would hinder the state’s move toward clean energy.
Solar panels are found on 1.5 million California homes, creating by far the largest home solar market in the country. The state has set ambitious goals to transition from fossil fuels to renewable energy sources like solar and wind to power homes, businesses and cars.
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Under existing rules, solar customers can sell extra power they aren’t using to their power company for a credit on their bill.
California’s three largest utilities, Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric, have argued that the payment is so generous that solar customers are not paying their fair share of the full cost of the electrical grid, which you still rely on when your panels are not generating power. Energy fees include other costs such as electrical transmission and forest fire prevention work.
Solar panels are seen on the roofs of homes in Folsom, California, on February 12, 2020.
(AP Photo/Rich Pedroncelli, File)
About $4 billion in costs is shifted from solar to non-solar customers, according to an estimate by a utility-backed coalition called Affordable Clean Energy for All. When solar customers pay very low bills, due to credit, they are paying less to the general power grid. The solar industry argues that that number doesn’t take into account the contributions to grid reliability and other benefits that rooftop solar provides.
Kelly Hymes, the administrative law judge who wrote the commission’s proposal, acknowledged that change, noting that the state’s current system hurts non-solar customers, with a disproportionately negative impact on low-income utility customers. income, and “it is not profitable”.
The new proposal reduces the amount of money people receive for selling their extra energy. But it doesn’t include a specific solar fee that the utility companies wanted. It creates new financial incentives for people to install home storage systems to capture additional solar energy during the day. It also changes electricity rates to encourage people to export stored power to the grid in the late afternoon and evening, when the grid typically switches from renewable sources to fossil fuels.
“These changes will help meet California’s climate goals and increase reliability, while promoting affordability at all income levels,” Hymes wrote.
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The five-member public services commission has until mid-December to discuss the proposal. If approved, it would not take effect until at least April 2023.
People who already have solar panels and storage systems wouldn’t see a change to their bill credits; the plan would only affect new customers. It also locks in a better rate for people who install in the next five years in an attempt to encourage more homeowners to enter the solar market now, though the solar industry argues it’s too minimal to matter.
The public utility commission estimates that the average customer with just solar panels would save $100 a month and that people with rooftop solar panels and storage systems would save $136. Those savings would offset the cost of the system with or without storage in no more than nine years. With storage, customers would recoup their costs in as little as five to seven years, the proposal estimates.
Today, bill credits to cover the cost of installing solar panels take five to seven years, and longer for storage systems, said Bernadette Del Chiaro, executive director of the California Solar & Storage Association. The average solar and storage system costs about $26,000 when you factor in new federal tax credits that cover 30% of the cost, she said.
Some 150,000 people add solar panels annually, and 16-20% of those installations include battery storage, he said.
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The latest attempt to strike a balance between utilities and the solar industry drew more criticism than praise. The utility-backed coalition said it “fails to make meaningful reform necessary” to ensure costs are shared fairly, while the California Solar Energy and Storage Association said the proposal would “really hurt” the industry. by making home solar panels less affordable.
“It is extremely disappointing that, under this proposal, low-income families and all customers without solar power continue to pay a hidden tax on their electric bills to subsidize rooftop solar for most of the wealthiest Californians.” Kathy Fairbanks, spokeswoman for the utility-backed company. Affordable clean energy for all, she said in a statement.
In addition, he chided the commission for not further reducing state payments for solar energy consumers at a time when more federal money is flowing into solar panels and other clean energy. The federal spending bill signed by President Joe Biden in August includes a 30% federal tax credit, estimated at about $7,500, to install solar panels over the next decade, according to the US Department of Energy.
While Del Chiaro supports battery storage, she said she’s skeptical that reducing bill credits for solar customers will incentivize enough people to add batteries.
“The drastic change overnight assumes that every consumer going solar today will add a battery, snapping their finger,” he said.
The changes, if adopted, would only apply to Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric customers.
