By Alex K. Williams, founding partner, Solar Energy Partners
The installation of private solar power systems in homes across California has been a key driver in the state’s green power revolution. Twenty five years ago, roughly 10,000 houses and businesses had rooftop solar power systems installed. Since then, the number has reached upwards of 1.2 million with no end in sight. This boom in private solar power systems has not only had an impact on the amount of emissions released into the atmosphere, but on homeowners’ pockets too, with a potential twenty-year savings of more than $40,000 in the state of California for those who convert. These savings are made through not only a reduced reliance on outside power sources, but also through net metering, which is the sale of unused solar-generated power back to the grid.
This monetary aspect has caused some of the largest utility companies in the state to band together and push forward California Assembly Bill 1139 in an attempt to charge rooftop solar customers a monthly fee and alter net-metering credits. Although the solar industry-dubbed ‘utility profit grab bill’ failed, the California Public Utilities Commission is still considering adjustments to net metering in the next few months.
According to a range of industry leaders, these utility companies are still attempting to push through some of the same adjustments originally on bill 1139 via the CUPC. Among the changes proposed are requests for a solar-generated power credit value-reduction, so solar-generated energy costs the same as energy available on the open market, as well as the introduction of a monthly $90 flat fee for all solar customers.
Although it’s reasonable that these companies seek to reclaim some of the lost profits from the solar power boom, the effects of these adjustments will stretch further than just an increase in cash flow for the companies. In fact, if they are passed, negative impacts will ripple across all stakeholders in this newly emerged ecosystem, from the homeowners themselves and potential future customers, to the solar companies that serve them and maintain their systems.
The utility companies claim that these changes, particularly the $90 flat monthly fee, are designed to reduce the cost-burden on existing non-solar customers while also supporting the maintenance of the transmission system, funding wildfire-prevention initiatives and financing the shift toward renewable energy. The issue isn’t the proposed initiatives this money will go toward — which should already have been accounted for long ago by the utilities — but the deterrence these extra and unnecessary fees will give potential customers.
While some wealthier homeowners can shoulder the cost of a flat monthly fee and reduced income from net metering, it’s the next generation of solar power system buyers who will be most impacted by these changes. According to statistics from Berkeley Lab, the adoption of solar energy systems has trended toward lower-income households over recent years, mainly due to the long-term savings and increased accessibility as a result of federal and state programs. As it currently stands, a main value proposition for converting to home-based solar is the potential for long-term savings. If these changes are implemented, the monetary value of these savings will be reduced, which will ultimately deter new customers with less financial resources.
If new adoption is reduced, this will affect the industries that have emerged to serve these customers. In short, these changes not only deter new lower-income customers, but also limit the speed at which the solar industry can evolve, as well as the speed the state, and ultimately the country, can move away from non-renewable power sources. With events like the Gulf of Mexico fire becoming increasingly normalized, the focus should be on driving adoption of renewable-energy generation by any means necessary, instead of deterring or penalizing it with corporate-focused, profit-grabbing adjustments.
With all of this in mind, it’s clear that the changes requested by utility companies are a poorly veiled scheme to reduce the adoption of residential solar, while limiting the growth of a competing industry and harming residential customers. Due to the numerous financial and environmental benefits of converting to solar, the current state of the solar industry as well as regulations around metering and additional charges should be left untouched, if not improved to incentivize increased adoption. To ensure that this happens, and to protect the rights of solar customers from big utility companies, consider signing this petition by Save California Solar.
Alex K. Williams, founding partner of Solar Energy Partners, leads the solar industry with years of experience in entrepreneurial industries like security and the oil industry. Alex joined the solar industry to help grow sales teams across California. By 2021, Solar Energy Partners is growing its footprint and ownership team to include a range of western states.
Paying us (homes with solar) a wholesale rate for the excess power we produce seems fair. I did not get solar to sell excess and make a profit. In fact, I moved to using all my produced power on a yearly basis by switching to more electric heat during the winter and less natural gas fired furnace.
I do feel the fixed charge mentioned for being connected to the grid seems unreasonably high. For better transparency I’d like to see that fee on both solar and non-solar customer’s bills and the utility rates which must currently include those costs bundled in, reduced. I’d be surprised if it remained at $90.00 if all utilities customers were to be charged that amount, but if in fact that is the cost to be connected and have the benefit of having electricity when needed and therefore applies to everyone, I’d be fine with it.
Here’s the problem, the IOU electric utilities are “allowed” an “assured” rate of return on assets, sometimes up around 12%, maybe more. This goes into every kWh of residential electricity used. Those copper wires that go from the neighborhood transformer to your home C.B. panel are already paid for when the property was developed by you or the contractor. That neighborhood transformer that was paid for up front and passed onto the home owner as utility upgrades to the lot are turned over to the utility after the development is complete to operate. The utility also gets to depreciate these ‘assets’ on their taxes. All of these TD&D charges, fuel charges, demand response charges, fees, tariffs and taxes are all bundled into a kWh of electricity.
Have you noticed in this narrative there is NO mention of avoided costs by the utility? They didn’t have to buy property for the solar PV installation, didn’t have to buy the components, pay for plans or permits, get financing, (right of ways), file an EIR, pay for the system installation or maintain, repair, replace or insure the system. All of these avoided costs and no compensation adjustments to non-solar PV homes and businesses. MY point, if these entities want to charge ME $90/month for ‘their’ service connection to my house, I want $100/mo. from the utility to use the ‘right of way’ to my home to make that service connection, to my distributed generation system that puts excess power back onto the grid at the right voltage/frequency to support the local homes without solar PV on their roofs. A DER has more worth than a wholesale centralized generation resource and the typical 12% to 25% transformer power loss inefficiency from end to end that all residential ratepayers pay for now. Just sayin’, the utility business model is inefficient and needs to be stepped into the EaaS model or let it die on the vine.
“According to a range of industry leaders, these utility companies are still attempting to push through some of the same adjustments originally on bill 1139 via the CPUC. Among the changes proposed are requests for a solar-generated power credit value-reduction, so solar-generated energy costs the same as energy available on the open market, as well as the introduction of a monthly $90 flat fee for all solar customers.”
I’ve noticed where ever this monthly “connection charge” pops up it is getting higher every time some random utility tries to force this usury onto the retail ratepayers, while claiming energy credits at wholesale prices. I also notice there are NO mentions of the ‘actual’ worth of having a distributed generation system that puts power back onto the grid for non-solar PV homes to use. There is also NO mention of the utility’s “avoided costs”. The utility wants to “rob” me for paying it forward and having my own solar PV system generating power for my home needs every day. As far as I’m concerned, this $90 dollar flat fee is not for O&M but is just a (sun tax) to pad their coffers for paying out dividends. Why does my non-solar PV neighbor have to pay the TD&D charges, fuel charges, fees, tariffs for solar PV power that flows out of my inverter and right into the meter at his home? It is also unacceptable for the utility to cling to a uni-directional grid with centralized energy generation, when a grid that is bi-directional and digitized to offer EaaS, would be a better business model. The IOU utility needs to bring a lot more efficiency and value to the residential ratepayers without usury with these specious flat fees.
Doug Dewitz says
Every household that is considering buying any gas fired vehicle that will depreciate as it is driven from the car lot should pay attention here.
Every community that is willing to provide real cost of energy service should adopt a community solar initiative.
Thank you for this guest opinion Solar Power World
Semper Solaris says
Great point Doug! However, I feel it’s more than just the loss of value of the vehicle that people should be paying attention to. With the prices of gas consistently going up and with no signs of slowing down, electric and hybrid cars are now more enticing.
Especially when you have multiple battery storage units such as the Tesla Powerwall at your home, you can save big and at the same time not have to worry about gas cost and other issues.
Solar + Battery Backup is a must now a days especially in states like California, Texas, Arizona, etc.
One big thing that did catch my eye on the article is this statement at the end. “With all of this in mind, it’s clear that the changes requested by utility companies are a poorly veiled scheme to reduce the adoption of residential solar, while limiting the growth of a competing industry and harming residential customers..”
It’s kind of like the article states: “Twenty five years ago, roughly 10,000 houses and businesses had rooftop solar power systems installed. Since then, the number has reached upwards of 1.2 million with no end in sight.”
At that time, the utilities laughed at early adopters as they polished their ROI argument over the years. The unfortunate part is these early adopters pretty much proved, simple ROI is basically a lie. When one takes a deeper dive into how these so called IOU “regulated monopolies” are allowed to operate, every time they raise electricity rates, your, ROI period goes down. Every desperate energy program from tiered electricity block rates, TOU rate spiking and onerous fuel, TD&D, fees, tariffs placed on retail electricity costs (bundling) you will pay off your system in electricity cost savings over the years sooner than the simple ROI (suggests).
Over the years, these adopters have grown to 1.2 million and counting. How many more roofs can ‘effectively’ have solar PV installed? Could California have 12 million, 15 million solar roofs sooner or later? I’ve come across stories that some apartment complexes have been built with solar PV in mind and a smart ESS in every apartment as an aggregate energy storage system of MWh in large apartment complexes, Soleil Lofts community in Utah. IF the utility has a ‘problem’ with installing energy storage infrastructure, then let the developer entities make resiliency and energy storage part of the overall plan, with or without solar PV on the roof.