It is official! One million solar systems have been installed across the United States providing more than 27 gigagwatts (GW) of clean energy over the past 40 years! This incredible milestone becomes even more impressive when you consider that projections have us reaching 2 million installations in just 2 years.
Every day at Run on Sun we are proud to be part of the solar movement helping our communities access clean renewable energy. Solar is no longer a fringe technology, nor is it a solution for the future. It is powering homes and businesses nationwide today, and the more solar we install, the more jobs and economic growth we support.
On Tuesday, May 3rd at 10AM EDT solar supporters across the nation are participating in a social media “thunderclap". Join us in celebrating and sharing this historic achievement and what it means for our energy future by spreading the word across your networks. Working together to raise our voice in unity shows our business leaders and lawmakers that solar is here to stay. We are #MillionSolarStrong! Join the SEIA organized movement and thunderclap here.
Second only to the flame-out of oft-maligned Solyndra, the bankruptcy filing this month of once high-flying SunEdison has gotten a great deal of press, particularly by those who follow the financial side of the solar industry closely. But what does it really mean for residential, non-profit, and small commercial solar clients? In a word - nothing, and here’s why.
SunEdison, is a developer of utility-scale solar projects, that is, projects that sell energy directly to a utility rather than offsetting the energy loads of a local customer.
SunEdison Alamosa PV Plant
In recent years SunEdison expanded aggressively, creating two captive subsidiaries known as yieldcos to purchase the parent’s projects at a premium, sell the energy and pay investors dividends from those projects - thereby enticing more investors, which provided more capital to purchase more projects, thus paying more dividends and on, and on.
Until it didn’t.
Possibly the straw that broke the investors’ back, however, was the deal that SunEdison announced last July to purchase Vivint Solar at a 52% premium. To a lot of folks this seemed like an odd move - Vivint is a major player in the residential solar space where it competes against SolarCity (and us!) - not a real fit with a developer of mostly utility scale projects. That deal spooked investors, liquidity became an issue, and the Vivint deal dissolved into litigation in March.
With the demise of the Vivint deal, rumors of bankruptcy grew, culminating in its filing for Chapter 11 reorganization on April 21. The announcement - ironically one week after coal giant Peabody Energy did the same thing - generated some pretty scathing coverage:
While certainly not the level of vitriol directed at the failure of Solyndra, those are still tough headlines (and interesting articles, should you be inclined to dive deeper).
So while there is a great deal of buzz about the problems facing SunEdison, they really have nothing to do with the markets that our clients occupy. We, along with the other local, independent solar installers out there, are still doing just fine, thank you! We have never purchased products from SunEdison, so none of our product warranties are affected.
In the end, this story does highlight one consideration for potential clients to consider as you mull over the trade-offs between a smaller, local company and a large, national chain. If even the biggest firm can fail, as SunEdison has shown, so can the other giants out there. So if there is no guarantee that either the large or the small company will still be around in ten years, where would you rather place your bet: with the small company that takes the time to get the job done right, or with the giant that is bragging to its investors how it takes a day or less to install a system?
At the end of the day, size may matter, just not in the way you would originally think!
While difficult economic times are not far removed from our collective consciousness, Californians as a whole are feeling optimistic about how things are going in the state. Generally speaking, when economic times are good, Californians are more willing to take affirmative, collective action for the common good. In particular, at times like these we expect to see concerted action on improving the environment, whether through water conservation (a big topic these days), regulating greenhouse gas emissions, or other air quality improvement measures.
So it came as a complete shock when we learned that Barry Wallerstein, the long-standing Executive Officer of the South Coast Air Quality Management District (the AQMD) - the agency responsible for providing breathable air in the Nation’s most polluted region - was unceremoniously fired from his post. What had caused his sudden ouster? Was there some scandal at the AQMD on Mr. Wallerstein’s watch? No. Was the air quality in the LA Basin deteriorating, due to some AQMD ineptitude that was laid at Mr. Wallerstein’s feet? Nope. So what changed? What was behind Mr. Wallerstein being sacked? In a word: politics.
This is not good!
Before I go further, a bit of background. In the early nineties I was the Director of Clean Air Programs for a statewide non-profit environmental organization. In that role I was a frequent participant at AQMD workshops and Board Meetings, first in El Monte and later in Diamond Bar, trying to push the staff and the Board to do more to protect public health.
Are we headed back to this?
The early nineties was a time of recession, and its lingering effects emboldened many polluting interests to lobby heavily against the allegedly “job killing regulations” coming from the AQMD. For the relatively small cadre of environmental activists who engaged in that debate, we were generally outnumbered and always outgunned. When I or one of my colleagues would address the Board, it was not uncommon for us to be booed by industry allies in the audience. We referred to it as “getting dissed at the District.”
Barry Wallerstein was a senior staff member during my tenure, not yet the Executive Officer, and far from an environmental booster. More often than not, we were arguing against positions taken by Mr.Wallerstein. Far too often, in our view, he adopted the position advocated by industry at the expense of the environment.
This is the man that the new Board deems too enviro-friendly to continue in his post?
How did this happen?
The short answer is that a recent change in AQMD Board membership gave the Republicans on the Board a 7-6 majority. But to really understand what is going on here, you need to know who is on the Board and how they voted. Here’s the tally, along with a link to their bio page and the source of their appointment:
|Name||Vote||Source of Appointment|
|Dr. William Burke (Chair)||Retain||Speaker of the Assembly|
|Mike Antonovich||Fire||Los Angeles County Board of Supervisors|
|Ben Benoit||Fire||Cities of Riverside County|
|John Benoit||Fire||Riverside County Board of Supervisors|
|Joe Buscaino||Retain||City of Los Angeles|
|Michael Cacciotti||Retain||Cities of Los Angeles County, Eastern Region|
|Dr. Joseph Lyou||Retain||Governor|
|Larry McCallon||Fire||Cities of San Bernardino County|
|Judy Mitchell||Retain||Cities of Los Angeles County, Western Region|
|Shawn Nelson||Fire||Orange County Board of Supervisors|
|Dr. Clark Parker, Sr.||Retain||Senate Rules Committee|
|Dwight Robinson||Fire||Cities of Orange County|
|Janice Rutherford||Fire||San Bernardino County Board of Supervisors|
One thing here is unlike the others. All of the sources for pro-business votes - the cities and county representatives of Orange, Riverside and San Bernardino - voted against clean air and for the polluters. All of the sources for pro-enviroment votes, save one - i.e., the cities of LA County, the Democrat-dominated legislature and governor’s office - voted for protecting the environment. So who is the odd man out? That would be LA County Supervisor Mike Antonovich, a true dinosaur on environmental issues - who has been on the AQMD Board since my days appearing there!
How can that be? The LA County Board of Supervisors is 3-2 Democratic, and has been since 1993. So how on earth has Mr. Antonovich managed to remain as the representative of the millions of people in LA County before their most important local public health agency when he routinely votes - as he did here - against their best interests? Are the three Democrats on the Board just too lazy to take on the job themselves, happy to leave the AQMD workload to Mr. Antonovich, even if it imperils the health of their constituents?
We decided to find out, so we sent the three Democrats on the Board this email:
Dear Supervisor –
I run a small business in LA County and am also the author of a blog, Thoughts on Solar, regarding the solar industry. I am preparing a post regarding the recent firing of AQMD Executive Officer Barry Wallerstein and I would like an answer to the following question – your response to which will be included in my post:
The LA County Board of Supervisors has a Democratic majority and has had since 1993. Yet for all of that time, Supervisor Antonovich has represented the County’s millions of residents before the AQMD Board where he has been a reliable vote in favor of polluters and to the detriment of the health and well-being of your constituents – including his most recent vote to oust longstanding Executive Officer Barry Wallerstein. So why is it that Mr. Antonovich has been allowed to remain as the County’s representative to the AQMD Board?
Thank you for your consideration; I look forward to your reply.
That email was sent to the offices of Hilda Solis (First District), Mark Ridley-Thomas (Second District), and Sheila Kuehl (Third District). Only Ms. Kuehl’s office bothered to respond, and her spokeswoman’s response was terse in the extreme:
Thanks for reaching out to our office. Supervisor Antonovich is serving a fixed term and there will be a new appointment in December.
Director of Communications
Office of LA County Supervisor Sheila Kuehl
Of course, her response doesn’t address the question posed (though it is better than no response at all), but it does highlight an important fact. After a lifetime on the Board, Mr. Antonovich is finally termed out this November. Moreover, the other Republican on the Board, Don Knabe, is also termed out. Under the election rules, if a candidate gains an outright majority of the vote in the June 7th primary, they are elected. Otherwise the top two finishers face off in the November general election.
Despite their enormous power, elections for County Supervisor tend to be down-ballot snoozers with very little public scrutiny of the candidates. Once elected, as with Mr. Antonovich, they have largely remained in office for decades. Hopefully this year will be different. Given the enormous stakes for public health in the home of the Nation’s most polluted air, the outcome of the Supervisorial elections - and the subsequent appointment of the LA County representative to the AQMD board - is of the highest importance.
This is not a political blog, but this issue is just too important to everyone who lives and breathes in this Basin to ignore. We intend to return to the issue and seek to make representation on the AQMD Board an issue in the upcoming campaign. Watch this space.
UPDATE - 3/31 - The Solar Power World Webinar has come and gone, but the good news is that you can watch it anytime by going to the SPW website, register and then watch. To get started, click on the “Watch Webinar!” button. The whole event is worth a listen, but if you wish to cut to my presentation, it starts around the 25 minute mark!
Run on Sun Founder & CEO, Jim Jenal, is frequently quoted on topics related to solar power and the nature of the solar industry. Two media events this month demonstrate that continuing influence. Check these out…
Run on Sun has long had a happy relationship with the folks at industry magazine, Solar Power World, having been named to their “Top Solar Contractors” list three years running, but this upcoming webinar is a first for us. Directed toward other solar installation companies, the one-hour presentation offers the perspective from Jim and two other industry leaders on steps to take to develop a first-class operation. From the online blurb:
Technology is constantly changing; are you using the right tools to ensure your business is operating as efficiently as possible? The desire for great customer service stays the same; are your offerings and sales techniques making it easy for the customer to go solar?
Join us in a special 1-hour presentation in which several presenters explain:
- How innovative software can streamline your business
- Why PACE financing can help enable you to service more customers
- What best practices are most effective when working with clients (this is Jim’s topic!)
Readers of this blog know that Jim brings a distinct point of view to his writing, and this presentation will certainly be no exception!
SUNMetrix is a cool portal that is designed to allow homeowners to gather information about how to go solar, and check out highly rated solar companies in their area. Headed up by Simone Garneau, and winner of the SunShot Catalyst Business Innovation Contest, we are fans of the concept, and of Simone. When she contacted Jim about contributing to her upcoming blog post, he was happy to oblige.
The result is Are Solar Panels Worth It? and here’s an excerpt:
In the past decade, the expansion of the residential solar energy market has been nothing short of astonishing. Though it’s still early days, all key market metrics point to continued growth for the coming years…
For most homeowners though, the decision to go solar boils down to a single question: is it worth it?
…Homeowners, frustrated by their ever increasing utility bills, are looking for an alternative that will save them money in the long run. They are also looking for ways to help the environment by producing their own clean energy. Jim Jenal, CEO of the solar company Run on Sun in Pasadena, California knows this firsthand:“For most homeowners it starts with a desire to save money; however, even for the most cost conscious, the understanding that they are doing something good, sweetens the deal.”
With dramatic price drops in solar equipment, solar energy is more affordable than ever for homeowners considering the switch.
Of course, as we have written in the past, the answer to the question of is solar worth it, is… it depends! (Check out Laurel’s great post on Assessing My Home’s Solar Potential: Step-by-Step to see more of our thoughts on this key point.)
Simone’s post provides lots of good information, along with quotes from other industry experts - check it out by clicking here.
On January 28 the California Public Utilities Commission (CPUC) voted 3-2 to adopt new rules governing what is known as Net Energy Metering, thereby creating the framework for Net Energy Metering 2.0 (NEM 2.0). Here is our take on what the CPUC did, and didn’t do.
The first and most important thing to know is that for many people, the new rules adopted by the CPUC will not affect you at all! These new rules only directly apply to customers of the three investor owned utilities (IOUs): SCE, PG&E, and SDG&E. If your electrical service is provided by one of the municipal utilities - like PWP or LADWP - nothing that the CPUC did last month will directly affect you since the CPUC does not have jurisdiction over the munis. (That said, the munis often follow the lead of the CPUC, so it is entirely possible that they will individually adopt their own version of NEM 2.0, but that will be a discussion for another day.)
Even for solar clients in the service territory of one of the IOUs, if you have already signed a net metering agreement, you will be grandfathered in and allowed to continue to operate under the old rules for 20 years. Once the 20 years have elapsed, you will be transitioned to the net metering rules (NEM 5.0?) then in effect.
Beyond all of that, even for new solar clients in IOU territory, these new rules do not go into effect right away. Rather, the old rules will still apply until your utility reaches their 5% of customer aggregate demand cap, or July 1, 2017 - whichever comes first. In SCE territory it is an open bet as to which will occur first (see more below).
Bottom line: this is not happening right away, so you still have time to benefit from the existing rules.
Net metering is changing!
Lots of people weighed in on NEM 2.0 including all three IOUs, CALSEIA, NRDC, and various advocates for rate reform and consumer protection. While some of the proposals, and their proponents, were entirely predictable, others were not, and at least one such position was seriously disappointing.
For example, the three IOUs all advanced proposals that would have significantly reduced the value of going solar. SCE wanted to reduce the rate for energy exported from full retail to just 7¢/kWh (with a 1¢ adder if you give SCE your renewable energy credits), plus a $3/kW/month “grid access charge", and a one-time $75 interconnection charge. (SDG&E’s proposal was even worse, seeking a $9/kW/month charge!) On top of that SCE wanted to eliminate virtual net metering altogether.
At the other extreme, the “solar parties” (such as CALSEIA and The Solar Alliance) advocated for keeping net metering at full retail value. However, in a nod to changing realities, they did support paying on nonbypassable charges (more on that mouthful in a minute) but not until after 2019.
Still, there was one proposal that strikes us as entirely reasonable which CALSEIA opposed - mandatory warranty periods. Back when the California Solar Initiative was in place (i.e., when SCE was paying rebates), solar contractors were required to provide a ten-year warranty on their work in order to participate in the program. With the demise of the CSI program, technically that warranty requirement also went away. As part of the NEM 2.0 rulemaking, ratepayer advocates advanced the notion of restoring the warranty requirement - a common sense request that no one should oppose.
But the “solar parties” did oppose it, asserting that such a requirement could “discourage innovation in product offerings." Seriously? What “product” might we reasonably want to offer that having to stand behind it would be discouraging? When pressed about this position during CALSEIA’s NEM 2.0 webinar, Brad Heavner, CALSEIA’s policy director, said that the view was that the market could decide this: presumably if a company didn’t offer a warranty and that was important to the customer, they would go with a different company. This was not, however, a position that CALSEIA pushed hard to win, and in the end, they lost on this point.
In our view, opposing a mandatory warranty paints solar in a bad light. It puts the industry on the side of those who do the least reliable work, and penalizes those companies who go the extra mile to install systems that will stand the test of time. From what we have seen it is tough enough to get a company to honor its warranty commitments, let alone relying on the “invisible hand” of the market to protect consumers. CALSEIA did a lot of great work on NEM 2.0, but this position was a mistake.
The ultimate decision is a major defeat for the IOUs, and a partial victory for the solar industry. For the IOUs, they clearly overplayed their hand, advancing proposals that were so clearly anti-solar that the Commissioners couldn’t really take them seriously. According to a CALSEIA webinar, toward the end of the proceedings the IOUs suggested an energy export feed-in-tariff which, if they had proposed it at the start, might have gained traction. Something to think about as we look toward subsequent iterations on NEM rules.
The solar industry retained full retail value for energy exports, but they also saw three changes that undercut somewhat the value of that victory: nonbypassable charges (NBC) for all energy taken from the grid, one-time interconnection fees, and mandatory time-of-use (TOU) rates. Let’s look at each in turn.
As part of their rate schedules, the IOUs have certain rate components that are known as nonbypassable charges or NBCs. For example, if you were to look at SCE’s Domestic Rate schedule tariff page (check out page 3), you would see a whole host of factors that go into making up the rate that the customer ultimately pays. The decision affects three of those NBCs: the Nuclear Decommissioning Charge, the Public Purpose Programs Charge, and the Department of Water Resources Bond Charge. The sum of those three charges for an SCE residential rate payer comes to 2.224¢/kWh. (The lion’s share of which is the charge for public purpose programs, such as bill assistance to people on limited incomes.)
Under the old rules, solar customers would only pay for these charges on the net energy that they consumed in a month. So, if your consumption was 1000 kWh per month, and your solar system produced 800 kWh, you would only pay these charges on 200 kWh, about $4.45. Under the new rules, however, every kWh that you pull from the grid, whether it is ultimately netted out by energy you exported, is subject to NBCs. Sticking with the same example, of the 800 kWh that you produce, imagine that 500 kWh of that are consumed at your home and the remaining 300 kWh are exported. Meaning that you imported a total of 500 kWh from the grid. As a result, under NEM 2.0 you will pay NBC on 500 kWh — raising the charge from $4.45 to $11.12, and increase of $6.67/month on the solar customer’s bill.
The relatively small impact of the NBCs is due in part to solar industry lobbying that held the line at around 2¢/kWh versus a proposal, apparently favored by the two dissenting Commissioners, to include more charges that would have brought the total above 4¢/kWh. (Indeed, we are told that keeping the NBCs at 2¢/kWh is what caused those two Commissioners to vote against the final package.)
Frankly, we think the NBC costs are fair. The programs supported by the NBCs are a public benefit and all other customers pay for those based on every kWh they pull from the grid. Under the new rules, so will solar customers. Of course, if you are in a lease and only saving $20/month from your old bill, this is a much bigger hit. Yet another reason to avoid leasing!
Also reasonable was the imposition of one-time interconnection fees to be set based on the IOUs actual cost of handling the interconnection. The CPUC estimates that the fee will be somewhere between $75-150. (Recall that SCE advanced a $75 fee as part of its proposal, so it will be fascinating to see if they try to come back for a higher fee now!)
The biggest hit to solar mandated by the NEM 2.0 rules was the requirement that solar customers get switched over to TOU rates. (SCE is moving all customers to TOU rates eventually, but that target date is 2019.) Under TOU rates, you pay more for your energy depending upon the time of day when you use it, as opposed to being on a tiered rate schedule where you pay more when you use more during a billing cycle. For residential customers, SCE sets its peak charge time as the hours between 2 and 8 p.m., and Noon to 6 p.m. for commercial customers. This means that, for residential customers, solar exported to the grid before 2 p.m. will be valued less than energy that needs to be pulled from the grid after the sun goes down, but before 8 p.m.
It is this change to the rate structure, and to a lesser extent the imposition of the full NBCs, that makes intelligent energy storage that much more valuable. With smart storage, you won’t export energy during the day, you will store it for later use. That reduces the total amount of energy pulled from the grid (lowering the NBCs) and allows you to shift the availability of the energy to the evening so as to avoid peak TOU rates altogether. There can be no doubt that this is the future for how solar installations under NEM 2.0 (and likely beyond) will be the most cost-effective. We are optimistic that by the time NEM 2.0 goes into effect for SCE clients in our service area, we will have an intelligent storage solution to offer.
So when does all of this go into effect? As we noted above, at the very latest, the new rules go into effect on July 1, 2017. Most likely, however, they will go into effect sooner than that since the actual start date is tied to when the IOU reaches its 5% cap. In SCE territory, the following NEM report is informative:
SCE’s total customer aggregate demand, the basis for the 5% cap, is 44,807 kW. 5% of that is 2,240 MW of solar installed. As of the end of December, 2015, SCE had 1,388 MW of solar either installed or with net metering agreements in place, leaving 852 MW remaining under the cap.
The report also shows that applications for 48.1 MW of new solar were received during the month of December. If we take that number as a fair monthly average, we can expect SCE to reach its cap in 17 to 18 months. So to lock-in your system under the existing rules, you will need to have your net metering application complete and on file with SCE before then (May-June 2017). We will continue to update on the status of SCE’s progress toward its cap.
On the whole, the solar industry dodged a bullet, especially when you look at the latest battles over NEM in other states, like Nevada. This success is a tribute to the thousands of people who took the time to advocate for solar, whether they be our trade association, CALSEIA; individual solar companies, like Run on Sun; or solar customers who reached out to inform the Commission of the true value of solar. Not lost in the debate was the importance of solar as a job creation engine in California.
Moreover, the political climate in California, from the Governor on down, has been strongly supportive of solar and they deserve our thanks as well.
We would love to hear your thoughts and if you have questions that haven’t been answered here, please leave them in the comments and we will do our best to address them.