When Governor Brown signed AB327 last October, one thing was clear: net metering as we presently know it was going to go away, we just didn’t know how soon. Now, thanks to a ruling yesterday by the California Public Utilities Commission (CPUC), we know: 20 years. Here’s the scoop.
Around the country, utilities have been pushing hard against net metering—the tariff under which solar customers receive credit for surplus energy production (say during the day when no one is home or on a weekend when a commercial facility is dormant) that offsets energy consumed from the grid (for example, at night). The solar customer’s bill reflects the “netting out” of those two quantities (total energy exported versus total energy imported from the grid) and the customer only pays for the difference. If the solar customer is a net energy producer (quite rare), the utility has to cut the customer a check for the surplus. (Unless you are an LADWP customer, sorry.) Last year’s bill sought to end the squabbling and provide certainty to solar customers.
Under the law, the CPUC is required to devise a replacement for the current net metering arrangement, but yesterday’s ruling does not disclose what that will be. Instead, the ruling establishes a sundown provision for customers who are either currently, or will become net metering customers under the current rules before July 1, 2017 (at which time the present net metering rules will be closed to new participants).
Solar system owners will be entitled to operate their systems under the net metering rules for a full 20 years from the year in which they interconnect their system. That, decided the CPUC, will provide sufficient time for solar customers to recoup their investment. However, solar customers can transition to the new rules, whatever those may turn out to be, sooner at the customer’s election. The year of interconnection is determined by the date on the Permission to Operate letter received from the utility, and the twenty-year term ends on the last day of the twentieth year.
What happens to systems that are modified after July 1, 2017? Does the new portion of the system get its own 20-year net metering extension or is it simply subsumed into the term for the original system? The CPUC split this into two possible scenarios: repairs or modifications that did not increase system capacity by more than 10% of the original design will operate under the original 20-year term, neither resetting or ending it. But system changes beyond the 10% limit will either have to be metered separately, or the entire system will have to be transitioned to the new tariff structure.
The next question to be resolved was what happens if the system is sold or relocated? After all, many solar customers purchase systems expecting it to increase the value of their home—but if the sale eliminates the net metering agreement, that added value could be lost. The utilities, of course, disdained any such concerns, arguing that the net metering term should be tied to the original owner only.
Fortunately, the CPUC sided again with solar system owners. Thus, systems will remain under net metering for the full twenty-year term, regardless of changes in ownership, as long as the system remains at the original location. However, if the system is physically moved to a new location, the CPUC deems that to be a new interconnection and the old net metering agreement would no longer apply.
The decision yesterday also took an important step in addressing the impact of adding energy storage systems to an existing solar system operating under the twenty-year net metering rule. The CPUC ruled that “to the extent that energy storage systems are considered an addition or enhancement to a renewable electrical generation facility utilizing a NEM tariff, we find that they should be treated in the same way, and subject to the same transition period, as the underlying renewable generation system to which they are connected.”
The July 1, 2017 deadline is an absolute cutoff, but the actual end of new net metering agreements can actually be reached sooner if the utility in question has reached its “net metering cap.” The CPUC previously set the cap at 5% of the utility’s “non-coincident aggregate peak load.” To allow perspective solar customers to know if their utility is going to hit that peak before the July 1, 2017 deadline, the CPUC ordered the three IOUs to report to the Commission (and on the utility’s website), on a monthly basis, their progress toward that cap.
Finally, the ruling addressed whether solar installers should be required to provide prospective clients with disclosures about the ruling, specifically as to the duration and limitations on existing net metering agreements. According to the decision, IREC and SEIA opposed such a requirement on the grounds that it exceeds the authority of the CPUC. As a legal matter, that may well be true, but SEIA’s position strikes a sour note. Frankly, the solar industry is in serious need of mandated, standardized disclosures on everything from system components, warranties, energy yield, true costs, etc., to say nothing of issues surrounding the changes to net metering. SEIA should be producing model documents for its member installer companies to use and drafting model legislation to mandate their use.
In any event, the CPUC punted the requirement issue for installers, saying:
Solar installers have a legal [citing Business & Professions Code § 17500] and ethical responsibility to disclose to their customers the terms that will apply to renewable distributed generation systems for the foreseeable future, including the applicable tariffs as well as the timing and terms for transition to a successor tariff. Such disclosures provide customers with the information that they need to make educated decisions about their future electric service. Because of this, we expect solar installers to provide honest and complete disclosures on the NEM transition, and we encourage customers to report to the appropriate authorities any misleading or fraudulent information that may be provided to them. At the same time, we require the large IOUs to post information on the NEM transition clearly on their Web sites along with other information about NEM terms, eligibility, and progress towards the statutorily mandated transition trigger level.
Of course B&P section 17500 is entirely generic and provides no guidance as to what disclosures solar companies should provide to their potential clients. Clearly this is an area that requires legislation and California, as the most mature solar market in the country, should be leading the way here.
As for Run on Sun, we will revise our Return on Investment materials to reflect a 20-year window instead of the 25-year model we have used previously. Hopefully that will provide clients with a more accurate estimate of their true ROI.
Run on Sun Founder and CEO, Jim Jenal was a recent guest on the Energy Show, hosted by Barry Cinnamon and available over at Renewable Energy World. Barry is the former head of Westinghouse Solar and now runs Cinnamon Solar up in Silicon Valley. His Energy Show airs on both radio station KLIV and as part of Barry’s regular column, Listen Up, over at REWorld.
In the interview (listen to it here), Jim talks about a variety of subjects of concern to the solar industry—here’s how Barry described it:
The solar industry is growing fast, just like many other cost effective, transformational industries. And like many other industries, we have our share of great players, as well as some not-so-great. Jim isn’t afraid to “out” some of the entities that, for lack of a better term, aren’t doing the solar industry any good. That’s why his blog is such a great read.
We talked about some of these challenges, the bad as well as the good. Like LADWPs incompetence in delaying customer interconnections for months on end (compare that to PG&E’s recent eight day turnaround, including snail mail, on customer interconnections). Or the way some companies sell solar to customers (often retired) at two or three times the market rate (would you buy a rooftop system for $10+/Watt?).
There are lots of good stories, too — like the improved reliability of rooftop systems, hiring patterns of veterans in the solar industry, and new hardware that is both less expensive and safer. So please tune into this week’s Energy Show on Renewable Energy World for some candid anecdotes about the solar industry, courtesy of Jim Jenal.
So head on over to Barry’s post and give a listen to his cool interview with our boss, Jim Jenal.
Unemployment is a continuing problem in California but for one group of our neighbors it is stubbornly higher still. That group is our recent veterans—folks who volunteered to fight in our wars but when they muster out are finding anything but a grateful and welcoming work environment. Now the folks at The Solar Foundation and Operation Free are trying to highlight a potential bright spot for veteran employment: the solar industry.
First some background. According to a Washington Post article, as of last October the unemployment rate for post 9/11 vets stood at 10 percent whereas the overall U.S. unemployment rate was 7.2%. The Post story cites numerous factors driving those numbers, including the depressingly high number of disabled vets, but one reason that could be addressed by nothing more than concerted action is this: lack of civilian work experience. Think of it, many young vets went directly from school to service with no stops in the civilian work world. They may be long on life experiences, but still very short on job experience.
According to the joint report issued by The Solar Foundation and Operation Free titled, Veterans in Solar, those numbers are even more stark when you focus on vets under the age of 24. For that group, as of last December, a whopping 16% were unemployed. Not much of a “thank you” for your service.
The solar industry, by comparison, has been a source of hope. Out of an estimated workforce of roughly 143,000 people, the solar industry employs 13,192 veterans or 9.2% (this contrasts with vets making up just 7.6% of U.S. workers overall). These jobs are distributed throughout the industry as illustrated by this chart:
Clearly, while veterans are able to work in a wide variety of positions throughout the entire solar industry, installation provides the easiest entre to the field.
The folks at The Solar Foundation and Operation Free are committed to not only documenting the role of veterans in the solar industry, but in facilitating their involvement in ever growing numbers. One such example of their plans to aid veterans is the “creation of a skills transfer tool designed to help employers easily match skills obtained by veterans with those that are sought by leading solar companies.”
Here at Run on Sun, we like to think of ourselves as a “leading solar company,” and we would like to take part in this worthwhile effort. So here is our commitment: On every commercial project that we install going forward, we will hire one or more veterans to work side-by-side with our NABCEP certified team, thereby giving those veterans the opportunity to learn the skills needed to participate in this industry from some of solar’s best.
The U.S. Department of Energy has announced the list of 20 teams that will compete at the 2015 Solar Decathlon to be held at the Orange County Great Park in Irvine. The 20 student teams selected include eight returning teams and 12 new teams (teams in last year’s competition are highlighted):
Of all the teams on that list, it is most gratifying to see West Virginia University included as they were forced out of the competition last year at the very last minute due to financial constraints. It is good to know that their hard work will finally get its moment in the sun.
Interestingly, neither Caltech nor Team USC is on the list. We understand that USC decided to pass on the 2015 competition to plan for the 2017 event. Given the enormous amount of work that it takes to field a successful entry, that approach makes a great deal of sense. Also missing from the event are any of the top three finishing teams: Team Austria, UNLV and the Czech Republic. Hopefully we will see their energy and innovation in a future contest.
Last year was the first year the competition was held outside of Washington, D.C. and, not coincidentally we suspect, it was the first year that every team’s house produced more energy than it consumed. We are eager to see what new records these teams will be able to set next year. Best of luck to all.
UPDATE - The podcast is now online so should you care to listen to Steven Bushong’s interview with me, you will find it here.
The folks at Solar Power World have a regular feature called “Contractors Corner” where they profile a solar power company and this month they chose Run on Sun!
We have been on a bit of a roll with Solar Power World of late. We were honored to have our small but mighty band featured as one of their top 250 solar companies around the country, and we were quoted at length in their piece on “How to Make Sure Your Business Survives the Solar Frontier."
Today’s honor takes things to a whole new level. The piece started with a phone interview (which will be turned into a podcast at some point) and from that, editor Steven Bushong created the article that is featured on both the Solar Power World website as well as their print magazine.
A point we particularly like is that they picked up on the importance of social media. Here’s the quote:
To stay current on the solar industry and help with marketing efforts, Run on Sun is plugged into social media much more than most other contractors.
“People who aren’t initiated often think it’s little more than photos of cats and dinners, but we have a well-developed Twitter and LinkedIn presence,” Jenal says. “The NABCEP LinkedIn group has some really smart people who are good at raising issues and answering questions.”
As an outbound marketing source, Run on Sun has amassed more than 20,000 followers on Twitter (@RunOnSun). Jenal says when the company releases blog posts or announcements on social media, the impact is immediate on the company website or blog.
“It’s a way to get our information out there so people can see it,” he says. “That indirectly contributes to leads coming through the door or website.”
Indeed it does - and it contributes to becoming more broadly known in the industry, as Solar Power World has demonstrated. We greatly appreciate the honor.
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