Last year the legislature passed a major piece of legislation, AB 327, that deals with the future of net metering. While that was a short-term victory for solar advocates, it put the long-term future of net metering in the hands of the California Public Utilities Commission (CPUC).
Alas, that result was a decidedly mixed blessing, as departing Commissioner Ferron recently noted:
But recognize that this is a poisoned chalice: the Commission will come under intense pressure to use this authority to protect the interests of the utilities over those of consumers and potential self-generators, all in the name of addressing exaggerated concerns about grid stability, cost and fairness. You – my fellow Commissioners — all must be bold and forthright in defending and strengthening our state’s commitment to clean and distributed energy generation
Which brings us back to the petition campaign over at Vote Solar.
Here’s the petition text in full:
Dear California Public Utilities Commissioners,
I am signing this petition because I believe in protecting Californians’ right to go solar and receive full credit for the clean energy they deliver to the grid.
California has more than 200,000 solar roofs, and we expect to boost that number to half a million by the end of 2017. The policy of net metering has been crucial to recent growth and the creation of local jobs around the state. Rooftop solar systems reliably produce electricity for 30 years or more, and Californians invest in rooftop solar because they expect long-term bill savings over the life of the system.
Under Assembly Bill 327, the Commission must decide how long solar customers may continue under current net metering rules. Changing the rules unexpectedly for customers who have already made solar investments and signed contracts would be unfair and would drastically slow our state’s solar momentum.
I urge you to stay the course and allow customers who install solar under the current program to continue under current net metering rules for at least 30 years.
We believe that the CPUC needs to hear from as many Californians in support of solar as possible. Trust me, they are already hearing plenty from the lobbyists for SCE, PG&E and SDG&E.
Please take a moment to add your name in support of rooftop solar by signing Vote Solar’s petition.
A key to the growth of solar, particularly commercial solar, is the availability of affordable storage solutions. Two recent developments suggest that we are about to see dramatic growth in this vital market sector.
One week ago the California Public Utilities Commission (CPUC) voted five to nothing approving a plan to require the three investor-owned utilities (SCE, PG&E, and SDG&E) to procure 1,325 MW of energy storage by 2020, with installation completed by no later than the end of 2024. Both SCE and PG&E are required to procure 580 MW each, with the remaining 165 MW allocated to SDG&E. 200 MW of that 1,325 MW total is to be interconnected at the customer’s site. In addition, the decision provides a timeline for this to happen with the first 200 MW to be procured by the end of next year.
Other electric service providers, like the munis, will have to procure energy storage equal to 1 percent of their annual peak load by 2020. Those storage systems can also include customer sited and/or customer-owned storage devices as long as they were installed after January 1, 2010.
Large scale pumped hydro storage (greater than 50 MW) is excluded from the program, but storage obtained from plug-in electric vehicles can be counted.
This is a tremendously significant decision as the mandate will surely drive R&D as well as deployment investment and help provide a ready market for these emerging technologies.
An announcement this week during Solar Power International shows how that investment is already starting to happen.
Stem - the company with the clever technology for using storage to “smooth out” the demand peaks that drive commercial energy costs - just announced a $5 million project finance fund with Clean Feet Investors (CFI). From the parties’ press release:
The new financing model, which Stem developed in collaboration with CFI, is designed to open access to a wider pool of customers by removing barriers to adoption, enabling up to 15 MW of energy storage to be deployed. With this financing capability, Stem hopes to follow the dramatic growth trajectory pioneered by the third party ownership model in the solar industry. Stem and CFI plan other innovative financing offers for customers including performance-based and shared savings financing solutions with the capital from this financing.
“In addition to breakthroughs in technology, Stem is focused on driving business model innovation,” said Prakesh Patel, Stem’s vice president of capital markets and strategy. “By working closely with CFI, I believe we have created a unique offering to help accelerate customer adoption of Stem systems. This transaction paves the way for Stem to become one of the first efficiency technologies to achieve bankability.”
“Deployment capital is essential for Stem to get their technology in the hands of their customers – many of whom prefer a “pay as you save” offering,” added Jigar Shah, a principal at Clean Feet, and founder of the largest solar services company, SunEdison.
Allowing companies to install Stem’s technology with little or nothing down will help those companies save money at the same time it allows Stem to ramp up. This is great news for the solar industry since it is posed to provide the energy that Stem’s system later distributes as needed to offset those costly demand peaks.
Of course, this isn’t exactly great news for the utilities who, if this technology were widely adopted, would see a huge revenue hit as more and more commercial customers were able to lop-off the most expensive energy they now have to procure. Whether it is the continuation of net-metering on the residential side or the ability to eliminate the worst of demand charges on the commercial side, the pressure on the utilities will only continue to grow. But for their customers, things have never looked brighter.
In a curious bit of timing, two reports of great significance are being released today. The one that will get all of the headlines is the latest assessment on climate change coming from the UN’s Intergovernmental Panel on Climate Change. The second report will see far less attention, but is inevitably linked - the report for the California Public Utilities Commission on the costs and benefits of Net Metering. We will have more to say about both in the coming days, but here is our first take.
Since 1947, the Bulletin of the Atomic Scientists has kept a “Doomsday Clock” showing how close to midnight - and thus, human-induced annihilation - the world was. At the depths of the Cold War the clock was as close as 2 minutes away, but by 2007 the clock was wound back to twelve minutes to midnight - the “safest” the world had been since the dawn of the Atomic Age.
But for Rajendra Pachauri, the lead scientist on the IPCC report, climate change has replaced nuclear destruction as mankind’s greatest threat. According to him, “we have five minutes before midnight." The report’s Summary for Policymakers, which can be downloaded now from the IPCC website, includes numerous graphs and illustrations to buttress Pachauri’s conclusion, here are two:
That map makes it pretty clear that the globe is heating up and in some parts of the world, heating very significantly.
But what about the “Global Temperature Standstill” that deniers like to tout? Isn’t it true that for the past decade, surface temperature rise has leveled off and thus, Climate Change is nothing to worry about?
The short answer to that is, not so much - take a look:
That last bar is for the past decade and it clearly shows yet another decadal increase - and that is based on observed temperatures, not computer models. And keep in mind that these are surface measurements - yet many climate scientists believe that the majority of the warming effects are occurring in the deep ocean.
So no, warming hasn’t halted, and we need to do all that we can to reduce emissions of Greenhouse Gases if we are to avoid making the clock strike twelve.
Which brings us, sadly, to the other report just released on the Costs and Benefits of Net Metering in California. Currently, the overwhelming number of residential and commercial solar installations in the state benefit from Net Metering which provides a one-for-one credit for energy produced and exported to the grid against energy consumed at a later time. In a sense, the grid acts as a storage device for solar clients, allowing them to bank credits during the day and then drawing on those credits in the evening, at night, or on cloudy days when the solar system cannot meet current needs.
The take-away from the 319-page draft report is summarized in this chart:
According to this analysis, the net cost of Net Metering by 2020 when the caps on how many net metering customers the IOUs must allow is reached, will be over $1.1 billion, or slightly more than 3% of the “revenue requirement” of the three utilities studied.
That sounds like a significant imbalance—until your realize that the report contains this incredibly important caveat which renders the entire analysis suspect:
Lastly, it is important to note that the attached NEM [i.e., Net Metering] Cost-Effectiveness Evaluation is focused exclusively on the utility ratepayer impacts of NEM, and does not include the overall societal benefits from the deployment of clean energy resources, although significant environmental, public health and other non-energy benefits occur.
We are supposed to suspend consideration of environmental, public health and other non-energy benefits, even though we know that they are significant? How can that make any sense? Worse still, we are supposed to suspend those very considerations at the same time that we are being told that it is “five minutes to midnight” for the world if we do not reduce our GHG emissions. Talk about a disconnect.
It is patently absurd to ignore the societal benefits provided by solar installations, particularly in light of the existential threat posed by climate change brought about by burning fossil fuels. The entire analysis views the world from the perspective of the status quo in which fossil-fueled utilities have a “revenue requirement” that the rest of us are expected to provide. Such a world view - and such a business model - leads to skewed results like these and if followed, would push us all closer to Midnight.
A fascinating piece over at Bloomberg Businessweek Technology turns our question into a declaration: Why the U.S. Power Grid’s Days are Numbered in a piece by three authors, Chris Martin, Mark Chediak and Ken Wells. But it isn’t the grid so much as the 3,200 utilities scattered across the landscape that are headed for extinction. (H/t SolarWakeup.com)
The article traces the story, familiar to readers of this blog, about the downward spiral facing utilities - as their prices rise, more customers get to the point where solar makes economic sense. But that switch further erodes the revenue base for the utilities so they must raise their rates yet again, driving away yet more customers and on it goes. Clearly not a sustainable future - for the monopolistic utilities. (Perhaps that is why some - and here we mean you, SCE - have so little sense of humor these days?)
Here is one of the many insightful quotes compiled by the authors:
“The technology and energy sectors will no longer simply be one another’s suppliers and customers,” the report says. “They will be competing directly. For the technology sector, the first rule is: Costs always go down. For the energy sector and for all extractive industries, costs almost always go up. Given those trajectories, counterintuitively, the coming tussle between solar and conventional energy is not going to be a fair fight.”
(Quoting from the Bernstein energy industry black book.)
Hmmm… solar beating up on the utilities so badly that it isn’t a “fair fight” is a future that many of us would pay to see.
While that future might seem inevitable to reporters viewing this from a distance, those of us in the solar industry know that we have a major fight on our hands. Today we have a sympathetic legislature in Sacramento, but that could change and our allies replaced by adversaries almost overnight. Surely the utility industry has the bucks to lobby legislators in ways that the solar industry will never be able to match.
As I said, the article makes for great Friday reading and I commend it to you.
If the California Public Utilities Commission (CPUC) has its way, investor-owned utilities (IOUs) around the state will have a mandate to acquire 1,325 MW of storage capacity by 2020 as part of the plan to have one-third of all electricity come from renewable sources, according to a report from Bloomberg.
The CPUC’s proposed ruling would allow IOUs to acquire energy storage as part of the “general rate case” process by which utilities build infrastructure and pass the cost on to their rate payers.
Energy storage is widely viewed as a critical piece of adding more renewable sources to the grid, given its ability to smooth out the peaks and valleys that come with renewable sources like solar PV and wind. Possible storage technologies include lithium-ion batteries and even molten salt to store heat to later run a turbine to produce electricity. Cost of this exercise? As much as $3 billion, or $2.26/Watt.
The proposed rule making is the result of legislation, AB 2514, by our old friend Nancy Skinner, and it is evident that the CPUC “gets it":
Energy storage has the potential to transform how the California electric system is conceived, designed, and operated. In so doing, energy storage has the potential to offer services needed as California seeks to maximize the value of its generation and transmission investments: optimizing the grid to avoid or defer investments in new fossil fuel-powered plants, integrating renewable power, and minimizing greenhouse gas emissions.
The proposal allocates portions of the 1,325 total to each IOU with SCE targeted to procure 580 MW of storage, of which 80 MW should be customer side, as opposed to transmission or distribution connected.
A final adoption of storage targets is due in October.
Meanwhile, in a separate but related announcement, SolarCity made some news when it disclosed that it intends to incorporate a storage offering by 2015 that would serve customers without net metering. In other words, the storage system would be capable of storing any excess energy created by the solar power system and then feeding it back to local loads without ever sending any energy back onto the grid. If such a system could be deployed in a cost-effective manner, it would eviscerate the utility’s “fairness” argument in opposing the additional penetration of solar.
But can it be cost-effective? SolarCity is hoping that its partnership with Tesla Motors will enable it to procure battery packs at a low enough cost to succeed in this new arena.
Of course, a successful energy storage system is more than just batteries, and as we head to Intersolar in a little over a week, a great deal of attention there will be devoted to the energy storage realm. We will be there and will report back after the show.
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