Canada’s new Prime Minister, Justin Trudeau, ventured south of the border last week to visit the White House, marking the first official Canadian Prime Minister visit in 19 years! What are Trudeau and Obama palling around about? You guessed it… collaboration on a North American transition to renewable energy! The leaders announced a joint strategy to move coordinated climate action even beyond their respective commitments at COP21 in Paris last December.
Trudeau has been much more willing to implement climate change policies than his predecessor, Stephen Harper, who opposed cutting greenhouse gases to the point that he pulled Canada out of the Kyoto Protocol. In the joint announcement they emphasized the special relationship between the two countries and the importance of collaboration on energy development, environmental protection, as well as Arctic leadership.
In the joint press conference they remarked that Paris was a turning point in the global effort to take action on climate and anchor economic growth in a clean energy transformation. One important outcome in Paris was the launch of Mission Innovation. Mission Innovation is a global initiative including 20 countries commiting to double their governments’ clean energy research and development investments over the next five years. Indeed Obama’s 2017 budget is seeking $7.7 billion in discretionary funding to boost clean energy research. (Hopefully those R&D dreams won’t be dashed by Congress.) Last month, the U.S., Canada, and Mexico also signed a memorandum of understanding seeking to expand our countries’ cooperation to include climate change and energy collaboration activities. Building on these and other multilateral agreements, last Thursday the leaders reaffirmed their commitment to working together to:
“strengthen North American energy security, phase out fossil fuel subsidies, accelerate clean energy development to address climate change and to foster sustainable energy development and economic growth.”
Specifics regarding the clean energy highlights of the joint pledge include:
Few further details were included but the leaders’ focus on the need to accelerate clean energy innovation and a transition to renewables is a giant step in the right direction!
Check out the full press conference here:
On August 3, 2015, President Obama and the Environmental Protection Agency (EPA) announced the Clean Power Plan (CPP) – an exciting, historic and truly critical step in tackling climate change. Advocates say its policies will create jobs, make our grid more reliable, and our economies more resilient while helping protect all of us against climate change’s worst impacts. The CPP is the heart of Obama’s effort to uphold commitments agreed upon at the Paris COP21 climate conference last December.
Power plants are the largest polluters in the US. They account for one third of all greenhouse gas emissions! We wrote about the controversial carbon standards for NEW power plants put forth by the EPA in December 2014. Obama’s Clean Power Plan takes it a giant step further by forcing all EXISTING coal-fired power plants to cut carbon emissions by 32% from 2005 levels by 2030.
Despite the seemingly fair and flexible terms of the Clean Power Plan, vested interests (including coal and mining groups and a coalition of Republican states) fiercely opposed, stating the regulations are an overreach of the EPA’s power. On February 9th the U.S. Supreme Court voted 5-4 to stay implementation of the CPP until the litigation challenging the Clean Power Plan is addressed. Justice Scalia’s passing doesn’t change anything since a 4-4 vote also stays the implementation until the Federal District Appeals Court makes a decision likely in late 2016.
Experts are confident that the CPP’s contents are on solid legal ground and courts will ultimately uphold it. However, a final decision is unlikely before June 2017 or even into 2018 (depending on when the Supreme Court makes their final ruling after going through the DC Court). These delays only make global progress more and more difficult as all eyes are on the US to set an example by honoring our Paris climate commitments.
While 27 states filed the petition to delay the CPP implementation, eighteen state governors - both Democratic and Republican - have announced an accord to move forward on clean energy solutions regardless. The governors declared that “we recognize that now is the time to embrace a bold vision of the nation’s energy future,” and that their states “are once again prepared to lead.”
“As the world gets hotter and closer to irreversible climate change, these justices appear tone-deaf as they fiddle with procedural niceties. This arbitrary roadblock does incalculable damage and undermines America’s climate leadership. But make no mistake, this won’t stop California continuing to do its part under the Clean Power Plan.” – California Gov. Jerry Brown
Its leaders like these governors, and many large private businesses who have come out in favor of upholding the Clean Power plan, who seem to understand the gravity of climate change and the many benefits that moving to a clean energy future brings. We hope the alliance of leaders in politics and the private sector continues to grow and soon will outnumber those that back the interests of dirty energy!
Here at Run on Sun we are big fans of Electric Vehicles (EVs) - we started writing about them years ago as a natural marriage, if you will, with solar power. We have long had a page on our website devoted to the synergy between solar and EVs, and we drive a Volt as our main company car.
But one thing we hear from skeptics is that EVs will never replace gasoline cars - they are too expensive or they are too limited in range (that latter point being why we drive a Volt and not a Leaf). But an interesting analysis from Bloomberg Business suggests that this will change, and far faster than most might think! Check out their very thought provoking video (h/t climatecrocks.com):
Quite the range of opinions on EV penetration - from 1% of new car sales in 2040 (according to Exxon) to 50% in this video. Frankly we are betting with Bloomberg. People who drive EVs have no desire to revert to an internal combustion engine. When you combine that EV with solar power to charge it, you are really getting to a game changer.
So what if, as the video suggests, instead of having to regulate away fossil fuels, we just stopped buying them? That future can’t get here fast enough!
As solar installers here is sunny SoCal (it is 84° headed to a high of 88° as I write this in mid-February), we have the sense that there is a great deal of competition in the Run on Sun service area for solar clients. Well the freshly minted Solar Census 2015 now provides the hard numbers to back up that contention - more than 10% of the entire national solar workforce is located here in the Los Angeles Metro area!
More fun facts follow…
According to the folks at The Solar Foundation, as of 2015 there were 208,859 solar jobs nationwide, including 119,000 installation jobs - 57% of the total. But here’s the shocker, 21,263 of those nearly 209,000 workers are right here in LA! No wonder you can’t sneeze without bumping into someone in the biz!
To help put that in perspective, LA’s municipal utility - LADWP, the largest muni in the country - only employs 8,600 people. And while everybody has heard the names of the biggest solar companies out there, more than half of all the solar installation companies actually have 10 or fewer employees. So if you are looking to Go Solar with a local company, the solar industry has you covered.
More broadly, that national total exceeds the number of direct jobs in both the nuclear and coal industries. (In the electric energy sector, only natural gas has more direct jobs than does solar.) And those jobs are growing by leaps and bounds - with growth in solar jobs expected to increase by nearly 15%! (No wonder the federal solar tax credit was extended - that’s a lot of jobs at stake.)
Overall, there are 9,900 solar companies in the US that have installed solar on over 5 million homes. Nationwide, the cost of energy from those home solar systems is just 10.5¢/kWh (comparable to what we see) which compares quite favorably with utility prices that start around 15¢ and go as high as 40¢!
We are proud to be a part of this growing movement - give us a call and let’s see if we can’t help you join the ranks of your five million solar neighbors!
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.
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