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Rethinking the "Cost" of Solar

03/28/18

  10:07:00 am, by Jim Jenal - Founder & CEO   , 532 words  
Categories: All About Solar Power, Utilities, Residential Solar

Rethinking the "Cost" of Solar

We hear a lot about the “cost” of solar when utilities attempt to weaken net metering rules.  “Solar is only for the wealthy,” they say.  “Poorer ratepayers subsidize every rooftop solar installation out there."  “Why should the poorest ratepayers help pay for a more affluent person’s solar system?"  Yes, you hear these claims a lot - generally with little or no data to back it up.  But you know what?  We just got some real data about the cost of solar, and it might change this whole discussion.  Stick around…

California Independent System OperatorThe California Independent System Operator (CalISO) manages the utility grid in California.  They are a great source of information about energy usage, demand, and supply, and they also create an annual spending plan on transmission infrastructure that will be needed to keep the grid humming.  The CalISO Board just adopted their latest spending plan and that is where things get interesting!

In the CalISO press release, the Board agreed to cancel or modify 39 previously approved transmission projects, avoiding an estimated $2.6 billion in future costs!  That is some serious coin - how did this happen?   It turns out that we all did it together - here’s what the Board noted:

The changes were mainly due to changes in local area load forecasts, and strongly influenced by energy efficiency programs and increasing levels of residential, rooftop solar generation. (Emphasis added.)

Home solar rocks!

Turns out, this homeowner is saving all of us money!

This is really important.  Historically CalISO has pretty much ignored the contributions to the grid of residential solar generation since they do not have direct visibility into that production.  (That’s in contrast with utility scale PV systems whose production data is monitored by CalISO.)  What is significant is now, residential solar generation is a sufficiently significant player in the state’s energy mix, that - along with energy efficiency programs - resi solar is changing how CalISO decides to approve transmission infrastructure spending.

Put another way - resi solar just helped save the ratepayers in California some 2.6 billion dollars!

So let’s go back to that whole, “cost” of solar thing.  It seems that thanks to the investments made by hundreds of thousands of individual homeowners throughout the state, installing solar power systems funded mostly out of their own pockets, all ratepayers are getting to share in the return on that investment.  Moreover, this is not a one-time return; those systems with 20+ year life expectancies will continue to help avoid additional infrastructure costs for the next couple of decades.

Which explains why some utilities are not so thrilled by these results.  Turns out that the Investor-Owned Utilities (or IOUs, specifically SCE, PG&E, SDG&E) make their money through rates that are based on providing a guaranteed rate of return on built assets - like transmission lines.  Build fewer transmission lines (or power plants for that matter) and there is a smaller asset base from which to derive that return.  The ratepayers save money, the shareholders of the IOUs make less money.  Oops.

So… the next time someone starts squawking about how resi solar is “installed on the backs of the poor” you might point out that actually, we are saving folks a bunch of money, all the while making the world a greener place!

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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