California slashes residential solar feed-in rates

[OVERKILL]

California regulators unveil new rooftop solar plan that cuts payments to homeowners

The CPUC’s scaled-back plan eliminates consumer fees. The original was abandoned after...

www.sfchronicle.com

The revised rules would:

• Remove a proposed $8 monthly fixed charge, a so-called solar tax, on new residential systems.
• Reduce utilities’ payments to homeowners for excess power they sell by as much as 75% compared to current rates. The change would not apply to residents with existing solar systems.
• Fund $900 million in new incentive payments to help purchase rooftop solar systems, with $630 million set aside for low-income households.
• Encourage the installation of solar panels plus battery storage.
• Set lower rates in an attempt to shift consumers’ use of power to the times of day that improve grid reliability.

The CPUC is required under state law to update its net metering rules, which triggered a prolonged, complex and politically thorny process.


Bernadette Del Chiaro, executive director of the California Solar & Storage Association, said the 75% reduction in credits to new solar customers means utilities will pay residents less for the power their rooftop systems provide to the grid.


The proposed rules “would really hurt,” she said. She estimated that new customers would be paid a base rate of 5 cents per kilowatt-hour for power they generate but don’t use, compared to about 30 cents now.

This is in-line with the changes we are seeing in Australia. Once solar penetration hits a certain level (and it's arguable that California has already blown-past that) its capacity value tanks. Ultimately, solar should be paid market (the value of the power at the time it is produced, dictated by the needs of the system) but $0.05/kWh is pretty close to that point, even if it is a firm mandated price.

Of course legacy NEM contract holders are not impacted by this, but it will (or should) have an impact on uptake rate going forward.

 

[wag123]

This is not the way to encourage homeowners to install solar systems.

 

[OVERKILL]

This is not the way to encourage homeowners to install solar systems.

No, but it's a way to curb the rate increases necessary to fund all this. While NEM is a heck of a lot better than FIT, it's still over-compensating for power relative to wholesale, often by a huge margin.

 

[Slow Car Sport Mode]

California is trying to be a leader. I wonder how that will work out...

 

[Pew]

So what I see happening in the near future is more resistance against adapting residential solar from the middle-middle and lower class as Cali forces everybody to move towards solar while base power generation funding gets nixed and everybody blames fossil fuel lobbying. This is going to be an interesting next couple of years for Cali energy.

 

[OVERKILL]

So what I see happening in the near future is more resistance against adapting residential solar from the middle-middle and lower class as Cali forces everybody to move towards solar while base power generation funding gets nixed and everybody blames fossil fuel lobbying. This is going to be an interesting next couple of years for Cali energy.

Yep.

From an Ontario perspective, since our solar irradiance levels are nothing like Cali's, the elimination of FIT and switch to NEM totally tanked uptake. While there is still the odd bit of capacity being added, it's so small it might as well be zero. Our retail rates are much lower than Cali's as well, so that makes it even less viable.

 

[Rand]

I'm still waiting for solar shingles and transparent solar windows.

Or maybe they could make them like current metal roofs only with solar integrated.

 

[OVERKILL]

I'm still waiting for solar shingles and transparent solar windows.

Or maybe they could make them like current metal roofs only with solar integrated.

You might be waiting a while, Tesla is shutting down Solar City operations in many markets and cancelling projects:

Tesla cancels solar projects en masse, scales back solar division

Tesla has canceled solar projects en masse across the US as the company says that it is shutting down its solar operations in some markets.

electrek.co

 

[Pew]

Yep.

From an Ontario perspective, since our solar irradiance levels are nothing like Cali's, the elimination of FIT and switch to NEM totally tanked uptake. While there is still the odd bit of capacity being added, it's so small it might as well be zero. Our retail rates are much lower than Cali's as well, so that makes it even less viable.

I noticed (maybe confirmation bias) the biggest factor of residential solar adaption was the reduction of overall energy bills and not the reduction of fossil fuels. Due to a thread in this forum earlier this year and the Texas power outage, I did not realize solar users were getting paid market rate instead of wholesale. I figured once the powers-that-be realized market rate and slow adaptation wasn't going to pay off, they were going to scale back the incentives and we would be back to square one while learning some expensive mistakes (or finding a blame.)

 

[Vercingetorix]

This will only limit the size of solar installations. Nobody will oversize their grid to sell power, they will simply size it to offset the amount they use and go no bigger. That was requirement when I installed solar in my state. I couldn’t generate excess or it would be donated at the annual true up.

 

[OVERKILL]

I noticed (maybe confirmation bias) the biggest factor of residential solar adaption was the reduction of overall energy bills and not the reduction of fossil fuels. Due to a thread in this forum earlier this year and the Texas power outage, I did not realize solar users were getting paid market rate instead of wholesale. I figured once the powers-that-be realized market rate and slow adaptation wasn't going to pay off, they were going to scale back the incentives and we would be back to square one while learning some expensive mistakes (or finding a blame.)

Yes, solar adoption/incentivization has three phases:

1. FIT - Feed-in Tariffs. This was the highest incentive and most egregious abuse of ratepayers that paid in many markets, up to $0.80/kWh for what they fed back into the grid. This had an obviously profound impact on rates as it scaled up.

2. NEM - Net Metering. This was where things went after FIT's were phased-out. You get paid retail rates for what you feed back into the grid. Still lucrative, particularly in places with high retail rates. Of course the lower the retail rates, the less of an incentive there is to invest.

3. Wholesale - Exactly how it sounds, people get paid the market value of their electricity with no form of additional compensation. This is where California is starting to land now.


On top of 2 and 3, many markets with high levels of solar penetration are also leveraging smart controls to curtail solar output when it isn't needed and may cause grid stability issues. Australia was the first place I heard about this as there was outrage from people who discovered they weren't getting paid because the utility was rejecting their output. However, this is a natural part of the process and, coupled with #3, is the best value for ratepayers when it comes to solar. It also encourages an investment in storage if you do plan on buying panels. Of course then you have to look at whether that makes any financial sense.

 

[OVERKILL]

This will only limit the size of solar installations. Nobody will oversize their grid to sell power, they will simply size it to offset the amount they use and go no bigger. That was requirement when I installed solar in my state. I couldn’t generate excess or it would be donated at the annual true up.

Yes, as long as it makes sense financially. Cali has some pretty nutty retail rates so if somebody sizes their system accordingly to avoid feed-in, they will still have a pretty significant monthly hydro bill, and that will have to be factored-in to the payback on the solar system. It also of course depends on your usage profile and the TOU rate profiles.

 

[UncleDave]

The cali contract has more strings than a box of tampax.

 

[JohnnyG]

Florida did the same thing. Florida is PRETTY sunny, but the only thing the electric companies were after with home solar, is free real estate.
Rules such as those cutting the payback result in a total failure of home solar implementation.
I'll give Elon credit for recognizing that it's going nowhere under this administration.

 

[BMWTurboDzl]

Not surprised. Adoption will continue primarily through new construction due to updates made to residential building code q couple of years ago.

 

[Shannow]

When my Mum was an early adopter, she was paid 3 times the retail rate for power off her roof...

But now that the market is swimming in the stuff in the middle of the middle of the day, there's no Earthly reason to pay even the retail rate, when the wholesale prices are zero, or negative...the generators need at that point to be exposed to the price, to encourage others to build storage to take the "free" (or even be paid to take negatively priced electricity, and store it to later.

To encourage overproduction in fixed hours leads to examples where your panels will be curtailed (switched off), to prevent instability, or the home owner is paying to produce the energy when not needed (like all othr genetrators).

If there's subsidised prices to be had to encourage behaviours, now is the time to subsidise feed in at peak times (i.e. buy your own battery, and discharge at peak - in the future, this may make economic sense as an arbitrage mechanism, even without your own panels.

I put in solar 3 years ago, was 12c feed in, 26c purchase, I made 25-40kWh per day depending on the season, and used 6, even still, no power bills...now it's 7c feed in (reflecting oversupply in solar hour), and 30c purchase (and the 30c is still short of Market wholesale costs in the peaks, without transmission and distribution).

 

[CKN]

California is trying to be a leader. I wonder how that will work out...

Yea-many under estimate the state and they still thrive. I left California ten years ago-but if I was still there I wouldn't want to pay for my nieghbors solar panels-either through subsides, or over payment for their solar powered electricity.

 

[UncleDave]

Yea-many under estimate the state and they still thrive. I left California ten years ago-but if I was still there I wouldn't want to pay for my nieghbors solar panels-either through subsides, or over payment for their solar powered electricity.

Those deals dont exist anymore in Cali and haven't for quite some time.

It's swung the other way, with the utility getting a phat discount on what I produce and marking it up handsomely to their clients. How convenient for them.

Don't want to pay some equitable amount for my energy - no problem. I wont sell it to you then.

There needs to be sensible and fair incentive to spend the money, or people simply wont.

 

[UncleDave]

When my Mum was an early adopter, she was paid 3 times the retail rate for power off her roof...

But now that the market is swimming in the stuff in the middle of the middle of the day, there's no Earthly reason to pay even the retail rate, when the wholesale prices are zero, or negative...the generators need at that point to be exposed to the price, to encourage others to build storage to take the "free" (or even be paid to take negatively priced electricity, and store it to later.

To encourage overproduction in fixed hours leads to examples where your panels will be curtailed (switched off), to prevent instability, or the home owner is paying to produce the energy when not needed (like all othr genetrators).

If there's subsidised prices to be had to encourage behaviours, now is the time to subsidise feed in at peak times (i.e. buy your own battery, and discharge at peak - in the future, this may make economic sense as an arbitrage mechanism, even without your own panels.

I put in solar 3 years ago, was 12c feed in, 26c purchase, I made 25-40kWh per day depending on the season, and used 6, even still, no power bills...now it's 7c feed in (reflecting oversupply in solar hour), and 30c purchase (and the 30c is still short of Market wholesale costs in the peaks, without transmission and distribution).

How long are your rate contracts good for Shannow? Under three years obviously, - 1?

We get 20 year deals here in Cali.

 

[JeffKeryk]

California is trying to be a leader. I wonder how that will work out...

Well, we will likely overtake Germany this year and be the 4th largest economy in the world.