The newest try by the California Public Utilities Fee – CPUC, the US state’s regulator – to reform internet metering guidelines, appears to once more be solely motivated by the will to kill off rooftop PV, as vitality economist Ahmad Faruqui reported within the newest challenge of pv journal.
On Dec. 13, 2021, CPUC issued a proposed determination (PD) on reforming the NEM 2.0 net-metering laws instituted in 2016, by introducing NEM 3.0. The proposed determination – for consideration by the 5 commissioners on the regulator – got here in for extreme criticism from celebrities and public figures, together with former governor Arnold Schwarzenegger and actor Ed Norton. Professor Severin Borenstein, on the College of California’s Power Institute, has additionally thought-about the deserves of the proposed laws.
Three unfavorable options stood out: a discriminatory grid-access cost of $8 per kilowatt per thirty days, an unprecedented retroactive software of the proposed new guidelines to NEM 1.0 and NEM 2.0 clients, and a big drop within the electrical energy export compensation price.
These options would have crippled the economics of rooftop photo voltaic. The payback interval for photo voltaic panel techniques would have doubled or tripled. Photo voltaic adoption charges would have plummeted.
The proposed determination was completely at odds with the state’s net-zero objectives, which embrace a mandate that each one new properties shall have photo voltaic panels on their roofs. The premise for instituting such drastic measures was CPUC’s need to remove a price shift that supposedly penalized the poor and benefited the wealthy.
The proposal, nonetheless, ignored all different price shifts that come up within the design of electrical energy charges. It ignored subsidies offered by the state to low-income clients. It ignored the $1.5 billion that the state spends yearly on vitality effectivity applications which trigger utilization to go down, creating one other useful price shift.
Revisions made
Underneath stress from the general public, a second proposed determination, launched on Nov. 10, suggests eradicating the grid-access cost and the retroactive provision. Eradicating these two components, nonetheless, doesn’t make the second draft worthy of admiration.
The “poor-to-rich” cost-shift narrative nonetheless permeates the whole doc. The only goal of the newest proposed alternative for NEM 2.0 is to cut back the expansion in set up of rooftop photo voltaic panels. That was additionally the motivation behind the primary PD.
The export compensation price, paid to photo voltaic system house owners for electrical energy they inject into the grid, drops dramatically inside just a few years beneath the newest proposed revision. Calling the discount a “glide path” is a misnomer. Basically, export compensation is being pushed off a cliff.
The newest proposed determination states that its provisions will guarantee a nine-year payback interval for photo voltaic techniques. That’s uncertain since that’s the present estimate, beneath NEM 2.0. The payback interval shall be even shorter for photo voltaic techniques which can be paired with vitality storage, in keeping with the newest suggestion drafted by CPUC. Reaping the advantages of such an affiliation is much more uncertain, since storage remains to be fairly costly.
The newest PD says that each one new photo voltaic clients shall be positioned on a brand new time-of-use (TOU) “electrification” price. In comparison with different TOU charges, this can function barely decrease vitality expenses however may have a hard and fast cost of $15 per thirty days. The non-bypassable expenses will stay in impact. Thus, the standard photo voltaic buyer shall be paying a hard and fast cost of round $25 per thirty days.
The proposed determination is difficult to comply with, even for educated economists, and the mathematics it comprises is even more durable to decipher. As an alternative of single-mindedly specializing in decreasing the price shift, CPUC ought to state what the affect on carbon emissions could be in three eventualities: the established order beneath NEM 2.0, the primary proposed determination for NEM 3.0, and the brand new one.
CPUC must also clarify why the societal price check – which components in extra prices and advantages for society at massive that don’t instantly have an effect on the price of vitality provide – was not used. It must also clarify why resilience advantages, particularly for these with storage, weren’t thought-about, though they have been introduced up by a number of events through the decision-making course of.
The import price has an odd, unexplained spike between 9 a.m. and midday. Export compensation will get a drastic haircut. It’s uncertain that clients would perceive the proposed guidelines. For instance, varied events have reported the typical export price is $0.08/kWh when the photo voltaic output weighted common price is nearer to $0.06/kWh.
The brand new proposed draft says the intent is to incentivize the set up of storage with photo voltaic. In that case, the best path could be to double the state’s self-generation incentive for batteries. To make these investments much more engaging, a vital peak interval pricing overlay ought to be added to the electrification price. If clients comply with that, they’re contributing to the state’s load flexibility objectives and ought to be provided a rebate primarily based on the scale of their system. To handle the truthful entry challenge, the rebate may very well be doubled for low-income clients.
In regards to the creator: Ahmad Faruqui is an vitality economist who has labored on price design points for greater than 4 a long time, on six continents. He has additionally testified virtually 70 occasions earlier than regulatory our bodies within the US and Canada and appeared internationally earlier than governments, legislators, and regulators. He holds a doctorate from the College of California, Davis.
