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2022 Solar and Storage Predictions

image credit: Cinnamon Energy Systems

Barry Cinnamon 2,717

CEO Cinnamon Energy Systems

Barry Cinnamon heads up Cinnamon Energy Systesms (a San Jose CA residential and commercial solar and energy storage contractor) and Spice Solar (suppliers of built-in solar racking technology)....

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Feb 26, 2022Feb 26, 2022 6:46 am GMT
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My 2022 solar and storage predictions came into clearer focus — although I didn’t like the picture — after the California Public Utilities Commission (CPUC) dropped a bomb on California’s solar and battery storage industry. Basically, the CPUC sided with PG&E and other utilities in California to eliminate Net Metering.

The proposed terms for Net Metering 3 (NEM 3) cannot be considered net metering since new solar customers will actually be penalized for connecting to the grid under this rate. The utilities’ NEM 3 proposal includes high monthly fixed costs, wholesale daytime reimbursement rates, and a change in grandfathering for existing NEM customers. Under this planned NEM 3 regime, solar customers will be better off economically with a battery and never send excess power to the grid.

The California solar and storage industry mobilized to modify this poorly-reasoned CPUC decision. The NEM 3 decision is now delayed for another few months, most likely being finalized sometime during Summer 2022. There is no doubt in my mind that NEM 3 rates for solar and battery customers will be significantly worse than the current NEM 2. And what happens in California tends to spread; Florida is likely to experience similar net metering battles as their utilities gear up to fight rooftop solar and storage.

With this background about NEM in mind, here are my 2022 Solar and Storage Predictions:

Please listen to this week’s Energy Show as I walk through the details behind my 2022 Solar and Storage Predictions.

1. California’s investor-owned utilities will have their best year ever in 2022
2. The NEM 3 transition will drive record solar installations in Q1 and Q2
3. Suppliers will not have inventory to meet the Q1 and Q2 rush in California
4. New battery system suppliers will focus more on technology than actual customer needs
5. Branded U.S. solar manufacturing will increase
6. Poor data communications technology will be problematic for battery systems
7. Shortages of battery installers and technicians will slow down deployments of storage systems
8. Only battery system manufacturers with a well-known brand and deep pockets will gain market traction
9. Smart load control systems will become standard equipment for backup power systems
10. PV module power capacities will increase until modules get too big to carry up a ladder

Please listen to this week’s Energy Show Podcast as I walk through the details behind my 2022 Solar and Storage Predictions.

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Bob Meinetz on Feb 27, 2022

"My 2022 solar and storage predictions came into clearer focus — although I didn’t like the picture — after the California Public Utilities Commission (CPUC) dropped a bomb on California’s solar and battery storage industry."

Barry, I'm sorry you didn't like the picture CPUC painted. I thought it was a masterpiece - or least, a remarkably competent hack by a commission staffed by amateurs, only one of which has a degree related to energy.

"Basically, the CPUC sided with PG&E and other utilities in California to eliminate Net Metering."

I would offer a different assessment, something like this: "basically, CPUC found electricity customers had had enough of solar installers and their wealthy customers forcing others to pay retail rates for wholesale electricity, i.e., to cover the costs of grid maintenance and line losses."*

*Have utilities ever been permitted to charge customers as metered at the plant? Of course not - you pay for electricity as metered at your home, the energy you actually use. Home solar producers, however, are being paid for electricity as metered at their home, not yours - before 9% of it is lost in transmission. They should be glad CPUC didn't go back and charge solar producers retroactively for those losses - whether they like the picture, or not.

Matt Chester on Feb 28, 2022

The NEM 3 transition will drive record solar installations in Q1 and Q2

So you're not worried about the economic downturn or potential supply interruptions bringing the solar industry to a more dampened place?

Jim Stack on Feb 28, 2022

Barry, Battery storage has been the holy grail of power in the GRID for 100 years. It is being added to both the GRID and individual homes and business each day. I feel, a lot of people like me will go Off GRID even in the city. If the power companies don't wake up and work with customers they will start to lose thousands of customer. Micro GRID are already starting to grow and they may also disconnect from the GRID. They better wake up soon.

Bob Meinetz on Mar 2, 2022

Jim, I've been anxiously awaiting the mythical exodus of millions of customers from utilities since the 1970s, when the Church of Renewables faithful first starting making the threat. More recently the website "Utility Dive", in 2012, predicted the approaching end of utilities with its name - now, stuck with the name, it serves as a nagging reminder of the futility of their simpleminded dreams.

They're still whining about it, while doing nothing. I fervently wish they would disconnect from the grid, and make good on their threats, though. They'll quickly be taught a hard lesson in the value of reliable electricity. And maybe, shut up for a while.

Barry Cinnamon on Mar 3, 2022

Hi Bob - How do you explain the 10% annual increase trend for California electricity? The result of rich people getting solar? Really?

Bob Meinetz on Mar 3, 2022

Barry, though transmission maintenance and improvements haven't run up prices much in the past, those costs will increase dramatically - up to $10 billion for PG&E customers in coming years. CPUC is trying to get out ahead of them to assure they're equitable - especially, given lower-income customers are already footing the bill for solar's lucrative federal tax credits and line losses.

The 10% annual price increase trend over the last decade, however, is mostly the result of integration costs for intermittent renewable energy, both solar and wind:

"Integration costs include balancing costs (to manage unpredictable intermittency), transmission costs (to reach high-quality resources or ease grid congestion), backup and residual generation costs (to manage predictable intermittency), and curtailment costs (reflecting wasted solar and wind power when it cannot be used on the grid)."

Not included are the following non-trivial costs:
• ancillary services - voltage and frequency stabilization necessary to synchronize thousands of distributed sources of AC power
• negative pricing - the cost of paying neighboring states to take CA electricity when mid-day overgeneration threatens grid stability.

Many don't realize the supply of electricity on an electrical grid must match demand within small tolerances (±4% steady-state voltage), or breakers trip and the grid goes down. When a cloud passes over Topaz Solar Farm, for example, 100 MW of supply can disappear in a matter of seconds. That requires gas generation in spinning reserve (gas turbines that run constantly) to begin generating electricity quickly so stability can be maintained.

Gas plants in spinning reserve can afford to provide this service because they're bidding into California's 5-minute wholesale market, the most lucrative of all, where prices can be hundreds of times higher than its day-ahead market. And of course, all of these costs are passed on to retail customers.

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