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Ahmad Faruqui's picture

Ahmad Faruqui is an energy economist who has worked on electricity pricing issues throughout the globe and testified numerous times before regulatory commissions and governmental bodies.

  • Member since 2000
  • 21 items added with 22,259 views
  • Dec 22, 2022

That’s what happened on the Ides of December at 505 Van Ness Avenue. After listening to some three hours of public commentary on the revised Proposed Decision (PD) on NEM 3.0 from this past month, most of which vociferously opposed it, I was convinced that the CPUC would take notice of which way the winds were blowing and show a spirit of accommodation, even if they had gone into the session prepared to approve the revised PD. At the minimum, one or two commissioners would offer a dissenting opinion.

The fact that the vote was 5-0 is very telling. It's a very risky move on the CPUC's part, since they are swimming against the tide. They must know what happened in Nevada and Kansas. Suffice it to say that it was not pleasant.

After the original PD was issued by the CPUC last December, the citizens of California weighed in with hundreds of comments and mass rallies. Several of the state’s leading newspapers weighed in with editorials. I don't recall seeing such a strong swell of public opinion on any topic related to electricity.

In January, I debated the provisions of that PD with an academic. At the end, a poll revealed that only a third agreed with my opponent’s views.

Two of its atrocious features – a grid access charge and retroactivity – were removed in the second PD. But the drastic drop in export competition was preserved.

I installed a solar+storage system back in December 2019 and was given permission to operate in January 2020. My payback was estimated at 9 years (it would have been 7 years if I had just installed solar).

Now, I am being told that had I waited until this coming April, under the new rules which have just been approved, the payback for my system would have been less than 7 years.

Is that possible? When you cut the export compensation rate by 75%, the payback should be longer.

I am being told I would come out ahead because the export compensation rate in the evening hours has been raised several times of the current rate.

But, as I have shown in several prior posts, there is nothing for me to export in the evening hours. The battery just powers the house and often runs out around 7:30 or 8:00 pm in the winter. Then I buy power from the grid which, under the new rules, would be VERY expensive.

The math behind the 7 year payback eludes me, as do most of the numbers and assumptions in the revised PD which the commission has memorialized today.

Soren Christian's picture
Soren Christian on Dec 23, 2022

Hi Ahmad, new to this page and haven't read any of your prior posts, so forgive me if I've missed something. Re the seven-year payback period and your inability to actually export from your storage and hence get any payback period: If you're draining your battery to power your house between, say, 4 and 8 pm, aren't you replacing even more power you would be drawing from the grid at high prices? So the fact that it is going to your house rather than to the grid and then back into your house again seems like a footnote in net terms. 

Ahmad Faruqui's picture
Ahmad Faruqui on Dec 31, 2022

Dear Soren,

I am using the stored power in my battery to arbitrage against the TOU rate.

I charge the battery during the morning hours from the sun. Those hours lie in the off-peak period, when the price to buy power from the grid is 25 cents/kWh.

The peak period begins at 4 pm and runs through 9 pm. That's when power costs 55 cents/kWh. I discharge the battery to power my house, avoiding the need to buy really expensive power from the grid. Does that address your comment? If not, please elaborate.


Soren Christian's picture
Soren Christian on Jan 1, 2023

Dear Ahmad,

Thanks for the reply, and Happy New Year!

I think we may be in agreement here? By avoiding the need to buy expensive power at the peak rate, you are in fact arbitraging against the difference between the TOU rates, even if in practice you aren't able to export anything to the grid. I need to run some numbers on this (and I plan to), but I think under NEM 3 there would be a bigger difference in export rates, giving you more opportunity to arbitrage those rates. Or at a minimum, it makes it more expensive to NOT arbitrage them (i.e. by having solar without storage).



Ahmad Faruqui's picture
Thank Ahmad for the Post!
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