Energy Central Topic of Focus: Let's Talk About the California Net Metering Debate

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Matt Chester's picture
Energy Analyst Chester Energy and Policy

Official Energy Central Community Manager of Generation and Energy Management Networks. Matt is an energy analyst in Orlando FL (by way of Washington DC) working as an independent energy...

  • Member since 2018
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  • Jan 25, 2022

At the start of the year, it was clear one of the hottest topics of debate early in 2022 was centered around net metering. Specifically, the California Public Utility Commission (CPUC) is debated and expected to put to a vote changes to the net metering rules. 

The Golden State was one of the early leaders in rooftop solar energy, and one of the reasons for that was the state's generous net metering rules that allowed owners of rooftop solar systems (both residential and commercial) to rapidly offset the initial costs of their investments by selling their excess generation to the grid at full retail rates. This landscape was undoubtedly key to California's early solar surge, but now CPUC is debating whether that large incentive for rooftop solar should be rolled back and ensure owners of large solar systems are paying into the maintenance of the grid (part of non-solar utility bills but which they have been able to offset thanks to selling their self-generated power for full retail price). 

This issue has attracted vast national attention on the state of solar and net metering more widely, and the industry will surely be watching the outcome of the upcoming vote and the fall out regardless of which direction it goes. To stay on top of this critical topic, we've added a new topic tag, 'Net Metering' to the list of our topics to provide a place for our community members to share their thoughts and insights around the subject at hand. I hope those of you who are following the discussions around the subject will take a minute to chime in and share your insights with the community by starting a post today

Bruce Chandler's picture
Bruce Chandler on Jan 25, 2022

Obviously this is a complex issue.  You have the politicians and their counterparts; the utilities and their largely unionized supporters, a good portion of CA utility customers both solar and non-solar, the solar/renewables industry and their supporters.  And then of course the utility company lobbyists and supporting consultants that worked, and continue to work, very hard at crafting an image of the solar industry and actually of California in general that if you look at the REAL data, is simply false.  Certainly opinions count.  But when you get to the bottom of this debate, as is the case in may other important debates, the truth lies within the data.  And of course, the Environment and our Air and Life quality are part of the data.  As with many negotiations, sometime starting with what you can agree on works better than arguing about differences.  I think many would agree that the following has some credence: 1) Californians are overpaying for power and have some of the highest rates in the nation 2) Solar customers (myself included) do get a benefit from connecting to the grid and should pay a reasonable fee for that privilege 3) Low-income families should get a discounted rate for utility power (many already qualify for this) 4) Given California's goal of reaching 100% renewable energy by 2045 it does not make sense to actually DECREASE the amount of solar being installed in CA.  This destabilizes a thriving renewable energy jobs market, and increases GHG emissions in the Golden State.  Lastly I would say I do feel for the workers in any legacy industry, and that includes the coal, oil, gas and utility industries.  Like I did when I switched industries 15 years ago, the solution is to get retrained for occupations that offer both reasonable pay and a bright future--like renewable energy.  It's not easy--I get it.  But it can be done.  Wow-what if the utility industry and unions took some of their lobbying budget and dedicated toward retraining workers for good paying jobs in renewables and infrastructure?  What if the renewables energy provided funding and support as well?  California and Californian's deserve better that what the current NEM 3.0 proposal outlines.  Let's fix this proposal so it's fair and keep California a leader in Renewables, Jobs and Clean Air.  We can do it.  We have to.

Martin Cohen's picture
Martin Cohen on Jan 26, 2022

If we are going to subsidize renewables with ratepayer funds -- and I think we should -- we must apply cost-benefit tests that we would to other utility investments and calculate the net amounts. The greatest bang bang for the buck may be larger scale than rooftop solar and may require optimal siting for system benefit. It would not be the same for all utilities and all locations and the utilities would not need to be the providers. But it would require ongoing distribution planning, undertaken transparently with stakeholder input for each utility. In the meantime, there should be cost-based payments for grid connection and services provided to solar owners, taking into account the system and enviro value of their production and the costs of service. These calculations should be time and location based but if that is not possible, averages could suffice for residentials. But we should get beyond the romantic notions about how wonderful it makes us feel to have solar on the rooftop and base public policy on public benefits. 

Rafael Herzberg's picture
Rafael Herzberg on Jan 26, 2022

This is a very interesting and valuable discussion Matt!

The concept of being able to sell excess energy via the grid is super from the rooftop prospective.

But one should take into account that the power supply chain (generation, transmission and distribution) is compensated by kWh sales. Rooftops reduce the sales of the power supply chain with net metering. This is a fact. 

It means that "all others" will end up paying for the extra cost (CAPEX - capital expenditure - now amortized by less energy sales for the same installed capacity) because sooner or later, the regulator will acknowledge this fact and to set up a balanced situation for the supply side, will have to increase power rates.

Or the supply side will pay for it if there are no rate increases. And that's bad in the long run.

It is high time to each party pay for its own costs. Subsidies like this are not justifiable in the long run!

Keith Klipstein's picture
Keith Klipstein on Jan 29, 2022

From a social benefit perspective there is value in DERs for the edge capacity that will reduce utility's costs for transmitting energy from the central plant, the improved resilience created thereby. The large solar farms are still at the mercy of wires. Until Nicola Tesla reveals how his long distance wireless electricity system works, the only backup for the grid going down is the rooftop solar and batteries, using the grid as a backup. 

Michael Keller's picture
Michael Keller on Jan 31, 2022

If someone wants to install solar panels to generate power for their own use, great, knock yourself out. However, disconnect yourself from the grid when your system is on. Easy to do from a technical standpoint. You can always install batteries to store your energy when the sun goes down. Yes, your energy costs will likely be higher than using the local grid like the average citizen. 

There is no question that the solar panel owners are reducing their costs at the expense of the bulk of utility users.

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