California is well on its way to reaching its goal of 1 million solar roofs. Earlier this month, Pacific Gas & Electric announced it has over 100,000 customers generating solar power -- the most of any utility in America, accounting for a quarter of all rooftop solar systems in the country.
As of April, PG&E has 115,000 solar customers with a combined total of just over 1,000 megawatts of rooftop solar. This number is double what it was at the end of 2011 and represents half of all solar in California. The total includes 6,000 non-residential customers. PG&E has an additional 4,500 megawatts of utility-scale solar on its system.
According to recent filings, 22.5 percent of PG&E’s power came from renewable resources in 2013. The utility expects solar to make up 40 percent of its renewable portfolio by 2020, when it will be obligated to get one-third of its power from renewables. Another third will come from big hydro and nuclear.
The pace of growth does not appear to be slowing. Customers are adding 2,500 systems per month, and the utility has streamlined the application process to ensure a five-day turnaround in getting a system interconnected.
Almost all of these customer-owned systems operate under net metering rules. But the future of net metering is uncertain in California. Last year, the legislature approved AB 327, sponsored by Assembly member Henry Perea (D-Fresno). AB 327 directs the CPUC to design a “successor tariff” to replace net metering.
It also tells the CPUC to reduce the number of rate tiers from four to “at least two,” potentially reducing the price of power for the biggest residential consumers. These big consumers—typically in the hot and sunny Central Valley—are the most lucrative customers for solar companies. And the law calls for a monthly fixed charge of up to $10, which further erodes the value of solar.
The CPUC will be holding a public workshop on successor tariffs on April 23 in San Francisco. “This workshop will outline the expectations and schedule for designing a successor tariff, assist Energy Division staff in the creation of a NEM Alternatives Public Tool, and provide guidance for future regulatory proceeding activities related to these issues,” according to the workshop announcement.
While PG&E has not yet made any filings in this phase of the case, the utility is working on it.
“It’s a critical and important discussion,” said PG&E spokesperson David Eisenhauer. “The decision will determine how sustainable solar will be for the long term. We want regulations that help rooftop solar continue to grow. We have one of four systems in America, so it’s clear we are supportive of our customers.”
While utilities in other parts of the country have encouraged a “value of solar" tariff or a “buy all, sell all” approach as replacements for net metering, Eisenhauer said PG&E does not have a position on the issue.
He acknowledged that “there is a similar conversation in California [around] how we can value the grid and pay for it equitably.”
Complicating this discussion is another docket on residential rate designs (R.12-06-013), which the CPUC plans to wrap up by end of this year. In that proceeding, Vote Solar and SEIA have proposed time-of-use (TOU) rates to better match rates with marginal costs. In their proposal, rates would run between 11.4 cents in the winter off-peak to 46.6 cents in summer peak periods for the highest consumption tiers. Average rates would be about 19 cents per kilowatt-hour.
Those residential customers that opt out of TOU rates would get a simplified inclining block rate structure, with only two or three tiers. No customer would pay fixed charges, according to the proposal.
An analysis by John Farrell of the Institute for Local Self Reliance based on PG&E tariffs calculated that applying a time-of-use rate to net metering can increase the value to the customer by as much as 250 percent, compared to flat rates.
PG&E says approximately 40 percent of its residential solar customers and nearly all of its non-residential solar customers are on TOU rates combined with net metering.
PG&E’s Eisenhauer was especially supportive of community solar, which PG&E had proposed before it was mandated by the legislature under SB 43 in 2013. The law requires utilities to procure 600 megawatts of “shared” solar, where the output of the system is credited against electricity consumption. Shared solar is intended for customers who can’t site solar on their roofs, or who don’t own their roof, such as renters in apartment buildings.
“Community solar is something we are really advocating. We want to make opportunities for all our customers to enjoy solar,” he said.
The rules for community solar are still under construction at the commission, with a decision expected by summer. PG&E expects to offer a “New Green Option” starting in 2015.
“The good news is that rooftop solar has come of age,” said PG&E’s Helen Burt. “And with installation costs falling, the pace of adoption is quickening.”
But the future still hinges on critical regulatory decisions pending in San Francisco.