California energy regulators were considering whether to vote this week on a controversial plan to cut the financial benefits residential rooftop solar customers currently enjoy.
But that vote is now on hold, indefinitely.
Energy companies like PG&E and Southern California Edison were behind the effort to lower the solar energy export compensation rates and add a monthly solar fee, while the rooftop solar industry has come out in force against it.
How does the system currently work regarding rooftop solar customers and then what they earn selling power back to the grid?
The system that's been in place for the past probably 20 years is that for any excess power that your solar panels generate, you can feed it back to the grid and your local power provider pays you the retail rate for that power. So that's a pretty generous price that's being paid to you for the solar that you generate.
Because it's being created at a time during the day when energy is at its cheapest.
Exactly. And solar panels help to drive down demand, which means that you're already at a pretty low demand level, which means that your panels are generating much more power, which means that you need to use them. You send them to the grid and you get paid for it.
Now, help us understand why the power companies and members of the California Public Utilities Commission, or CPUC might think it's a good idea to change this rate structure.
Well, the stated reason that the utilities and the CPUC that the state regulators give is they want to address something called the cost shift, which is them claiming that those that own solar panels paid less for grid maintenance cost than those without them. And there is some validity to this. But if you look deeper at what the utilities are saying, a distributed customer-owned energy is a threat to their state-supported business utility model.
And the rooftop solar industry's main concern is that sales would just rapidly drop off?
Yeah, that's right. Because for the past two decades, there's been very generous subsidies, essentially that do allow these solar panels to be installed. And that's led to lots of benefits. It's, of course, led to sales like for the solar installers, but it's also led to helping California towards its climate goals. It's helped California have increased grid reliability for those that have battery storage attached to their panels. And so there's all these different ancillary benefits, of course, that come with the installation of solar panels.
Might there be a compromise that splits the difference on what the power companies want and what the solar industry wants?
Yeah. Talking about any potential compromise, it's probably helpful to lay out what the current proposal is first, which is severely lowering the reimbursement rate for your exported solar and also imposing a monthly fee on solar owners just for the fact of owning solar panels. And so we could maybe see that monthly fee being lowered or even being eliminated. And then, with regards to the lower "export compensation," as they call it, maybe there could be more of a glide path to that lower compensation.
Because this is such a hot button issue, do you foresee this getting approval anytime soon?
Probably not anytime soon. They've already punted on it several times now, and Governor Newsom, as you and your listeners probably know, he has expressed his displeasure about this back in January. And so, this has become by far the hottest energy issue in the state over the past few months, and it's only going to keep heating up.