Californian utilities are showing signs of softening their resistance to policy that would have accelerated the deployment of cost-effective solar in the state, the chief of a leading trade body in the US said last week.
Julia Hamm, president and CEO of the Solar Electric Power Association, told the PHOTON Solar Electric Utility Conference in San Francisco last week: “In 2007/2008, feed in tariff conversations really started to pick up here in the US. There was significant resistance from utilities toward the concept of the feed in tariff. My own personal perspective is the idea of a utility mandated to buy power at a price that they can’t control is not appealing to them. That was the initial opposition.”
Jim Avery, the senior vice president of power supply at SDG&E, said: “Competition drives down cost. This notion that let’s fix a price and buy everything at that price isn’t competition all that is intended to do is accelerate the market, there is a place for that. But it doesn’t displace the need for a growing robust market that provides an opportunity for competition that truly drives costs down.”
Smaller And Farther Apart
Utilities have been concerned about losing revenue and market share for retail electricity as distributed solar installations increase through programs such as the California Solar Initiative, Net Energy Metering, and Governor Jerry’s Brown’s goal of 12 GW of distributed generation by 2020.
As a result, utilities have become increasingly interested in community solar, said Hamm. “Community solar is the number 1 hot topic for utilities across the country regardless of the size of utilities. There are 20 across the country at the moment and utilities are getting ready to roll out more utility-scale solar. It’s an important trend to be aware of.’
But she said that the industry was shifting to more “creative” approaches to the European-style feed in tariff in which the government determines the fixed price per MWh.
“We end up spending twice as much fixing the problem than had we done it right the first time.” – Avery
“In California we see feed in tariffs gaining traction within the utility space as an acceptable option. Possibly in the long term it’s a better option for utilities than net metering.
“Historically, the utility industry response to high penetration on the grid has been to say: It’s a problem for us, stop. The good news there are enough utilities for which this is a problem already today that they are past the point of trying to stop it. They know now they just have to find solutions. That’s a very important transition for the solar industry. The utility model is going to have to change.”
Behind The Meter
Sara Birmingham, director of western policy at the Solar Energy Industries Association, said that utilities had been pushing back against “behind the meter” initiatives to promote residential solar, such as net metering.
She said: “We’re seeing this really high uptick, we’re seeing installations increase. And we’re also seeing net metering under attack by the utilities.
“There are a lot of programs across the US but California is really unique in that we have programs which stimulate all of the different market segments we have the behind the meter which is typically less than 1 MW to meet load on-site.
“The CSI has been a overwhelming success. As the prices have come down, we’ve seen demand rise. Since 2007 when the CSI started, we’ve seen tremendous drops in terms of the price we’ve seen residential pricing decline by over 25% we’ve seen commercial prices dropped by 40% decline. We’ve seen quite an uptick in terms of market penetration of these types of systems.”
The program is scheduled to end in 2016 but is already ahead of schedule and has met up to 75% of its market segment goals with 1,000MW installed over 100,000 customer sites.
But utilities have felt threatened and some have responded with aggressive action against the net metering program, which is capped at 5% of a utility’s peak demand.
The Network Use Charge
San Diego Gas & Electric recently filed a general rate case requesting that a network use charge be applied retroactively to existing net meter customers.
Birmingham said that existing residential customers would have faced an increase of $10-$40 on their monthly bills, and public agencies could have faced an increase of up to 180%.
She said: “This really took us by surprise and we were incredibly pleased when the California Public Utilities Commission ruled that the network use charge is outside the scope of the general rate case and ordered SDG&E to refile the general rate case without this element. This is a really contentious issue within California.”
Net metering in California is meeting its 5% cap and will be the subject of further discussions between the CPUC and utilities this year.
Avery said: “Whatever model we take going forward it becomes more sustainable because if we’re advocating for a market that does not require a continuation of subsidies to keep growing, that’s not a sustainable market and it’s probably promoting the wrong technologies and that’s probably even more dangerous than the subsidies.
“We end up spending twice as much fixing the problem than had we done it right the first time.”