California presents brand-new web metering program

Sep 18, 2020 11:04 AM ET
  • The state's new net metering is a very anticipated, high-stakes case. It will successfully change the policies for the net metering tariff in California, which is arguably one of the most important policy mechanism for customer-sited solar of the last decade.
California presents brand-new web metering program
Image: Skeeze, pixabay

The California Public Utilities Commission (CPUC) has officially commenced its "NEM-3" proceeding, which will establish the successor Net Energy Metering (NEM) tariff to the "NEM 2.0" program in California. This is a highly expected, high-stakes case that will properly customize the guidelines for the NEM tariff in California-- perhaps the single essential policy device for customer-sited solar over the last years.

The CPUC's current order instituting rule-making (OIR) filing mentioned that "the significant emphasis of this proceeding will certainly be on the advancement of a successor to existing NEM 2.0 tariffs. This successor will be a system for supplying customer-generators with credit history or compensation for electrical energy created by their renewable centers that a) stabilizes the costs and also advantages of the eco-friendly electric generation center and b) enables customer-sited sustainable generation to expand sustainably amongst various sorts of clients and throughout California's diverse neighborhoods."

This follower tariff case was launched by Assembly Bill 327, which was signed into legislation in October of 2013. AB 327 is best known as the regulation that directed the CPUC to produce the "NEM 2.0" follower tariff, which was adopted by the CPUC in January of 2016.

The original Net Energy Metering program in California (" NEM 1.0") properly allowed full-retail value web metering "allowing NEM customers to be compensated for the electrical power produced by an eligible customer-sited renewable resource and also fed back to the utility over an entire invoicing duration." Under the NEM 2.0 tariff, customers were required to pay fees that aligned them more very closely with non-NEM customer expenses than under the initial structure. The main adjustments taken on when the NEM 2.0 was applied were that NEM 2.0 customer-generators should: (i) pay a single affiliation cost; (ii) pay non-bypassable charges on each kilowatt-hour of electricity they eat from the grid; and (iii) consumers were called for to transfer to a time-of-use (TOU) rate.

NEM 2.0

The commencement of the NEM-3 OIR was come before by the publishing of a 318-page Net Energy Metering 2.0 Lookback Study, which was released by Itron, Verdant Associates, as well as Energy and Environmental Economics. The CPUC-commissioned study had been widely anticipated as well as was expected to work as the beginning recommendation factor for the follower tariff proceeding. Verdant likewise held a webinar, which summed up the research study's inputs, assumptions, draft findings as well as results.

The study utilized a number of different examinations to research the effect of NEM 2.0. The expense effectiveness evaluation tests, which approximate expenses and also advantages attributed to NEM 2.0 consist of: (i) total source price examination, (ii) individual price test, (iii) ratepayer impact action examination, and also (iv) program manager examination. The examination likewise included a price of service evaluation, which estimates the minimal expense borne by the utility to serve a NEM 2.0 customer.

The opening paragraph of the report's exec recap mentioned that "overall, we found that NEM 2.0 participants gain from the structure, while ratepayers see increased prices." In every test that the writer's carried out the results generally supported this final thought for domestic customers. There were some exemptions in their searchings for. For instance, in the cost of service analysis the report stated that "residential consumers that install customer-sited renewable energies typically pay lower costs than the utility's expense to offer them. On the other hand, nonresidential consumers pay costs that are somewhat greater than their cost of service after mounting customer-sited renewable resources. This is greatly due to nonresidential customer rates having demand fees (and also various other fixed fees), as well as the reduced ratio of PV system size to consumer tons when contrasted to residential clients."

NEM-3 timeline

The preliminary timetable that the CPUC laid out in its OIR approximates that the proceeding will take about 15 months in total amount, beginning with a November 2020 pre-hearing seminar.

The genuine meat of the case, where celebrations will provide their proposals wherefore they think the successor tariff need to be as well as actually show their hand will certainly not start up until the Spring of 2021. So we're still a little methods far from seeing the proposals that the vital events to this proceeding, like the Investor Owned Utilities (PG&E, SCE, SDG&E), solar as well as storage space advocates such as SEIA, CALSSA, Vote Solar, and also ratepayer advocates like TURN) will send.

While the outcome for the new follower NEM tariff is anyone's guess at this factor, some industry policy people are beginning to hypothesize. We believe it is secure to think that the worth of exported energy will obtain reduced. How much and the system for how exports get valued remains to be seen. Based on the searchings for from the lookback research study, it looks like the decrease in export value will be much more extreme than what occurred when NEM 2.0 obtained carried out. In NEM 2.0, non-bypassable charges, which are volumetric costs that need to be paid on all imported energy and also can not be netted-out by exports, only corresponded to roughly $0.02 to $0.03/ kWh.

Given that the worth of exports will probably obtain decreased, we anticipate that to be bullish for energy storage space. Energy storage add-on prices with solar are currently steadily increasing in California. By the time NEM-3 begins obtaining implemented, likely in 2022, we believe storage space add-on prices will likely intensify further.

We would not be surprised to see future storage add-on rates in California resemble the Hawaiian market today, which are upwards of 80% for sure types of customers and applications. 2 big inquiries on our mind are: (i) will the NEM 3.0 policies be different for different customer course: household, CARE (e.g., low-income or disadvantaged neighborhoods), and also industrial & commercial; (ii) will the CPUC present some type of glidepath or phased in implementation technique?

The result of this proceeding will have much getting to ramifications on the future of customer-sited solar as well as power storage space in California. The NEM-3 result in California might likely function as precedent for various other states as well as utility areas that are expected to redesign their Net Energy Metering tariffs in the coming years.

Solar Installers, Manufacturers