Environment California held a webinar on Sept. 25 discussing its new report, “Will Solar Power Have a Home in California?” that examined the different scenarios of how net metering policy changes could impact California’s solar industry. The report was written before legislation (AB 327) passed the California legislature, but the legislation awaits Gov. Jerry Brown’s signature. Depending on how AB 327 is implemented, it could still have a large impact on the residential solar market.
First of all, there’s good news. “The success of California's solar energy policies have led us to a point where it's likely that the solar energy market will become self-sustaining within the decade,” stated the report's co-author Michelle Kinman, clean energy advocate with Environment California Research & Policy Center. “The main question now facing policymakers is how to manage the transition to a mature solar market, without undermining the momentum that the state and the citizens have invested billions of dollars to create.”
California has 1,669 megawatts of rooftop solar installed and that the residential solar market has grown an average of 47 percent on an annual basis, Kinman said. The state’s current goal of reaching 3,000 megawatts of residential solar could be achieved almost a year early if residential solar grows at 25 percent per Nowfyear, she added.
Without passage of AB 327, California’s net-metering policy faced extinction. “Eliminating net metering could severely limit the growth of California residential solar energy market and jeopardize California's progress toward a clean energy future,” said Frontier Group Senior Policy Analyst Tony Dutzik. The Frontier Group co-wrote the report.
Using a hypothetical scenario for a San Diego homeowner, the Frontier Group found that "the cumulative value of net metering over the 25 year lifespan of the solar panels is $6,000 in nominal value or $2,800 in net present value,” Dutzik said. “That translates into the equivalent of about a $1 per watt reduction in the up front cost of going solar.”
The solar incentives, which include net-metering and federal and state incentives also increase the return on investment and reduce payback time. “The hypothetical homeowner in 2015 would see a 10.5 percent return on their investment in solar energy, with a payback period of nine years,” Dutzik said. “Without net metering the return on investment would fall to less than 8 percent with a payback time of 12 years. These payback times assume that the financial incentives that have been available to residential rate payers in recent years are still available. But we know that these incentives are ending.”
Even with the passage of the new bill some things remain fuzzy, however. The new bill allows the California Public Utilities Commission (CPUC) to approve an up to $10 a month service charge on all customers to support net metering. “It also orders the CPUC to consider alternatives to a fixed charge,” said California Solar Energy Industries Association (CALSEIA) Executive Director Bernadette Del Chiaro. “I think there’s a lot of details that need to be hammered out at the PUC and this is one of them that needs to be watched very carefully and that particular piece of 327 on the solar market needs to be taken into consideration,” she explained.
The group made some recommendations: “The CPUC should ensure that solar energy system owners are fairly compensated for all the benefits they deliver. Moreover, all utility rate payers should contribute funds to this purpose in the same manner that ratepayers pay for power lines, power plants and for other kinds of infrastructure upgrades,” Kinman said. She added that policy makers should work to provide access to more financing options for homeowners using such tools as ‘on-bill’ financing. She also called for the state to allow PACE and community solar programs so more Californians can invest in solar energy systems.