Who Pays for Solar? 0

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We wrote before about an upcoming study from the California Public Utilities Commission (CPUC) to determine the overall cost-benefit of installing solar.  Well in advance of that study, the investor-owned utilities (IOUs) in California are coming out swinging, with populist rhetoric about solar’s unfair impact.  But just because a utility says something, doesn’t make it true!  Here’s a quick take.

In the closing weeks of 2012 several news stories appeared, making the case for the IOU’s POV regarding solar.  (This one from the San Francisco Chronicle is typical: Solar Power Adds to Nonusers’ Costs.)

Their theory is that because solar system owners pay according to Net Metering – whereby excess energy produced during the day is used to offset (or net out) energy usage at night or during stormy days – they are not paying their fare share of other fixed costs of the utility such as for distribution and transmission facilities.

It is certainly true that solar customers pay less for distribution and transmission systems because those costs are tied to a customer’s total usage and is not simply part of the fixed “customer charge” that all residential utility customers pay – including solar customers.  But customers did not decide the nature of the utility’s rate structure, and presumably the IOUs were happy to charge more to cover “fixed costs” based on usage.  If that is the case, then it is equally fair to receive less from a customer with a lower monthly usage.

Moreover, the “analysis” being advanced by the IOUs ignores the benefit of that net energy being provided by solar customers – since that energy largely peaks alongside the utility’s peak demand, it offsets peak production energy costs for the utility.  Such “peaker” plants provide the most expensive energy a utility produces, so reducing that demand is actually a significant benefit to the utility.

At least one countervailing analysis asserts that solar customers are providing a net benefit: Solar Power Generation in the US: Too expensive, or a bargain? That study looked at all components of solar system benefits – including impacts on transmission and distribution – and concluded that solar power customers are actually subsidizing other users, even with solar deployment as high as 30% (the current net metering cap is just 5% and California is still a long way from reaching that goal).

Make no mistake, the IOUs are coming after net metering because it is beginning to affect their bottom line – and they can predict that as costs for solar continue to fall, that enormous potential for solar energy will hurt their business model.  The solar industry is in for a fight – and it will be a fight of existential proportions.

Original Article on Founder’s Blog

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