Abstract
The California Public Utilities Commission (CPUC) is currently deciding on the structure of the next net metering program, which will determine how customers who install solar panels (and battery storage) under this new program will be compensated for excess energy that they export to the grid, and the additional fees that these solar customers will have to pay. The major investor-owned utility (IOU) companies in the state and some legislators have argued that the current net metering programs are far too generous to the customers and that they create an inequity by favoring the wealthy and causing a cost shift to the poorer non-solar customers. The IOUs have jointly proposed a set of regulations to the CPUC. In this paper, we examine the financial implications to residential customers who go solar under the new net metering program if the joint IOU proposal were to be adopted. We examine the case of a hypothetical southern California home that consumes the average amount of electricity (for that region) and estimate its electricity bills for various load profiles, assuming no solar or battery storage, with solar alone, and with solar and battery storage. For the two latter scenarios, we determine the ideal system configuration that will maximize the customer’s financial returns. In all cases, we determine that the joint IOU proposal for net metering will make residential solar panel and battery storage installations financially unattractive even in the best-case scenarios. In short, if the CPUC adopts the joint IOU proposal then residential solar installations in the state would likely come to an abrupt stop. We also analyze the economics of going off-grid (where a customer completely cuts himself off from the electrical grid) and find that it does not make sense for customers to go off-grid without being willing to cut consumption or make other compromises.
Highlights
The California Public Utilities Commission (CPUC) is currently deciding on the structure of the net metering program, which will determine how customers who install solar panels under this new program will be compensated for excess energy that they export to the grid, and the additional fees that these solar customers will have to pay
This paper examines the financial implications to residential homeowners who may install solar panels or solar panels combined with battery storage in the near future, under the regulations proposed by the three major electric utility companies in California
Net metering refers to the policies and rules that determine how customers who generate their own electrical energy are credited for any excess energy exported to the electrical grid, and how they are charged for energy imported from the grid
Summary
This paper examines the financial implications to residential homeowners who may install solar panels or solar panels combined with battery storage in the near future, under the regulations proposed by the three major electric utility companies in California. The IOUs and some legislators who wish to scale back California’s net metering program have argued that net metering programs are far too generous to solar customers They contend that residential solar installations are mostly done by wealthier people who pay little if anything for electricity, and this in turn causes less well-off, non-solar customers to shoulder most of the cost of maintaining and operating the electrical grid and generation infrastructure resulting in non-solar customers paying higher electricity rates. Opponents of net metering include Ms Lorena Gonzales, Assemblyperson from San Diego, who is the chair of the influential appropriations committee She introduced assembly bill AB 1139, with the support of the Coalition of Utility Employees (a group closely aligned with the IOUs) which called for all past grandfathering for customers who had previously gone solar under NEM 1.0 and NEM 2.0 to be limited to just 5 years, rather than the 20 years that they were promised. AB 1139 was defeated in June 2021, but similar legislation is likely to come up for a vote in future years
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