In a nearly unanimous decision yesterday, the California Assembly passed a bill that would allow a greater number of people in the state who produce their own solar power to sell the excess electricity to their utility company. Assemblywoman Nancy Skinner’s (D-Berkeley) bill, AB 510, raises the Golden State’s net metering program capacity from 2.5 to 5 percent, a move that supporters say will result in wider adoption of solar technology and offset high electricity costs–and will perhaps even open up the solar market to those who had been formerly closed off to it. Governor Schwarzenegger has every intention to sign the bill, according to Rachel Arrezola, a spokeswoman for the Governor.

“The bill will help California achieve its renewable energy goals by allowing for increased solar installation, more jobs created and more renewable energy in California,” Arrezola said.

Under existing state law, California’s three largest utilities–PG&E, SCE, SDG&E–must obtain 33 percent of their energy from renewable energy resources by 2020, a renewable portfolio standard whose chances of being met would likely rise with the new measure, which provides further impetus for distributed solar generation. Considering that AB 510 passed by 53-1, California’s clean energy future appears to be on track.

Tomorrow, California’s state legislature will vote on lifting the current cap on the amount of energy in the state’s energy portfolio that can come from net-metered solar installations. Set at 2.5 percent, the net metering cap once seemed generous but now seems low–dangerously low, in fact, for the California solar industry. Successful solar incentives have encouraged nearly 460 MW of solar installations just within the service territories of the three investor-owned utilities (for more on the California Solar Initiative, start here).

Net metering is a huge piece of the incentive puzzle for solar homes and businesses and without it, solar growth will suffer a severe blow in the state that has so far blazed a trail for the rest of the country. Bill AB 510–last year’s doomed AB 560, reincarnated–would raise the cap to 5 percent, effectively ensuring long-term growth for California solar.

If you’re a California resident, the Vote Solar Initiative has made it very easy to tell your senator to pass this landmark legislation. Just click here, fill out a simple online form with space for optional comments, and hit “Send my message!” Do your part to protect California’s clean energy future.

A joint venture of solar panel manufacturer Suniva and storage developer GS Battery aims to bring battery back-up (but still grid-tied) solar into the limelight once again. Inefficient battery storage has encouraged small-scale solar generation to rely entirely on the grid for auxiliary power. Battery systems can cost nearly twice as much as straight grid-tied systems, depending on the needs of the system, and the batteries themselves are often not eligible for cost-reducing solar incentives. (Though beginning this year, battery systems are eligible for the 30 percent federal ITC.) They also take up a ton of space, which is something many homes and small commercial installation sites don’t have on hand. The Suniva-GS system will use deep-cycle nanocarbon batteries to achieve high performance. The demo system will be 30 kw in capacity with a 3,000-amp hour battery component.

Let’s get into the battery vs. grid-tied debate a bit further. Up until ten or fifteen years ago, home solar energy systems with a battery storage component were the norm, even though utilities in the United States have had to allow independent electric generation facilities to connect to the grid since 1978. But it wasn’t until 2005 that the Federal Energy Regulatory Commission (FERC) introduced interconnection standards for systems under 20 MW, making it much easier for states to build their own such standards and speed up the installation and permitting process for solar energy systems.

Interconnection standards do not net-metering make: it’s up to an individual state to require its utilities to compensate independent electric generators for the energy they feed into the grid. Most states do now have net metering laws in place (all but six states offer some form of net-metering, whether state mandated or in some cases by the utilities’ own initiative–the Pew Center on Global Climate Change maintains an easy to read map of which is which).

Not all net-metering programs are created equal: in some, you get compensated for your net-excess generation (NEG) at the rate at which you purchase electricity from the grid, an even exchange and perfect offset. In this instance, the utility is basically acting like a perfectly efficient “battery”.

In some net-metering programs, however, the utility is allowed to compensate you for your NEG at a rate lower than that at which you purchase electricity from them. This can be either a lower-tier rate or, worse, an avoided cost rate. “Avoided cost” is the estimated cost of production per kilowatt-hour (kWh) that the utility avoids paying because, well, you’re producing that kWh for them for free. So they pass on their savings to you, but not a penny more. In this type of net-metering program, you’re not getting full value for every kWh of electricity you produce. It’s therefore more cost-effective to store any NEG on-site and either use it when you need it or–and this is where smart-grid technology and time of use meters are game-changing–sell it back to the utility when you can get a better price for it. Here’s where efficient, more affordable batteries could seriously make a positive difference to solar’s ROI.

All of which is to say, we’ll be keeping an eye on Suniva and GS Battery’s collaboration, as well as on other new battery solutions as they emerge.

Yesterday saw a surprisingly positive new chapter in California’s net metering saga roll out. PG&E is voluntarily expanding its net metering program in the absence of new legislation that would mandate such a move. PG&E customers can continue to explore solar as a valuable investment for some time to come now–without this move, many were predicting that PG&E would reach its net metering cap by first or second quarter 2010.

The broad situation is this: California electric utilities are rapidly approaching the mandated cap for the percentage of their energy portfolio that can be supplied by the electricity garnered from net-metered solar projects (2.5 percent of peak demand). Once that cap is reached, the utilities are no longer required give home or business owners credit on their electric bill for any net excess electricity generated by their solar panel arrays. PG&E is raising that cap within their own portfolio to 3.5 percent. The reason this comes as such as a surprise is that the utility was one of the strongest voices in opposing a legislated net metering increase earlier this year (failed House bill AB 560).

Net metering is one of the cornerstones of any incentive package for solar, and is a huge part of the reason projects can be financially attractive–in essence, the utility is acting as a giant, completely efficient battery. Net metering ensures that every kilowatt-hour of electricity generated by your solar panels is helping offset your grid-purchased electricity, either by directly reducing the amount of energy you need to purchase (because you’re producing it on-site) or by offsetting the energy you do still need to purchase (by means of credit on your bill).

So, to make a short story probably longer than you feel up to reading on a Friday afternoon, PG&E’s announcement yesterday to voluntarily expand their net metering program came as a huge relief to the solar industry, and its timing could not have been more apropos as Solar Power International, the country’s largest solar conference, finished up in Anaheim.

Armed with a net-metering agreement and enough grid-tied solar panels, you could literally eliminate your monthly electricity bills. Poof! Gone. But, as this story from KMGH Denver demonstrates, you’d still need the utility’s infrastructure to make the arrangement work.

Solar energy customers are worried a new fee proposed by Xcel Energy would punish new customers for getting solar panels. The monthly fee, which would pay for distribution and transmission of energy, would go into effect in April 2010 and would have to be paid to Xcel, regardless of whether the solar customer used any electricity that month. Customers who got solar panels before April 2010 would not have to pay the fee.

So what’s going on here? From the customer’s perspective, it seems unfair that they be charged — even in those months where they, in effect, don’t buy any electricity from Xcel. Indeed, the main motivation behind installing solar panels is the desire to minimize monthly payments. With this achieved, some Colorado solar panel owners are, understandably, balking at the additional fee.

Now for the other side of the argument. Even if their monthly energy usage nets to zero, solar panel owners still make use of the electrical grid and associated infrastructure: during the day, for example, excess electricity from the panels flows into the grid, crediting the owner’s utility account; and at night, when the panels are idle, the customer draws power just like anybody else. Solar panel owners should, Xcel maintains, be charged accordingly. Hence the proposed fee for “distribution and transmission” of energy.

Tom Henley, an Xcel Energy spokesman, initially told 7NEWS that implementing the fee would level the playing field for electricity users who are currently subsidizing connectivity fees for solar users, who sometimes use no electricity in a given month and therefore, pay no electrical fees.

“We just don’t think it’s fair that customers that don’t have solar panels on their homes should subsidize these solar panel customers any further,” said Henley.But when pressed, Henley admitted that currently, no Xcel electric customers pay extra to fund solar connectivity fees. In reality, Xcel absorbs those fees. The money from the proposed fee would not go into the pockets of electric customers, but would go back to Xcel. Henley said the fee is a preventative measure to ensure that, down the road, solar customers do not get free rides.

“What we’re looking to do is stop that, avoid that occurrence from happening,” he said. …

In an e-mail, Beth Hart, the executive director of the Colorado Solar Energy Industries Association (CoSEIA), called the fee a “misplaced charge,” and said, “What Xcel didn’t include in their cost analysis were the benefits of PV (photovoltaic) to the electrical grid.”Henley said the fee would add up to, on average, about $1.90 more per month than solar customers currently pay.

But Ferguson [a solar energy consultant], and members of CoSEIA, worried that the fee would be much higher.

Judging from the “comments” section of the KMGH story cited above, there’s a strong temptation to view the impending confrontation between solar advocates and Excel as a case of corporate greed. (One commenter sarcastically notes, “They’ve got to pay those executive bonuses somehow.”) I think the reality of the matter is far less controversial. After all, Xcel already runs one of the country’s most prominent utility-sponsored solar rebate programs. My guess is that, in the end, a fee will be levied, but that it will be constrained by the Public Utilities Commission.

Note: A public hearing on the matter is scheduled from 4pm to 6pm on Wednesday, August 5. See the PUC website for details.

UPDATE: As relayed by Russel Gold at Environmental Capital, Xcel has withdrew its request for a hike in fees, dealing a blow to my previous hypothesis:

The proposal was short lived. On Tuesday, Xcel backtracked and withdrew their request for a new fee.

Here’s how the company explained itself in a press release: “We made this proposal in good faith as a reasonable approach to provide for a fair allocation of costs and benefits between customers with solar panels and customers without solar panels. However, we appreciate that the proposed rate mechanism has caused significant customer confusion.”

What Xcel saw as customer confusion, others might call customers getting upset. The Colorado Public Utility Commission received 76 emails in the last week against the idea.

Ever since the inception of its highly successful $3.3 billion solar subsidy program, California has been continually touted by solar power enthusiasts—ourselves included—as the model state for renewable energy adoption in the United States. As the LA Times reports this week, however, not everything is coming up roses in solar country. Due to the overwhelming success of the program, the state utilities are toeing the legal limit for the amount of electricity they can buy back from customers. Parts of northern and central California served by Pacific Gas & Electric Co. may hit the limit by the end of this year, whereas the areas served by Southern California Edison Co. and San Diego Gas & Electric Co. are in less danger of doing so. What’s a supporter of clean energy to do?

Enter Assemblywoman Nancy Skinner (D-Berkeley), whose bill AB 560, which proposes to raise the net metering cap from 2.5% to a whopping 10%, passed the California State Assembly in May and awaits a crucial Senate utilities committee vote this week. Present California law restricts utilities from buying back from customers more than 2.5% of a utility’s maximum generating capacity, a cap which some would prefer to see gone altogether. Not surprisingly, PG&E, Edison and SDG&E all oppose the bill—although perhaps not as violently as one might expect, given what they might lose.

All three companies oppose Skinner’s bill. They do not want lawmakers to raise the limit until next year at the earliest, after the California Public Utilities Commission tallies up the program’s costs and benefits.

Utilities say they strongly support solar power but want more information about whether it’s fair to further increase financial incentives for solar-panel ownership.

Such incentives, they point out, would come at the expense of most of the utilities’ other customers, who don’t want or can’t afford to invest in the costly panels.

Other complaints extended beyond the net-metering to the solar subsidy program overall, which a report from the Senate Energy, Utilities and Communications Committee lodged against California’s solar incentives program. It noted that solar power users receive a state subsidy of roughly 20% of the purchase and installation cost, as well as a federal income tax credit of 30%, and suggested that adding more incentives could be going “too far,” citing the disparity between the benefits solar power users receive and regular ratepayers receive. Some supporters of the program, however, chose to focus more on solar energy’s potential as a consumption-mitigation tool.

Caps are an impediment to fully developing solar power’s potential and its ability to provide clean energy that can be tapped in urban areas, where it is most needed, during peak demand on hot summer afternoons, [Adam Browning, executive director of the Vote Solar initiative,] said. Eighteen states allow net metering without any caps, he noted.

Ultimately, though, it’s often the hard numbers that speak the loudest. The LA Times article opens with the anecdote of a woman who, after installing 20 solar panels on her roof, found herself with an electric bill of $1.26 this past June. You can’t even buy an In-N-Out hamburger for $1.26. Furthermore:

Legislation, approved in 2007 and known as the Million Solar Roofs program, has spurred the production of solar-generated electricity to rise 78%. That’s equivalent to the power generated by a modern power plant, the Public Utilities Commission reported last week.

I doubt that the overwhelming popularity of California’s solar subsidy, and the roadblocks that have arisen from it, will sound the death knell of the state’s solar industry. It has far more longevity than that. Former solar poster children—Spain, Germany—have survived, retooled their programs and carried on promoting the adoption of solar energy. But what’s at stake aren’t just some extra dollars we could be saving on an electric bill—it’s a model of solar power adoption in America. Do the utility companies’ arguments seem valid? What possible solutions are there, and have they been tried before elsewhere? We welcome any thoughts, comments, questions—let’s make this an ongoing discussion as the events unfold.

Two bills that would improve the affordability and accessibility of solar in California have met with oppostion from an unexpected quarter: Pacific Gas & Electric (PG&E), a utility company that has previously been a champion of solar within the state. The utility, in fact, manages the impressive and complicated state-wide California Solar Initiative solar PV rebate program. Everyone knew the bills under consideration would displease utilities state-wide, but outright opposition took the bills’ supporters by surprise, it seems.

The two bills would change California’s approach to net metering (get some background on net metering in California and one of the bills by reading my first post on the topic, here). AB 560 would effectively force utilities to extend net metering payments for years and years to come. AB 920 would make utilities responsible for compensating consumers for all net excess generation (NEG) by lifting the current one year “expiration date” on net metering credits.

The Mercury News reports:

Put simply, PG&E’s objection is that the two measures would make solar too popular. The utility says that would be unfair to its non-solar customers, who under existing law must subsidize rebates and credits paid to solar-power users.

But some supporters of the bills say PG&E’s real worry is about its own financial burden, since it sells less electricity to solar-power users.”The big picture, unfortunately — and counter to their public image — is that PG&E doesn’t like the idea of an unbridled solar market,” said Bernadette Del Chiaro, director of clean energy programs at Environment California, a nonprofit statewide environmental group and sponsor of Assembly Bill 920. “Unfortunately, the business model doesn’t yet allow for a market in which customers generate their own electricity.”

This latter point is the crux of the problem. Utilities are required to meet government-mandated minimums renewable energy available in their portfolio. In order to do this, they need to make solar an attractive financial proposition for both residential and commercial consumers. The utilities do benefit by the simple expedient of not having to supply the kilowatt-hours now being produced instead by consumers’ renewable energy systems. This saves on both production and distribution costs. But what happens when so many customers are providing their own energy that the utility is no longer selling enough electricity to make a profit? For all the utility industry’s hype about this scenario, it’s surely a long way off–yet it is a valid point.

What do you think, readers? Do utilities have a responsibility to make solar affordable at the cost of their own profit?

Most of us, I reckon, don’t give much thought to electricity bills. We don’t lie awake in bed dissecting our monthly energy use down to the watt-hour. Nor do we chat with co-workers about the wondrous world of weatherstripping (it saves so many kWhs in winter!). We certainly don’t subscribe to Electric Light & Power magazine, be it, as it may, a critical resource for understanding the vagaries of utility pricing schedules and state-by-state regulations. No, most of us are aware of electricity’s presence only in those rare moments when it’s not there. Example: when a late-July thunderstorm brought a tree branch down on a powerline near my house, it took only about 15 minutes before I started griping about not being able to charge my iPod. Alas, this is the nature of the human mind: it’s not until we feel a thing’s absence that we truly appreciate its full worth.

This habitual unawareness, I think, provides little motivation to improve energy efficiency or reduce one’s reliance on the grid. It’s why most of us continue to cut a check to the utility company, month after month, only vaguely aware of other options. Breaking this monthly cycle — rather, modifying this cycle — first requires a recognition that workable alternatives do exist. From compact fluorescent light bulbs (and weatherstripping!) to full-blown solar PV arrays, energy-saving and -producing technologies are available to fit almost every budget. Second, modifying the business-as-usual cycle requires a general understanding of how, and why, these alternatives make sense. They save power. They produce power. They seal up all the gaps and cracks in your house, making it less expensive to heat or cool your home. You get the idea. Third, modifying the cycle requires action (which usually involves spending some cash).

Today, my interest lies with the first observation: that workable alternatives exist. I won’t discuss the alternatives in detail, directly. Rather, I’ll do so by briefly reviewing two important — some, would argue, potentially revolutionary — items: the bi-directional meter and the renewable energy credit.

(1) The bi-directional meter. Chances are, the electricity meter on the side of your house is uni-directional. That is, it keeps track of all the power that you use to run your refrigerator, oven, TV, computer, lights, etc. At the end of the month, you pay your utility for each kilowatt-hour (kWh) consumed. Now imagine that you’ve just installed a 3.5-kW solar PV system on your roof. At certain times of the day, your new system will produce enough juice to meet all your electricity needs — and then some. At other times, say when it’s cloudy, you’ll fall short and need to draw power from the grid. Only a bi-directional meter is able to track this ebb and flow. Armed with a net-metering agreement, you can essentially run your meter backwards: any electricity that your system produces in excess of your needs — sometimes called net excess generation (NEG) — is typically credited to your utility account on the following billing cycle. Bi-directional metering is critical to the future of solar, and other forms of renewable power: it not only enables system owners to derive a better return on their investment, it also plays a central role shaping the way we think about power generation and distribution. It seems fair that electricity should have value regardless of where, or by whom, it’s generated.

(2) The Renewable Energy Credit. From the overview above, it’s clear that many residents and businesses would jump at the chance to install bi-directional meters and sign net-metering agreements, then start “selling” any excess power to the utility. The natural question is, of course, Why would a profit-seeking utility company agree to such a deal? The short answer is government regulation — in this instance, by individual states. Most U.S. states have adopted mandatory renewable portfolio standards requiring that a certain percentage of statewide electricity demand is met through the use or renewable sources, like wind and solar. Connecticut, for instance, has mandated that, by 2020, 27 percent of all power purchased must come from several classes of alternative sources. (For more information on other states’ standards, see the Pew Center on Global Climate Change.) Depending on the state, a utility can meet these standards in a number of different ways. Among them, renewable energy credits, or RECs, are playing an increasingly prominent role.

Wikipedia briefly explains that RECs

are tradable environmental commodities [certificates] in the United States which represent proof that 1 megawatt-hour (mWh) of electricity was generated from an eligible renewable energy resource. These certificates can be sold and traded and the owner of the REC can claim to have purchased renewable energy.

What this means is that residents (and businesses) can install an on-site energy generation system, like a solar PV array, and then sell all the electricity generated by the system. Whoever buys it (presumably the utility) may then claim ownership of a proportional amount of renewable energy credits. The utility will amass their renewable power purchases into 1-megawatt bundles and, presto, they just came that much closer to meeting their RPS obligations. The nice thing about this approach is that, in theory, it reduces the role of direct government action. In some states, for example, you can enter into an agreement with your utility whereby they’ll purchse your system’s power over the course of 20 years. Or, you can instead opt for a one-time buyout up front: the utility will buy the expected output of your PV system. It bears noting that the REC approach is still being developed. Notably, New Jersey is in the midst of transitioning to an all-REC approach, one where it’s hoped a full-fledged REC market will provide enough incentive to PV buyers so that the state can begin to phase out its own rebate program.

RECs and bi-directional metering are simple concepts that challenge conventional way of doing things. In introducing these concepts, my hope is to drive home a single point: that workable alternatives to a purely grid-tied existence exist. And that through continued efforts, we can advance the way we collectively and individually produce electricity. I like to think it’s not a question of whether the electricity profile of our country will change, but rather how fast those changes will progress. In the end, it’ll come down to how many of us engage that third item — action — before we have any idea as to what the future holds.

In order to make an educated purchase of a solar electric system, you need to understand all the elements. People often come to us thinking that net metering is the primary incentive for going solar. While that’s not true, net metering is a big piece of the picture. Learn more about the truth behind net metering by reading the full article on GetSolar.com.

It’s evident Florida lawmakers and regulators are taking steps to ensure that the Sunshine State lives up to its nickname. As reported by the Miami Herald, the Public Service Commission (PSC) will increase the rate paid to owners of renewable-energy systems. At issue is net metering, the process by which excess electricity from such systems—called net excess generation (NEG)—is fed back into the grid and credited to the customer’s utility account.

Under the old net-metering rules, utilities were only required to pay 3 or 4 cents per kWh. This was a criminally low rate, one that benefited the state’s investor-owned utilities while providing little incentive for residents and businesses to install renewable-energy systems. Under the new rules, customers with renewable-energy systems will have their accounts credited at the same retail rate at which they purchase electricity from Florida Power Cooperation, Florida Power & Light, and others.

There is a minor catch, however. While owners of small systems (less than 10kW in size) won’t be charged to set up a net-metering agreement, owners of medium-size systems (up to 100kW) and large systems (100kW to 2mW in size) will have to pay $400 and $1,000 applications fees, respectively. It’s rare to see residential systems over 5kW, so if you’re a resident, you’ll simply have to sign up for net metering with your utility. For more information, see the Florida PSC website.

There’s no doubt that the new rules are a step in the right direction. Under the Florida Energy Act of 2006, lawmakers set up the Solar Energy Incentives Program. The program provides a super generous rebate of $4 per watt rebate for solar PV panels, capped at $20,000 for residential systems and $100,000 for commerical systems. To put this in perspective, a typical 3.5kW residential system would be eligible for $14,000 in money from the state, an amount that would easily cut your total costs in half.

Funded at $3.5 million for 2007-08, and at $5 million for 2008-09, the program has been a victim of its own success: so many people have applied that all approved funding has been exhausted. This shouldn’t deter you from applying, however, as all approved applications will be placed in a waiting line for future disbursements. Hopefully the 2009-2010 funding cycle will be even larger. Coupled with the revised net-metering rules, a well funded incentives program would go a long way to promote the adoption of solar energy in the Sunshine State.

For more information on Florida rebates, tax incentives and other programs, check out our Florida page.