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Solar ‘cap’ fast approaching

Posted: June 3rd, 2016 | Featured, Features | No Comments

Customers can their place bets now or wait out imminent charge to finish line

By Morgan M. Hurley | Editor

If San Diegans are still considering “going solar” this year, they only have about two months left to get their installation complete and certified in order to see the absolute best return on their investment, but thanks to the state’s public utilities commission, solar in California is surely here to stay.

Changes to how residential rooftop solar customers are billed, however, will take place as compromise. Assembly Bill 327 (AB327), which Governor Brown signed into law last October, goes into effect soon, once the number of solar installations within the public utility’s territory reach a cap — determined at 5 percent of the utility’s peak capacity — which is expected to happen mid-July in San Diego. Other areas of the state have until July 1, 2017 to reach the cap in their territories.

Under current regulations, San Diego Gas and Electric (SDG&E) customers who have installed solar energy systems receive “full retail price” — which is basically a 1-for-1 credit on their bill — for each kilowatt hour of energy they add to the grid.

Daniel Sullivan, founder of Sullivan Solar Power, is a Downtown resident. (Courtesy Sullivan Solar Power)

Daniel Sullivan, founder of Sullivan Solar Power, is a Downtown resident. (Courtesy Sullivan Solar Power)

These generous incentives have helped create a boon in solar rooftop sales in California — and especially San Diego County — in the last decade, with San Diego currently ranked No. 2 in the nation, according to a recent report from advocacy group Environment California. Los Angeles is ranked No. 1.

“According to researchers who examined solar power installations in 64 American cities in nearly every state, San Diego had enough solar capacity at the end of last year to power about 47,000 homes,” Environmental California stated in a press release referencing their report.

In addition, the city of San Diego recently promised to install even more solar-generated power systems as part of their goal to transition to 100 percent renewable energy by 2035. Just last month, San Diego Airport unveiled a new 3.3 mega watt (MW) system, which officials stated is expected to save the facility up to $8 million over the next 20 years.

All this growth has increasingly impacted the state’s utility companies, who have lobbied intensely in recent years to boost fees for rooftop solar customers or eliminate incentives for the installations altogether.

“San Diego has been a leader in renewable energy, particularly solar power, for years,” said Daniel Sullivan, president and founder of San Diego-based Sullivan Solar Power. “Environment California’s report has ranked San Diego as one of the top solar cities in the country for three consecutive reports and that’s very encouraging and we welcome that growth. Because we’re so aggressive and proactive as we move away from fossil fuels and toward renewable energy, we are quickly moving towards reaching the maximum capacity that the public utility will allow to receive metering.”

While other states such as Hawaii, Arizona and Nevada have curtailed or nearly eliminated net metering — a method that incentivizes solar customers for contributing energy to the grid from their rooftop systems — the California Pubic Utilities Commission (CPUC) voted in January to retain the program, despite alternative proposals from the state’s three investor-owned public utilities, SDG&E, PG&E and SoCal Edison.

“The way net metering works — you have a solar powered system on your roof and the energy from that system automatically flows into your electric service panel,” Sullivan said. “Energy will first go to satisfy any loads in the home and anything that is in excess of what is needed in the home gets fed out into the street or onto the distribution grid with SDG&E. In doing so, you literally spin your meter backwards and generate monetary credits with the utility on your electric bill.”

In the evenings, when residential solar systems are no longer working, customers automatically begin to accumulate debits with the utility, which are later balanced out with the energy the customer added to the grid during daylight hours for billing purposes.

Though CPUC is retaining net metering and those with systems today will continue to get full retail credit through the life of their systems, AB327 will make it a little less appealing for new solar customers.

Amber Albrecht, a representative from SDG&E, said there is “little change to the existing program” and credits will remain “full retail value minus about two or three cents,” but others say those cents add up and the additional fees the utility will soon be allowed to enforce on its customers will further chip away at the incentives.

New charges planned include a one-time “interconnection fee,” which CPUC will determine (between $75 – $150), and a “non-passable solar fee,” a monthly service charge that will cover the costs of meter readings, billing services and help defray low-income customer programs.

Team members install solar on a rooftop (Courtesy Sullivan Solar Power)

Team members install solar on a rooftop (Courtesy Sullivan Solar Power)

Despite these post-cap changes, Sullivan said there are ways to enhance the installation to continue the appeal for users.

“A system’s performance needs to line up with a customer’s usage profile to optimize the benefit on a moving-forward basis,” he said, adding that his team performs a detailed pre-installation analysis for each project.

“If we move customers onto a time-of-use rate that is specific to solar and design the system to optimize production during on-peak hours, then it is financially advantageous.”

East County’s climate causes homes to expend more energy, requiring larger solar footprints than coastal areas but added benefits. Sullivan emphasized, however, that since not all homes have south- or west-facing roofs, some prospective clients may not be suitable for optimization or even installation.

“We always had to take [the usage profiles] into consideration when determining how good a system was going to perform, but now it is even more crucial to get it right on the front end, or the return on investment can be much longer.”

While two months may seem like plenty of time to get an install in under the wire — April saw 18 MW of installations and 37 MW still remain under the 617 MW cap — Sullivan said things are moving more rapidly than people realize, due to the installation backlog and the scope of the process, which can take up to 40 days to complete.

Add to that the sheer number of installs yet to come.

“There will be acceleration toward the cap by all local solar companies,” Sullivan said. “If you sign up for solar now, it is a risky endeavor because you may not get it installed before the cap is hit.”

Despite the seeming “gloom and doom” surrounding the upcoming cap, Sullivan was quick to point out that rooftop solar is still the way to go.

“While it is not as attractive to go solar in a couple of months as it is today, the state of California supported rooftop solar and it’s my belief they are going to continue to do so,” he said. “It is not just the right thing to do as far as global warming is concerned, but we have a finite amount of fossil fuels. It is logical, we need energy to survive and we need energy to support our economy. Being dependent upon a finite amount of fossil fuels controlled by a few special interests is not the way of the future.”

Assembly Speaker Emeritus Toni G. Atkins recently reiterated to Dowtown News the importance of solar energy and the state’s dedication to the future.

“Clean energy is hugely important to California,” Atkins said. “There are more than 2,300 solar-related companies working in our state, employing 75,000 people. In 2015, California installed some 3,266 MW of solar electric capacity, ranking it first nationally once again. The 13,243 MW of solar energy we have installed in California ranks us first in the country. We will continue to ensure that Californians who seek to increase their use of renewable energy — including individual consumers and our manufacturing and business sectors — have the maximum opportunity to do so.”

[Editor’s note: Next month we will share an in-depth look at the solar activist who became a business phenom.]

—Morgan M. Hurley can be reached at morgan@sdcnn.com.

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