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California Governor Promises to Fix CSI

May 10, 2007 | 22 Comments

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Sacramento, California [RenewableEnergyAccess.com] Governor Arnold Schwarzenegger today announced that he is sponsoring legislation to fix an unintended flaw in legislation passed last year that is hindering the California Solar Initiative (CSI).

"Last year's legislation had an unintended flaw we are seeking to immediately fix so we can maximize Californians' participation in the program."

-- Governor Arnold Schwarzenegger, California

The program, administered by the California Public Utilities Commission (CPUC), has been touted as the best in the country. But issues with Time of Use (TOU) rates have slowed applications for residential solar systems significantly. According to the CPUC, applications are down 78 percent in the first three months of the program compared with this time last year.

TOU rates are changing prices for electricity depending on the time of day. Prices go up during the day when demand is highest, and go down at night when demand is reduced. TOU rates are important for encouraging energy conservation, especially during the summer months. But TOU rates are also deterring people from investing in solar because they slow the financial payback for customers who use power during peak times.

The bill that created the solar program, SB 1, mandated that TOU rates be applied to all customers, including those who invest in solar. Now legislators are revisiting the bill to change language regarding TOU.

"Last year's legislation had an unintended flaw we are seeking to immediately fix so we can maximize Californians' participation in the program," said Governor Schwarzenegger.

To expedite the passage of the legislation, the Governor has reached a conceptual agreement with a bipartisan group of legislators to quickly introduce a bill that fixes the problem. The Governor has also worked with utilities, environmental groups and other stakeholders to craft the agreement.

The solution allows the CPUC to temporarily change the rate structure for solar systems installed since January 1, 2007. The legislation must be signed into law by June 6, 2007, to allow the CPUC to take action at its next regularly scheduled meeting.

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22 Reader Comments

Comment
1 of 22

jim-berry-51310

May 10, 2007

Residential solar is viable in California since they allow the consumer to resell the energy back to the utility at up to $.39 per kwh for a product that should cost between the utility between $.08 to $.13 (more at peak times) on the wholesale market.

In California, put in a solar cell system! The state will effectively give you a welfare check every month.

The system will still take 10 years to pay for itself, but it can be viable.

I would install a small array myself, but my house is facing the wrong waya and the only viable area is taken up by my solar pool heating system.

It kills me to pay $.39 per kwh. (part of which is to help the state pay off past and current (solar) energy blunders.

Comment
2 of 22

michael-blyzka-64213

May 11, 2007

Carolyn, at the moment, TOU is required for those who go solar. The state is planning to roll out the new smart meters that will have the capability to track TOU data. The SCE documents currently do not indicate any TOU requirement. One can conclude that those that choose solar today are held to a different standard.

Also, when you are in a local like Palm Springs, the need to air condition is much greater and the TOU requirement is a problem. The Edison rate tiered rate schedule currently adjusts the baseline during the summer season for this situation. The cooresponding TOU rate structure should also be adjusted accordingly. I believe CALSEIA is looking into this issue.

I have not been able to find any rate data that indicates flat rates going away under Edison.

Comment
3 of 22

carolyn-luce-54460

May 11, 2007

Michael, I've noticed that TOU meters (SCE's SmartConnect or PG&E's SmartMeter) are coming to California, but I haven't read anywhere that people will be required to switch to TOU rates. Will regular customers still have the freedom of choice between flat rate and TOU? It doesn't seem fair that if you go solar you lose that choice.

If you have a URL showing that the flat rate will be going away for everyone in 5 years, I'd like to see it. I wouldn't be surprised if that's what's coming, but until it happens it seems like people with solar systems are on unequal footing.

With our PV system, TOU does save us money compared to flat rate, but I don't live in an area where air conditioning is needed much. I think people who need AC should be given incentive to reduce peak demand on the grid by installing PV.

Comment
4 of 22

guest-user-0

May 11, 2007

The news media flubbed this, calling it a statewide "crisis".

For most systems, TOU makes excellent sense because it sweetens your ROI. During peak rates, your PV is peaking. PV systems too small to offset consumption become net users even when they are peaking. Then the ROI weakens or even reverses.

But it isn't the entire market and further, is apparently mostly an SCE rate structure problem. N. Cal. PV business is booming.

One might argue that trying to make tiny systems financially rewarding is penny-wise & pound-foolish. But, of course, it enrages people who want PV but cannot or will not install enough to offset consumption.

TOU is coming for all, regardless. The governor does not want a black eye over this right now so it makes political sense to help out those affected. But in the long run, this will be get tweaked again and it won't always be as sweet a deal is it is today.

Comment
5 of 22

christina-ivazes-59872

May 11, 2007

It seems we still may be slaves to the same old story:
Loyalty to the oil cartel! If there is GENUINE SINCERITY on the part of the CPUC, why then haven't we standardized crediting back power from renewable energy sources to the PUC across the board, whether you are in PG&E territory, SMUD, etc.? THIS will provide the ultimate incentive for both commercial and residential customers to install renewable energy & reduce consumption because we all know when it comes down to it, it is always the bottom line that dictates behaviors! ARE WE REALLY TRYING OR ARE THESE PIECEMEAL PRACTICES TO REDUCE GLOBAL WARMING JUST A FRONT TO ENABLE OIL PROFITS TO CONTINUE AS LONG AS THEY CAN!

Comment
6 of 22

arden-sniffen-34579

May 11, 2007

On the same note even if this system over generates and at net meter year end there is a credit the utilty keeps the credit ,it will not be applied to TOU or Demand!

Comment
7 of 22

arden-sniffen-34579

May 11, 2007

I installed 31kw on my commercial building and on SDG&E's recent bill demand charges were $ 167.00 and the time of use charge TOU was $48.00. My electrical energy charge for the 33kwh I did use was $4.61...

Comment
8 of 22

scott-wayland-50134

May 11, 2007

...there are too many small commercial businesses / buildings that would greatly benefit from PV but won't jump on right now becuase of the TOU issue. They cannot move their power use to non-peak times unless they invested in Chilled Water Storage or some other method of shifting power demand. So unless these companies can afford and fit a large PV system, the economics are not as good as they could be.

Comment
9 of 22

eugene-lucas-60935

May 11, 2007

I think that the main reason that solar installations are down is that people are beginning to realize that there is a lot of risk in installing PV solar - its cost-effectiveness is questionable. Why do it now, when there are technological advances (both in films and cells)that may obsolete PV as we know it? Recent editions of this e-zine have documented both. We need solar that competes directly with the grid, not that relies on rebates and politics.

However, off-grid solar-thermal cooling (which is a lot of that peak cost in California) is already cost-effective, IF the collector field is mounted above, and shades the roof. Check it out!

Comment
10 of 22

scott-wayland-50134

May 11, 2007

TOU is one of the biggest problems for DG and CSI because the scheduling was not intended for DG. Yes TOU is inevitable because of power demands during peak times. All customers will have smart meters someday soon. Consider this: If PG&E had forced TOU on customers before CSI was in place, we may have gotten to this situation.

What I would like to see from the state and those involved with the program is to solve the TOU and the performance issues with a generation payback rate that has the incentive included in it. We could learn a lot from how Germany does it today.

If the Generation price was separate from the purchace price in the TOU schedules, then customers would not be looking at a reduced incentive. Plus if the geration price had the performance incentive included, the issue with poor-performing installations and protecting the CSI allocations would be fixed.

Comment
11 of 22

chris-bovia-63175

May 11, 2007

Financial is probably the key concern for most that want residential solar PV. Clearly they are interested in the cost/payback. Several of my potential clients are retiring soon - therefore, they'll be home using energy at peak times under TOU - for one, their energy bill will increase with PG&E's E-6 TOU plan and not too much better with E-7. Clients shake their heads with disdain when I mention the TOU requirement. "I thought they wanted to have solar installed - but then government goes and screws it up." I can feel further apathy towards government growing. I'm glad to see this portion of the CSI addressed.

Comment
12 of 22

michael-blyzka-64213

May 11, 2007

TOU rates are coming to the state regardless of solar. Please refer to the Edison SmartConnect fact sheet and FAQs on Edison's web site.

The TOU rate structure demonstrates the full value of the solar system. If you want to combat the rising costs of energy and defend yourself against the coming TOU rate program, put your solar system in today!

I have a system on my home and I have opted for the TOU rate because I will get better benefit from that rate structure. Yes, you will have to watch demand during the higher rate periods, but isn't that what the game plan is all about?

Comment
13 of 22

christopher-blunt-9450

May 11, 2007

My company's sales are off for several reasons this year, TOU is one of them; a slower service sector, higher interest rates, the re-fi frenzy is slowed, etc, all contribute too. My prospective customers don't like the double-edged sword of solar these days: Take a 10-year leap financially, but don't use your creature comforts at the wrong time or it might be 12 years, or 17, or 23. They want a reward for their stewardship, not a penalty that no one else in the State is required to suffer. Now, do I think that the logic of TOU rates is a good idea? YES, but only if the rate structure rewards timely conservation by lowering someone's bill with or without solar. In theory, TOU rates should magnify the return of a small PV system, not dictate that unless the system covers 80% of usage, one's bill would actually go up before solar took it down.

Comment
14 of 22

curt-bradley-10038

May 11, 2007

As a retailer and installer of PV in California there are more issues than the TOU metering that are effecting sales. There is a third party monitoring requirment which adds cost to the over 10kW systems - Self install question do you qualify or not (contradictions written in the CSI Handbook)Remember people PG&E did not make these rules nor did they write the net meter program but the California Public Utility Commission that wrote the book and a State Justice oversees the commission and any changes need to be brought before the judge for a ruling. At this time I know CalSEIA has many motions to be reviewed by the CPUC for review.

Comment
15 of 22

paul-richards-64990

May 11, 2007

Could this all be motivated by PG&E's not wanting to pay solar energy producers at the peak rate? If they want to incentivize solar, then they should pass a law that allows bigger systems and let the surplus that is produced over the usage be credited back to the owner without a one year limit. It could pay for gas usage, for the numerous usage fees, taxes etc. Why should the utility just pocket it? If this new law reduces the amount paid back to solar system owners it will serve the interest of PG&E stock holders and not the public. The reform we need is to restore the public utility aspect of PG&E by removing private stock ownership from the company. Sacramento does it as does Redding, Alameda, and why shouldn't we?

Comment
16 of 22

glenn-andersen-47991

May 11, 2007

With his common-sense approach to solving problems, maybe the Gubernator would make a good national energy czar.

Comment
17 of 22

rich-barbarics-33637

May 11, 2007

The idea of TOU is to deincentivize power consumption during peak times and is a great concept. Why would anyone want to change the rules so that an end user 'continues' their existing electric usage practice during the times of highest demand?

Comment
18 of 22

carolyn-luce-54460

May 11, 2007

Gotta wonder about the research. What use is the latest research if it doesn't take into account the even later data that shows that the demand for residential solar has dropped 78% in the state that accounts for most of the PV installations in the US. I'd call it stalling. I'm glad that the Governor and the CPUC recognize there's a problem and will get the engine going again, hopefully sooner rather than later.

In California with the net metering program, the state never gives you a check every month. The state will give you an upfront rebate, but even if you produce more solar power than you use and send the excess into the grid, you never get a monthly check for the amount you put into the grid. The utility gets to keep it at the end of the year.

I found comment 2 interesting at http://www.renewableenergyaccess.com/rea/news/story?id=47853

Comment
19 of 22

pv-sales-in-ca-52346

May 13, 2007

As someone who pitches residential PV seems daily to my customers, I agree that the system in place is not perfect. The CSI is the largest solar iniative we have ever seen and is allowing for thousands of kW production to be installed each month.

Remember distributed generation is the future. The efficiency benefits alone are startling. At the present time, we are all enslaved to the utilities. Keep installing PV, build wind turbines and recycle those incandescents.

Also, keep in mind that the end goal here that the electrical utilities themselves become obsolete. That won't happen until DG is a force that cannot be ignored.

Comment
20 of 22

carolyn-luce-54460

May 13, 2007

Thanks for looking.

Comment
21 of 22

chuck-conover-55161

May 14, 2007

PV installation is off because the real estate market is in a slump. Low refi rates and high market value are over for now. And PV is a risky investment requiring lots of money up front. My 5.2Kw system will never pay for itself at the current .085/KWh here in AZ, but I'm betting rates will triple same as gas prices. Our govt. refuses to regulate monopolies like it should. Paul R's comment is right on. Energy companies are monopolies and so prices should be regulated.

Comment
22 of 22

chris-nelder-45602

May 16, 2007

IMO, there are more reasons for the plummeting rate of CSI residential applications than the TOU requirement or the financing.
For one thing, the complex web of solar incentive programs makes it difficult to figure out if we should go for the ERP, the CSI, the NSHP, or the PBI, each with its different rules, requiring lots of phone calls and up-front design work just to decide if a project is worthwhile.
Then there is calculating the demand, doing the EPBB calculation and the energy audit, making sure that the equipment is on the right approved list, finding third-party service providers, etc.
Selling residential solar has now become a complicated mess. Some contractors don't even want to bother with it anymore. What's so maddening about it is that ALL of this could have been avoided by waiting for the utilities to deploy the new data-comm meters, then simply charge the customer for every watt they use, and credit them for every watt they make. It really could be that simple.

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