California Utilities Could Pay Homeowners to Host Solar

As any solar insider will tell you, there are many more ideal rooftops for solar than there are able and willing homeowners to go solar underneath them. This vast solar potential of distributed energy resources (DERs) goes untapped.

This situation could be about to change, by incentivizing California’s investor-owned utilities (IOUs) to own DERs.

Commissioner Michel Peter Florio at the California Public Utilities Commission (CPUC) has introduced a first-ever draft regulatory incentives proposal “Need for Considering Utility Incentives to Deploy DERs” to discuss and decide upon incentives to allow the IOUs to own rooftop solar hosted on their own customers’ homes and businesses.

“The utility would also describe in its advice letter a proposal for notifying end-use customers in the affected area of the electrical products and/or services the utility was seeking to obtain,” wrote Florio.

The CPUC began mulling the concept in 2014. Now that docket is open for public discussion till May 2.

The idea is for stakeholders to think about equitable reimbursement rates for potential DERs, and appropriate incentives for utilities. Currently there are regulatory disincentives, even though siting solar closer to load can save utilities from investments in upgrades.

“If the utility displaces or defers such investments by instead procuring DER services from others, it earns no return on the associated expenditures,” Florio explained, in introducing the proposal.

California’s IOUs have long been incentivized through renewable portfolio standards (RPS) — mandates — to contract for increasing percents of renewable energy at utility-scale. However rooftop solar is not counted towards meeting the RPS.

Mandates like the state RPS have proved to effectively increase renewable energy deployment. Ever-increasing renewable targets are set, and utilities are penalized if they don’t meet them. (All three IOUs are well ahead of their current target — excluding utility-scale hydro — of 25 percent renewable.)

Applying an incentive could similarly increase solar rooftop deployment. The idea removes many obstacles to full exploitation of solar potential. IOUs, with guaranteed rates of return, can borrow for much less than solar companies.

Many excellent rooftop resources go to waste because the homeowner is unable or unwilling to access even $0-down solar or PACE funding, or inertia prevents them from acting. Going solar takes effort; homeowners must invite and compare bids, consider payback, check their credit rating and compare borrowing to $0-down.

It is much easier to simply accept some remuneration by agreeing to host a solar array — with the utility handling everything. Homeowners would simply get an offer inside their utility bill, to perhaps rent their roof; a simpler sell. Billing credits would be seamless, handled by the utility, which would commission local solar companies to install (at a lower cost than now, because they now have zero customer acquisition costs).

“Customers in the affected area could also indicate that they would like to have their names and contact information placed on a public list that vendors could use to solicit participants in a DER project,” Florio wrote.

In opening up the subject for ideas on how best to do it, Commissioner Florio explained why it’s not an easy regulatory decision:

“One might ask: why provide the IOUs with any incentive at all? Why not just direct the utilities to choose DERs whenever they are less costly than traditional distribution investments? The problem is that, given the complexity of the distribution system, this Commission is ill-equipped, at least at present, to determine with the necessary specificity exactly when and where such DER deployment opportunities may exist.”

Commissioner Florio asked:

“What would be the appropriate role of the IOUs themselves in the deployment of cost-effective DERs? Should direct IOU participation in DER deployment be encouraged, foreclosed, or allowed with certain caveats?”

Lead image credit: Matt Montagne ​via Flikr under Creative Commons License


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Susan Kraemer reports on renewable energy for CSP Today, Wind Energy Update, PV Insider and Renewable Energy World, and has written about renewables for Cleantechnica, Green Prophet and other sites.

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