California Approves Distributed Energy Resource Providers To Aggregate Renewable Energy Generation

If you live in California, there’s a chance that a neighbor with rooftop solar panels will help keep your lights on soon.

In a first, the state’s grid operator has approved rules allowing companies to buy electricity from numerous homes and commercial power systems, and then bundle it up to meet a threshold needed to sell energy on the wholesale market.

Companies including utilities will be able to consolidate the output of rooftop solar systems, batteries and even plug-in electric vehicles, the California Independent System Operator Corp. said Thursday in a statement. The shift demonstrates that small-scale power sources are becoming a more critical part of the state’s energy mix.

“This is an important win for California energy users,” said Ken Munson, chief executive officer of Sunverge Energy, which aggregates power from solar panels and batteries installed at homes and businesses. “It paves the way for consumers to play a more active role in the generation and distribution of the energy we use every day.”

Spurred by declining costs and leasing programs that offer installation with no upfront customer payments, residential solar has been the fastest-growing part of the California solar industry. It increased by 50 percent last year, outpacing utility-scale solar, which expanded 15 percent, according to Bloomberg New Energy Finance.

Some Californians are already helping juice the grid by participating in utility programs that pay them for power from their solar panels that they don’t use, a service known as net metering. Those won’t be able to bid in the wholesale markets.

Revenue Opportunity

The move by the grid operator “could ultimately benefit providers of distributed solar, because it creates the opportunity for an alternative source of revenue outside of net metering,” said Madeline Yozwiak, an analyst at Bloomberg New Energy Finance.

SolarCity, the biggest residential rooftop solar owner in the state, sees the Thursday decision as an “important first step toward expanding access for distributed solar and storage in wholesale markets,” Jonathan Bass, a company spokesman, said by e-mail.

This could lead to additional competition in the wholesale market for incumbent generators, Paul Patterson, a New York- based analyst for Glenrock Associates LLC, said in an interview.

Share Price

Shares of SolarCity fell 1.2 percent to $52.15 at the close in New York.

Companies that own fossil-fuel power plants in the California market include Calpine Corp., NRG Energy Inc. and Dynegy Inc.

“Historically, residents haven’t been able to participate in wholesale markets; they have been ring-fenced,” Alan Isemonger, founder of Energy Market Expertise LLC in Fair Oaks, California, said in a phone call Thursday. “Now they will have more opportunities to participate.” He was formerly a manager in market operations at the California ISO.

California has set a target of getting 33 percent of its power from renewable sources by 2020 and is looking to increase that benchmark to 50 percent by 2030 as part of its climate goals.

–With assistance from Christopher Martin in New York.

©2015 Bloomberg News

Lead image: Distributed Energy. Credit: Shutterstock.

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