A new bill passed in California could be on the right path to revolutionising the residential solar market with little or no risk to all benefiting parties.
California’s Senate Bill 843, the Community-Based Renewable Energy Self-Generation Program, that just passed 9-2 in the Assembly Utility & Commerce Committee hearing on June 25th, would give virtually any Californian the option of choosing power from a nearby solar project and being credited for its energy on their utility bills, creating a novel way for homes, businesses, schools and public agencies to harness renewable energy.
Customers of the state’s major investor-owned utilities (IOUs); PG&E, SCE and SDG&E could opt for solar built locally by a solar developer, much as if those renewable energy systems were located at their own home or business - but with no cost to participate.
With almost a decade as an environmental advocate in Washington, Tom Price, who heads policy development and market strategy at Clean Path, designed the legislation to make the choice of solar as straightforward as signing up for any electricity service.
“The real genius of this legislation is that it does not require either a high credit score or big cash upfront to participate,” he told PV-Insider. “It just requires you be a customer of a utility.”
It could catapult the development of distributed solar even more effectively than Feed-in Tariffs did for Germany or Spain - but at no cost or risk.
Currently, it takes a reasonable credit score (or cash) to go solar in the state. Even signing a contract with a solar PPA provider like SunRun (or leasing from SolarCity) takes a relatively high credit score, because of the risk to capital investment. Price proposes a very neat solution that removes the requirement for high creditworthiness.
“If I put a solar array worth forty thousand dollars on your roof, and you stop paying me, I’m out forty thousand,” explains Price. “But if I give you bill credits, and you stop paying me, I can give those credits to someone else.”
SB843 also easily hurdles another sales obstacle for solar: that so many potential customers rent, or have roofs that are unsuitable: shaded, or atop multistory buildings, or just badly designed for solar. “We’re trying to do something about the fact that 75 per cent of the residents and 75 per cent of the businesses in California, have zero option,” explains Price.
Solar developers would sign up interested subscribers and then build neighbourhood solar projects on nearby open space, industrial buildings or big box store rooftops to supply their electricity.
Clean Path has already proven its concept, in a ten year 1 MW PV-USA pilot project for the City of Davis, which is cosponsoring the legislation, along with the Superintendent of Schools. It is strongly supported by solar advocates, environmental organizations, and organized labour.
A Feed-in Tariff priced high enough to be an incentive can risk becoming too expensive for taxpayers. But under SB843, there would be no risk to taxpayers, customers, solar developers, investors or utilities, even if literally every Californian chose to go solar this way. The City of Davis alone already plans to commission 10 MW, based on the pilot’s success.
There is also no limit on enrolling in the plan, so it has much greater potential to grow solar adoption than the community solar bill passed in Colorado that limits participation to 6 MW for the entire state, and is self- limited to those with cash to buy the panels in a panel-purchasing co-op.
“We don’t think it’s good public policy if it requires people to have thousands of dollars to participate,” says Price. “Everyone benefits from renewable energy. Everyone should be able to vote with their money to support renewable energy.”
There is a strong argument by Price and others in the solar industry that this policy is better for utilities than net metering, since it reduces only the energy generation portion of the bill.
Keeping everyone happy
They can lose nearly their entire former income from ratepayers who install solar and cut their bill by up to 100 per cent under net metering rules, yet utilities must still maintain, repair and build new transmission and distribution lines and develop new generation with less and less income from ratepayers as more and more people go solar using net metering.
It is also carries low risk for solar developers, by aggregating large numbers of small, consistent payments over time. That likelihood of payment also makes investors comfortable. The way it would work, says Price, is that just the energy generation portion of the bill would go to the solar developer, instead of to the utility. Payments would be handled on a monthly basis, the way electricity is.
A ratepayer would get a credit for the generation from their electric utility, and a debit from the developer to help pay for the portion of the solar generation they use, and net a small savings. “You’d cut your bill, but not a lot, just 5 or 10 percent,” concedes Price.
The legislation is well thought out to grow distributed solar power faster than the Feed-in Tariff, not only because anyone can participate, but because it benefits every party fairly, from the industry, to ratepayers, IOUs, investors and taxpayers, and at no cost or risk to any of them.
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