Environmental Leader

Not to worry if more utilities follow the lead of Southern California Edison who has dropped their small-scale/residential rebate twice in the last six months. With their current rebate at only $1.90W AC the efficient homeowner is faced with payback in excess of 22 years. Certainly not a financially viable situation.

As incentives and rebates continue to drop we can expect to see a similar precipitous drop in the adoption of solar power at the residential level except for those with the financial resources to make a personal statement and/or those who are energy hogs purchasing power at top-tier rates.

With the current financial models available in Southern California the only viable approach for residential solar is to include PV with the initial design and build of new homes. It is not financially viable as a retrofit to existing high-efficiency homes purchasing power at Tier 1 & 2 rates.

Utility based incentives and rebates are yet one more means by which the utilities control and even limit the adoption of solar power in the residential market. This is an area that could benefit from a national renewable energy policy with proper oversight to ensure a level playing field is adopted that properly encourages the increased deployment of renewable energy – solar, wind, micro-hydro, etc. at the residential level regardless of the efficiency level and Tier rate level of the prospective site.

Jack Pouchet | August 31st, 2009

It is far worse than anybody will acknowledge. With net metering (grid-tie solar) you have three payment streams associated with the ownership and generation of electricity, and the utility company is about to steal all of them.

1) load displacement – all the energy you consume of your own production.
2) net-metering – all of the surplus energy you produce (above consumption)
3) RECs (renewable energy certificates).

Current assumptions are that load displacement is valued at the retail rate, since you are consuming your own production. However, this can be taken away by implementing a simultaneous buy-sell program. Soccoro Electric Co-op is already implementing this change. What it means is – even if you produce exactly the amount of energy that you consume (say 300 kwh), nothing more nothing less, the utility company will buy all of your 300 kwh at their avoided cost rate (say 6 cents) and sell you 300 kwh at their retail rate (say 14 cents). This means that even if your solar array is sized to exactly meet your needs, the utility company will still charge you 8 cents (difference between 14 cent retail rate and 6 cent avoided cost rate) for all of the 300 kwh you consumed – even though you produced all your energy with your solar array.

Net-metering only occurs when you produce a surplus of energy. As reference above, the net-metered rate is substantially below retail, less than half. In fact, current rules in New Mexico allow the utility company to roll forward (not pay you) any amount they owe you, indefinitly, until you close the account.

RECs are the green tags. It takes one REC + one kwh of brown power to = one kwh of green power. So, you produce one REC with every kwh your solar array produces. RECs have value. Current retial rate is about 5 cents per REC. Some utility companies will purchase your REC now, and it is expected that in the near future you will be able to sell your RECs on a regional exchange and not be dependent upon your local utility for purchasing it. However, the utility companies claim that they own the REC for free because of NMPRC rule 572.13.c.1.b and case ruling 05-00352-UT (which ruled that all net-metered systems in New Mexico are Qualifying Facilities).

Erik Hawkes

Erik Hawkes | September 1st, 2009