Scott TomashefskyCalifornia Energy Commission

April 11, 2005

 

Regulatory Considerations Surrounding Net Metering in California

Metering, Billing, CRM/CIS America Pre-Conference Seminar:

METCOGEN West Coast, Las Vegas

Opening Thought: Net Metering Policy Is Embraced Across Much of North America

Our government believes it's time to reward those who want to help clean up our air and increase Ontario's supply of clean, green energy.

Ontario Energy Minister Duncan, Ontario Govt Press Release, January 5, 2005

Net energy metering encourages the use of renewable energy resources and renewable energy technologies.

Arkansas Renewable Energy Development Act of 2001, HB2325.Louisiana Renewable Energy Development Act of 2003, HB863.

The legislature finds that it is in the public interest to promote net metering because it: 1) encourages private investment in renewable energy resources; 2) stimulates Montana's economic growth; and 3) enhances the continued diversification of the energy resources used in Montana.

Montana Code, Title 69-8-601, Legislative Findings, Public Utilities and Carriers, July 1999.

So What is the “Real” Appeal?

The Legislature finds and declares that…net energy metering… is one way to encourage substantial private investment in renewable energy resources, stimulate in-state economic growth, reduce demand for electricity during peak consumption periods, help stabilize California's energy supply infrastructure, enhance the continued diversification of California's energy resource mix, and reduce interconnection and administrative costs for electricity suppliers.

California Public Utilities Code Section 2827, Established in 1995.

Photos CourtesyOf NREL

Net Metering Defined

“The ability to generate electricity to an electric distribution grid system and receive a credit for deliveries to the grid.”

Net Metering Across the Nation

38 states have net metering

Variations are wide ranging

Size Technologies Limits on Total Capacity Treatment of Excess Generation

Maximum stated size of 1 MW allowed in California

California’s Net Metering Legislation

Assembly Bill 58 (2002)

Permanent expansion of net metering program.

Wind greater than 50 kw receives generation-only credit.

Public purpose program charges apply.

Utilities must interconnect within 30 business days of complete application.

Utilities must accommodate net metered MW equal to ½ of 1% of system-wide peak demand.

Assembly Bill 2228 (2002)

Biogas Net Metering.

Assembly Bill 1214 (2003)

Fuel Cell Net Metering.

Assembly Bill 1X29 (2001)

Temporary expanded net metering program to 1 MW from 10 kw.

Net Metering Takes Off in California!Grid Installed PV Capacity

2,280

4,950

85,874

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

kW

1981-1989 1990-1999 2000-2004

More than 93 MW to Date

$47.612,6412,9382004*

$158.740,39510,056Grand Total

$52.112,9173,0222003

$36.48,5012,3312002

$16.94,2941,2922001

$2.28022352000

$2.91,0601971999

$0.5181411998

Payments($ Millions)

MWNumberYear

$69.419,2184,615 2004

$180.440,39511,733Grand Total

$52.112,9193,0212003

$36.48,5012,3312002

$16.94,2941,2922001

$2.28022352000

$2.91,0601971999

$0.5181411998

Payments($ Millions)

MWNumberYear

But It Is Not Cheap…

Rebates Provided by CEC

Rebates for Net Metered Projects Via CPUC’s SGIP Program

Projects MW Payments($Million)

PV 778 109.65 389.2$ Wind 5 4.20 12.0Fuel Cells 2 0.75 3.4

Total 783 114 404.5$

But It Is Not Cheap…

Source: Utility SGIP Websites, February 14, 2005.

California Estimated Net Metering Caps

Note: LADWP is exempted from net metering caps. However, an estimated cap is provided for LADWP as if the cap did apply to them.

-

20,000

40,000

60,000

80,000

100,000

120,000

PG&E SCE SDG&E SMUD LADWP The Restof theState

kW

kW 2004 Net Metering Cap

Net Metering Policy Considerations

Do customers really need incentives to participate?

Should net metering be expanded to other technologies?

Does wide-scale deployment impact the work of the grid protection engineers?

How should “hybrid” systems be administered?

Do Customers Really Need Incentives?

Rebates going down over time, but interest is not subsiding.

Energy Commission and CPUC programs are oversubscribed.

Some May Need Incentives More Than Others

Example Calculation Commercial Residential

System Price $9.00 $9.00

Rebate Level $3.00 $3.00

State Credit (7.5%) $0.41 $0.38

State Depreciation (~ 6%) $0.36 $0.00

Federal Credit (10%) $0.60 $0.00

Federal Depreciation (~ 32%) $1.94 $0.00

Net Cost to Customer $2.69 $5.63

Tax Credits as % of After Rebate Cost 55% 7.5%

And Just Who Reaps the Benefit?(System Cost in Dollars per Watt)

$3.00$4.50 $4.50 $4.50 $4.00 $3.80 $3.20 $3.00

$5.96

$5.21 $5.46 $5.19$5.12 $5.20

$5.57 $5.75

0

2

4

6

8

10

J an-J un

2001

J ul-Dec

2001

J an-J un

2002

J ul-Dec

2002

J an-J un

2003

J ul-Dec

2003

J an-J un

2004

J ul-Dec

2004

Rebate

Cost to Consumer

Should Net Metering be Expanded to Other Technologies?

Inverter technologies relatively straight forward.

What happens when induction generators are allowed to net meter?

How Does Rapid Deployment Impact System Protection?

Wide-scale deployment a concern for utility protection engineers.

Small level of net metering projects generally manageable.

Large projects require more review from utility protection engineers.

Increases time needed to review all applications.

Are Emerging “Hybrid” Systems Problematic?

Technically – No

Procedurally – All sorts of tariff administration problems.

Metering is an issue

Non-bypassable surcharges are an issue.

Crediting mechanisms are difficult.

California Net Metering Policy Is at a Crossroads

Is net metering living up to the intent of the legislation?

Incentive requests continue to exceed amount of available money.

Program expansion up for reconsideration

Fuel Cell and Biomass pilot programs expire at the end of 2005.

Net Metering Policy Must be Focused

• Reduces peak demand.• Stimulates economic growth.• Stabilizes energy infrastructure.• Diversifies resources.• Reduces energy costs to suppliers.

• Uses limited public dollars sub-optimally.• Favors certain technologies.• Incentives do not always reach customer.• Often serves as substitute for conservation.• Increases administrative costs to utilities.• Raises utility protection concerns.

For Additional Information…

Scott TomashefskyCalifornia Energy Commissionstomashe@energy.state.ca.us(916) 654-4896