Solar and political struggle: The view from Intersolar North America

Despite all the success of the U.S. solar industry, the 10th annual Intersolar North America launched on an activist tone, with policy struggles at both the state and national level. In many ways, the work of transforming our energy system is just beginning

By Christian Roselund, PV Magazine

Bernadette Del Chiaro's keynote address at Intersolar, Monday Jul.10.17

2017 is already a banner year for solar in the United States. Following on record levels of deployment in 2016, the solar industry has been hitting a series of new records, with utility-scale solar costs falling below $1 per watt, power purchase agreements being reported at under $0.03 per kilowatt-hours, and the leading state, California, getting 13% of its electricity from solar on an annual basis.

But at the same time that the solar industry is seeing these successes, there are new challenges. While the overall solar market continues to grow year-over-year, the national residential PV market declined in the first quarter of 2017, largely due to difficulties in California and the other largest markets. Some of this is due to political pushback, and the modifications to state-level implementation of the Public Utility Policies Act of 1978 (PURPA) are in some cases closing off new state markets.

This is to say nothing of the national political picture, where the Trump Administration has made moves to threaten renewable energy, including proposals to slash funding for support through the U.S. Department of Energy. But while Trump can’t stop the progress of solar, the challenges to integration of high levels of wind and solar are already showing in California, which is leading to new fights over not only solar, but the future of the grid.

As such, at the opening ceremony 10th anniversary of Intersolar North America in San Francisco, the mood is decidedly combative. MC and California Solar Energy Industries Association (CALSEIA) Executive Director Bernadette Del Chiaro started the event with a social media audience participation exercise to put pressure on the California Assembly to pass SB 700, which would spur the creation of $1.4 billion in consumer rebates for energy storage systems.

But as states such as California are grappling with what to do next, the divide between the actions of progressive states that are grappling with a changing grid and states that have turned their back on the Energy Transition are stark. 2017 Champion of Change Award Winner and New York State Energy Czar Richard Kauffman during his acceptance speech referenced a statement by early 20th century Supreme Court Justice Louis Brandeis, who described states as the “laboratories of democracy”.

“There are states that are going forward, and there are states that are going in another direction,” noted Kauffman. He could have been speaking of Indiana, which recently shut down its net metering program, or Montana, which has greatly weakened its implementation of PURPA.

To be sure, the movement of policy to adapt to the rapid changes in the grid is always a balancing act. “We can’t keep putting DG On the grid of Tesla and Westinghouse, that was not designed for distributed generation or intermittent sources,” noted Kauffman.

However, he also noted that due to the opportunities involved in transformation of the electric system, there will be rewards as well. “There are ample opportunities for the utilities to share in the savings,” Kauffman explained.

And even with all of the political and policy work needed, there is also a need for less confrontational roles within the industry. Keynote Speaker and former Federal Energy Regulatory Commission (FERC) Chair Jon Wellinghoff spoke of the “three i’s” – Information, Innovation and Integration.

“There are lots of winners if we do this right,” concluded Kauffman.

And ten years in at Intersolar North America, in many ways the work is just beginning, as the needs move beyond raw deployment to integration, and beyond solar to an entire clean energy ecosystem.

More on that tomorrow.


California’s C&I solar sector thrown into chaos with TOU changes

California regulators are proposing to move C&I customers onto pending time-of-use rates starting on August 1 – despite a lack of clarity as to the details of those rates.

By Christian Roselund, PV Magazine

California has a few problems with timing. The state is in the process of setting new time-of-use (TOU) electric rates at its three large investor-owned utilities, which could have significant impacts on the economics of distributed solar installations under the state’s new net metering rules. And until these are finalized, solar customers and developers are in the dark.

This lack of clarity is a problem for residential solar customers, who will be forced onto mandatory TOU rates under Net Metering 2.0, which will be effective in the final of the three utilities as of July 1. But it is also a problem for commercial and industrial (C&I) PV system owners who were already on TOU rates, as these time periods that these rates will apply are set to change for the first time since the 1980s.

The cut-off date for grandfathering

Under a January ruling existing C&I systems will be grandfathered for 10 years under the previous TOU time periods. However, this week California Public Utilities Commission (CPUC) made moves to reject a petition by two solar industry groups – California Solar Energy Industries Association (CALSEIA) and the national Solar Energy Industries Association (SEIA) – to extend the date when new C&I PV systems will be grandfathered under the old rates.

The groups say their petition was an attempt to give more lead time to customers who are in the process of installing systems. “People have gone forward under certain assumptions,” CALSEIA Policy Director Brad Heavner told pv magazine. “A lot of customers are caught in the middle – moving forward with projects that aren’t going to be installed by (August 1).”

The Administrative Law Judge decision issued on Monday denies the SEIA/CALSEIA motion, but makes an exception for schools, which can complete interconnection by August 2018 and still be grandfathered under the old rates.

This ALJ decision is only the first step, and will now spur a round of comments before a proposed decision and then a final ruling. However if it goes forward under its current form, C&I PV systems that are not completed on August 1 will be subject to the new rates – despite installers and system owners not yet knowing what those rates will be.

The fight over the peak

The new TOU rates which have been proposed by utilities are themselves controversial. In response to a surfeit of mid-day power from California’s many PV systems, the state’s utilities are proposing moving “peak” periods back to as late at 5-10 PM. This would mean that solar PV would be generating in off-peak periods, and that PV systems owners would receive less for the electricity they generate than the electricity they use in the evening.

In SDG&E’s service area, which is the one utility service area which is moving toward resolution, the proposed decision is peak to set peak 3-9 PM. This translates to PV installations generating during only a portion of the peak.

According to CALSEIA, this is the first big change in TOU rates since the 1980’s, when peak was set at 12-6 PM. This timing was ideal for solar, but certainly not in line with recent changes to the composition of the state’s electric generation. And the change from 12-6 PM to 3-9 PM, let alone 5-10 PM, will have significant effects on the economics of solar.

Market impacts

A decision on SDG&E TOU rates is expected in July, and these rates will go into effect on December 1. However for PG&E and SCE final decisions on TOU rates are not anticipated until the first quarter of next year.

During this period of limbo, Heavner says that the uncertainty around TOU rates is affecting California’s solar market. “The markets are struggling right now, and the biggest reason is getting adjusted to the new outlook,” notes Heavner. “I’m hearing a lot of companies that specialize in commercial projects saying that business is slow.”

SEIA agrees. “The solar industry is committed to supporting California’s move to time-of-use rates, but we need to make sure there is continuity in the market,” Brandon Smithwood, SEIA’s director of California state affairs told pv magazine.

“This week’s ruling suggests that the vast majority of commercial customers won’t have clarity on time-of-use rates, a decision that prevents businesses who want to adopt solar from doing so, potentially leaving the state’s commercial market nearly frozen until next year.”


Daylight Savings - As financial incentives get phased out, local utilities and industry experts grapple with the future of solar power

By Russell Nichols, Comstock's Magazine

The biggest issue with solar panels on roofs has nothing to do with electricity.

This revelation came to Aaron Nitzkin back in 2012, after he had been laid off from Dow Solar. He had been in the industry for nearly 10 years at that point, and it was hard for him to watch from the sidelines as early solar business models crumbled under bad roofing contracts.

“I’ve seen so many problems with these solar companies,” Nitzkin says. “Some installed two or three systems in a day. Some were putting solar panels on a 15-year-old roof knowing that roof would need to be replaced in the next 5-10 years, costing customers thousands of dollars extra to remove the system and replace it. It was real sketchy stuff.”

It dawned on Nitzkin that the best time to install solar panels would be when a new roof is first put on. This would align the lifecycles of the roof and the solar system. With this basic concept, Nitzkin created Solar Roof Dynamics in 2013, putting solar in the hands of roofing contractors already thriving in the trade, and providing comprehensive solar training, products and services. Four years later, this small Davis-based startup is going national.

In January, Solar Roof Dynamics announced a strategic partnership with GAF, the largest residential and commercial roofing manufacturer in North America. Nitzkin’s company is enhancing GAF’s residential Solar Elite program, offering its vast network of roofing contractors an array of solar services, such as engineering and design, installation, sales and project management training. He believes this type of collaboration will be the model of the future.

“Ten years from now, the majority of roofing contractors will offer solar,” Nitzkin says. “It will be no different than ordering a burger and being asked if you want fries with that. ”

This year marks the deadline for California’s 10-year bet on solar roofs. In 2006, the state launched the “Million Solar Roofs” vision, pumping $3.2 billion into incentive programs. The plan was to build one million solar roofs, or the equivalent thereof, generating 3,000 megawatts of renewable energy by 2017. California currently has almost 700,000 solar projects, but the state surpassed the wattage target in 2015 (more than 5,000 megawatts installed as of March 2017), according to California Distributed Generation Statistics.

The impact was huge, creating 100,000 jobs, catalyzing California’s solar industry and expanding beyond homeowners to businesses and schools (Related: Plumas Lake school district takes advantage of Prop 39 for energy-efficiency projects). Now, with most incentive programs phased out, the next few years will determine how the market sustains itself as local utilities try to solve cost inequities and answer questions about solar energy storage.

Raising the Roof

In California, the push for solar power goes back decades. In 1995, California passed the net-metering program, allowing customers with a solar panel to send surplus energy back to the grid for credits. In 1998, the state passed a deregulation bill, offering rebates to customers investing in rooftop solar. Still, in those days, the solar market was almost nonexistent and climate change wasn’t a mainstream topic.

Then came the blackouts.

In the California electricity crisis of 2000 and 2001, illegal shutdowns of pipelines by Enron and market manipulations created a shortage of electricity in the state. Businesses were hit hard by rolling blackouts and, suddenly, the idea of customers generating their own electricity made much more sense, says Bernadette Del Chiaro, executive director of the California Solar Energy Industries Association.

But a solar panel wasn’t just something you could pick up at Home Depot. With a price tag of $50,000 or more to install a system, this was a luxury that only a select few could afford.

“Only extremely wealthy tech lovers were going solar — and more power to them, but that’s not going to solve any problems or create meaningful jobs,” Del Chiaro says.

Working with former State Senator Kevin Murray, Del Chiaro developed the Million Solar Roofs initiative. Former Gov. Arnold Schwarzenegger won the recall and supported the idea. The Democrat-controlled Legislature passed the unprecedented law. By creating this demand and giving certainty to the marketplace, California became ground zero for innovative solar business models and has since become a global leader.

“We employ 100,000 people throughout the state of California,” Del Chiaro says. “That’s twice the number of people that work for all the state’s electric utilities combined.”

Ten years ago, the market was small, with only early-adopters (the so-called “backwoods hippies” and “Malibu millionaires”) going solar. But when rebates were put in place with the new law, non-residential customers (businesses, schools, municipalities, etc.) took advantage and made it more mainstream. The industry was able to lower prices.

The rebates stopped in 2015 when California reached its target. Federal tax credits for solar installations (which now cost around $15,000 to $17,500, before incentives) still exist, but those will also be phased out in the next five years. But Del Chiaro says the market has continued to grow despite the absence of incentives for the vast majority of the marketplace.

Equity vs. Subsidy

The system isn’t perfect.

Low-income customers and those who rent generally do not have access to rooftop generation. These classes are among those most vulnerable to the net-energy metering cost shifts, says Mario De Bernardo, state government relations and external affairs manager of Northern California Power Agency, an association based in Roseville that oversees regional utilities.

In addition, customers without rooftop solar end up footing other users’ electric bills. For example, under net energy metering, homeowners with solar panels may earn subsidies from the utility and non-solar customers where they don’t have to pay for electricity at all. In brief, net energy metering is a billing arrangement where customers with solar panels receive financial credits for any extra electricity they generate and give back to the grid. But these homeowners still draw from the grid at night once the sun goes down. They’re benefiting from the distribution system without paying.

Those costs, in theory, get passed onto other non-solar ratepayers, De Bernardo says. “Some customers can’t invest in rooftop solar,” he says, “but under the traditional net-energy metering system, they’re still paying into the program to support those who can.”

This is why jurisdictions across the country are looking to reform their rooftop solar programs to allow solar to grow more sustainably, says Jonathan Changus, NCPA member services manager and regulatory affairs. Roseville Electric, recently ranked No. 9 by the Smart Electric Power Alliance in providing the most solar to customers, is a prime example. The utility is pursuing a plan to build a community solar pilot project that allows customers to opt-in and get benefits from a large, centrally located solar farm in the city. The project is ideal for residents who cannot install solar because they live in an apartment, condominium or rent a home. Also, unlike rooftop solar, the benefits of the program move with the customer, as long as the person stays within the utility’s service territory. The utility hasn’t yet entered into a contract with a vendor, and the project is in the preliminary stage.

“It makes more sense for municipal utilities because their local governing boards, which are usually city councils, like to see the renewable investments in their communities,” De Bernardo says. “These local officials are also looking at ways to help lower-income ratepayers in their communities.”

The Sacramento Municipal Utility District has been a solar pioneer since the 1980s, building one of the world’s first utility-scale solar arrays at Rancho Seco in 1984. Its Solar Shares program allows customers to take advantage of owning solar without the hassle of buying and placing panels, and “helps businesses deliver on corporate renewable goals while saving on capital costs,” according to Brent Sloan, SMUD’s solar expert.

On the business side, Sloan says companies started installing solar panels for many reasons, such as reducing emissions or boosting their competitive advantage by calling themselves “green.” But in the past few years, many have actually begun integrating solar for the energy savings. It may be only cost-effective in a certain timeframe instead of year round, but even that time period could help deliver net savings, Sloan says.

“I think you’re moving now to where businesses are seeing it as a way to affect their energy portfolio and lower time-of-use charges,” he says. “I do calculations to try and get them to look past that one time period and look at the larger picture of yearly energy usage and charges.”

Battery Life

California imports the vast majority of its fossil fuels. This means a percentage of every dollar derived from fossil fuels must be sent outside of the state for importation. By contrast, the sun is a free and inherently local energy resource, so a higher percentage of every dollar spent on solar energy goes to the person who did the installation, Del Chiaro says.

The next big challenge is storage. Or, as Del Chiaro says, “putting a battery in everyone’s garage to make the sun shine all day long.”

Customers would be able to draw from the battery at night instead of the grid. This would give them another tool to control energy usage and operate independently. Del Chiaro notes that these customers would not go off the grid completely, but would be protected from price spikes. Still, solar batteries may be too expensive for some customers, with price estimates between $5,000 to $7,000.

Currently, there are two bills aimed at transforming the energy storage market on the consumer side, and making the economic, environmental and grid support benefits more mainstream:

AB 1030 establishes state goals of creating a marketplace for energy services and achieving market transformation for the storage industry. The bill directs the California Public Utilities Commission to make a number of policy and programmatic changes to achieve those goals.

SB 700 would jump-start the energy storage market by reducing technology and installation costs through a tiered rebate program, similar to the California Solar Initiative program, but for storage.

Del Chiaro insists the objective isn’t to make utilities obsolete, but to help the energy model evolve to meet future demand, including an influx of electric cars.

“We have this 19th century grid and we’re adding 21st century technology,” she says. “The idea to build a huge power plant and transmission lines, and pipe them into a large city and sell them at full retail, that’s a thing of the past. We want the sun to shine at night. This will enable us to truly achieve a 100-percent, carbon-free energy economy.” 


California Moves to Boost Customer-Sited Energy Storage. Remains Industry’s “Undisputed King”

By Lisa Cohn, Microgrid Knowledge

Described in a recent report as the “undisputed king” of the energy storage industry, California continues to blaze new trails, now with legislation to boost customer-sited energy storage.

The California Senate recently passed SB 700, which creates incentives for customer-sited energy storage in homes, schools, farms and businesses. Next, the bill moves to the state Assembly.

The 10-year rebate program, called the Energy Storage Initiative, provides up to $1.4 billion and lets the PUC set the total amount, said Laura Gray, energy storage policy advisor with the California Solar Energy Industries Association. It aims to make storage more accessible to consumers.

“California is once again showing its leadership on clean energy. Just as the state revolutionized solar, it has the opportunity to transform the market of customer-sited energy storage,” Gray said. “With this bill California would be the first state to create a market transformational program dedicated to local energy storage.”

Undisputed king for next five years

Separately, GTM Research and the Energy Storage Association (ESA) reported this week that California “will remain the undisputed king of the U.S. storage market over the next five years.”  Arizona, Hawaii, Massachusetts, New York and Texas vie for second place.

California helped drive what proved to be a record-breaking first quarter for energy storage in the United States. GTM and ESA’s latest “U.S. Energy Storage Monitor” reported that 234 MWh of energy storage was deployed, a 944 percent rise over the first quarter last year.

Ravi Manghani, GTM Research’s director of energy storage, attributed the big leap in part to a large battery deployment made to bolster reliability following natural gas leaks at California’s Aliso Canyon.

Several recent policy moves also boosted energy storage in California, according to the report, including a doubling of the Self-Generation Incentive Program in April, upping the program’s budget to $83 million annually for 2017-2019. Energy storage will get 85 percent of the funds. Of that 90 percent goes to projects larger than 10 kW and 10 percent to residential projects less than or equal to 10 kW.

GTM Research noted several other recent activities in California helping energy storage:

  • San Diego Gas & Electric announced winners for its 2016 preferred resources request for proposals (RFP)
  • The California State Legislature introduced AB 1405, which would establish a clean peak standard for California
  • SDG&E released a Distribution Reliability/Power Quality RFP
  • The California Public Utilities Commission announced an additional 500 MW of distributed energy targets for the three main investor-owned utilities, distributed evenly among the three.
  • The California Independent System Operator released its Energy Storage and Distributed Energy Resources Phase 2 proposal, meant to lower barriers for energy storage and distributed energy to participate in the wholesale market.

California topped all states for non-residential and utility energy storage installations in GTM’s ranking. For residential storage, however, the state ranked only third. Residential installment may increase if California lawmakers approve the customer-sited energy storage incentives.

Legislation plays to consumer demand for energy storage

Customers are interested in storage because of its ability to help them control their energy use and protect themselves against fluctuating rates, Gray said. “Local storage will also allow homes, businesses and schools to use renewable energy more efficiently, which will help the state reach 100 percent renewables.”

California sees economies of scale pushing prices down over time. So under SB 700, the rebates for customer-sited energy storage get smaller as more systems are installed.

Bill sponsors hope the incentives will lead to more use of renewable energy and reductions in greenhouse gases.

The bill hails the benefits of distributed energy, saying, “The electrical system is evolving from a model dominated by centralized power plants and long distance transmission of electricity toward a model focused on local energy sources located close to customers of electrical load.”

The electrical system is evolving…toward a model focused on local energy sources.

In addition, the legislation, sponsored by Sen. Scott Wiener (D-San Francisco), says that a decentralized system with distributed storage “can create greater energy independence and energy security by providing for increased resilience of the power supply and smoother integration of renewable energy.”

What’s more, energy storage can help reduce line losses over long-distance transmission lines. And it can help customers be more actively involved in the electrical system, which helps them better understand the system. Energy storage also leverages private capital while insulating customers from increasing energy costs, the bill says.

Rebates will go to customer-sited energy storage systems that the commission determines safely use the existing transmission and distribution system.

Under the proposal, at least 30 percent of the amount collected will be reserved for energy storage systems in low-income residential housing and storage systems located in disadvantaged communities or low-income communities owned by small businesses, local or state government agencies, educational institutions or nonprofits.

In addition, the CPUC will create a streamlined reservation process, giving preference to projects that are part of the Multifamily Affordable Housing Solar Roofs Program.

Future energy storage growth

While California has blazed the trail, it still has a long way to go in getting more energy storage on the ground, the bill says.

“California is a worldwide leader in the development of energy storage systems and advanced management of the electrical grid, but the market is so small that this leadership position is not firm,” the bill notes.

Indeed, neither California, nor the industry as a whole, should expect a repeat of the Q1’s spike any time soon. It’s likely something of an anomaly.

Source: GTM Research/ESA U.S. Energy Storage Monitor

“The industry shouldn’t get too comfortable, as with fulfilment of Aliso Canyon deployments, there aren’t that many 10+ megawatt-hour projects in the 2017 pipeline, indicating that the first quarter may be the largest quarter this year,”  said GTM’s Manghani.

While spikes may be rare, the energy storage industry is still poised for impressive long-term growth. GTM Research forecasts the U.S. annual market to reach 2.6 GW ( 7.2 GWh) by 2022, creating a $3.2 billion market, a tenfold increase from 2016 and a fivefold increase from this year.