A million sun-charged batteries by 2030: this is what California needs to create a more stable electric grid while bringing down costs for everyone. If done right, gradual changes to net metering could increase the adoption of solar and energy storage systems in California, critical in achieving the state’s clean energy goals. But this is not what has been proposed by the California Public Utilities Commission (CPUC).
The proposed decision by a former commissioner gets it wrong by a long shot. It would undercut efforts to increase storage adoption by destroying the solar market that energy storage depends upon. By taxing the sun, the proposed decision would make batteries, along with the solar panels they depend upon, at least twice as expensive as they are today.
The math is not difficult to follow.
The proposed NEM-3 decision would impose new fees of $600 per year for a typical residential solar customer. It would also reduce the value of net metering credits by 80% for residential and commercial customers alike. For the typical residential customer, the value of the energy sent back to the grid will be reduced to about $20 per month, or $240 per year. The proposed decision would give the first set of NEM-3 customers a credit of $120 per year, but this would still leave a deficit for customers. The $240 in annual credits for surplus power sent back to the grid plus the $120 for the early adopters, is less than the $600 per year fee. Solar, whether you add a battery or not, would get more expensive under NEM-3. Net metering would become a bad deal that nobody would take, even without considering the cost of installation which is still around $17,000 for a solar system and $28,000 if you add a battery (assuming federal tax credit). Somehow the CPUC failed to do this basic calculation. It is important to note that solar would get more expensive for low-income ratepayers and affordable housing developments as well.
Now, adding a battery would increase monthly savings by about $480 per year according to the CPUC’s own modeling. This is due to the higher differential between daytime and evening prices under the proposal. That is nearly $5,000 over ten years, which does not come close to covering the added costs of energy storage, still in its infancy as a market. In other words, adding a battery to a solar system would not turn a bad deal into a good one. The CPUC would be taxing the battery’s fuel source and harming the overall economics of the packaged solar plus storage system. This is bad news for solar, bad news for storage, and bad news for consumers hoping to get out from under rising energy bills, continued wildfires, and an increasingly unstable grid.
A better approach is not to create punitive fees at all. California should not add a fee to electricity that comes from the sun, period. California should gradually increase the value of evening electricity (whether self-consumed or exported to share with neighbors in the evening), while decreasing the value of day-time exports to further drive solar-paired storage systems. This would encourage customers to send less electricity to the grid for NEM credits, using batteries to consume the power themselves in the evening. Making this change gradually over the course of many years would push customers toward batteries without destroying economics of their fuel source: the sun.
Today there are about 65,000 customer batteries installed throughout California. That number needs to be fifty times what it is today to achieve the state’s ambitious 100% clean energy goals. The utilities and their allies see customer-sited solar charged batteries as competition and are trying to wipe out customer opportunities, but solar-charged batteries are exactly what California needs.
Manufacturing capacity to produce batteries is expanding in the U.S. and around the world. Electric vehicles and home energy systems are competing for battery cells. It will take several years before we can expect every solar system to come with a battery; today, around 16% of solar customers are adding a battery. The market needs time and thoughtful policy to get to 100% adoption. Driving solar contractors out of business during this period of transition is exactly what the utilities want but it is exactly the opposite thing that California needs. The CPUC should stand up to the anti-environmental and anti-consumer proposals from the utilities and their allies and create sensible policy that will show the world how to build a clean and stable electric grid in the 21st century.