Solar Sector Records A Major Net-Metering Victory In California



The board of commissioners of the California Public Utilities Commission (CPUC) has voted unanimously, by a vote of 5-0, in favor of a net-metering calculation method that is expected to significantly help the state's solar market – the U.S.' largest.

‘We now have a runway to continue building residential and commercial solar in California,’ Benjamin Higgins, director of government affairs at Mainstream Energy/REC Solar, tells Solar Industry.

Existing state law set a net-metering cap of 5% of aggregate peak demand but did not specify how utilities should calculate aggregate peak demand. The state's utilities – Southern California Edison, San Diego Gas & Electric and Pacific Gas and Electric – had been using a calculation method that divided the aggregate capacity of all net-metered systems on the grid by utility system peak demand.

However, Vote Solar, the Solar Energy Industries Association (SEIA) and other solar stakeholders had maintained that the language of California's statute instructed utilities to divide the aggregate capacity of net-metered systems by the aggregate of individual customers' peak demand.

The CPUC agreed with this interpretation of the statute. ‘Today's decision clarifies that aggregate customer peak demand means the aggregation, or sum, of individual customers' peak demands,’ the CPUC wrote in its announcement of the decision.

The difference between the two calculation methodologies represented 2.1 GW of solar capacity, Annie Carmichael, solar policy director at Vote Solar, told Solar Industry earlier this month.

Depending on how the calculations are made, the difference may be even more significant. Higgins notes that during the CPUC's meeting, Commissioner Michael Peevey commented that if utilities continued to use their old methodology, 2.4 GW to 5.2 GW of solar power installation potential would be lost.

Per the CPUC, its new clarification will double the number of PV installations that can participate in net metering.

Opponents to the net-metering expansion have contended that the program is unsustainable over the long term and does not fairly distribute costs between PV-owning customers and non-PV-owning customers.

In order to assuage these concerns, the CPUC's decision also mandates the creation of a study examining the costs and benefits of net metering. Additionally, if a new, long-term net-metering policy is not implemented by Jan. 1, 2015, the CPUC will suspend the program for new customers.

‘The intent was to strike a compromise between the parties,’ Higgins notes. Nevertheless, the costs-and-benefits study – which is widely believed to be long overdue – may actually wind up benefiting the PV sector as well.

‘Essentially, this will be an update to the last net-metering study, which was released in March 2010,’ Higgins says, adding that the results of the study are expected to become available long before California's utilities reach the 5% net-metering cap.

Thus, the follow-up analysis necessary to set long-term net-metering policy can, ostensibly, be completed in time to ensure the industry can avoid any regulatory gaps or uncertainty.

Finally, although the CPUC's decision directly applies to only California's solar market, the entire U.S. PV industry should take note of this regulatory win.

‘California, for better or worse, is often where the future happens first – especially with respect to renewables,’ Higgins says. ‘We can expect that if changes were made that undermined net-metering policy, that [trend] would spread elsewhere.’

The full CPUC decision is available here.

Photo credit: miheco, via Flickr CC

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