CA net metering bill fails, impacts and next steps

Posted by Adam Browning  

10:09 AM Sep 15, 2009

The 2009 California legislative session ended on Friday without passing AB 560 (Skinner), a bill that would have raised the current cap on net metering in the state from 2.5% to 5%.  As usual, the 11th hour brought out the shenanigans.  First, a hostile amendment knocked the bill down to 3.5%.  After grassroots outrage (thanks Vote Solar members), the culprit changed position, and the bill returned to 5%.  Then the IBEW, with friends in high places, forced an amendment on a tangential licensing requirement.  While the bill enjoyed the support of over 50 organizations, including retailers, major cities, and 2 of the 3 largest utilities in the state, the IBEW amendment drew substantial opposition--including fierce resistance from other unions.  The bill got sucked into the Senate Business and Professionals Committee...and the clock ran out.

What does this mean going forward?  Well, it means that the rooftop solar market in PG+E territory--the country's largest solar market, by far--is in danger of distruption, as soon as the first half of next year, unless we get this right. 

The charts below project the growth rate for California Solar Initiative applications under two scenarios: average growth and high growth.  Applications are the key metric for measuring when we'll hit the wall, because once the applications queue reaches the 2.5% cap (around 500 MW for PG+E), a solar installer is no longer able to assure a potential customer that going solar will allow them to offset their energy bills.  If you can't quantify the savings, there is no sale.  Period.

AVERAGE GROWTH SCENARIO

HIGH GROWTH SCENARIO

There's a lot of reason to believe that the high growth rate is a more likely scenario. First, solar is getting cheap, and as these news stories in the Sacramento Bee and San Jose Mercury News indicate, lower prices is driving increasing demand.  Secondly, the Treasury has just started taking applications for their cash-in-lieu-of-ITC program, which will free up financing for commercial systems considerably. In order to claim that cash, project construction must begin by end of 2010 - so you can bet there are a lot of developers focused like a laser on getting these projects out the door. I expect that all the pent-up project development from recent finance-related market stagnation in the commercial sector will hit the CSI application queue very soon.  Thirdly, public agencies have another financing mechanism that's looking pretty attractive these days - Clean Renewable Energy Bonds or CREBs. Applications were due in July, allocations will be dispersed in the begining of October, and the bookings will hit at least by Q1 of 2010.  A quick, non-scientific survey of some developers suggests at least 100 MW of CREBS apps in the state, and I would imagine a substantial portion in PG+E territory.  Finally, several cities--including San Francisco and a state-wide joint powers authority--will be debuting their municipal property tax financing programs in the fall and winter, further driving residential demand.

This quick survey of all the positive developments makes the failure of the bill--putting all this hard-won momentum in jeopardy--all the more infuriating. 

We've said it before and we'll say it again: with the state facing both an economic crisis and a climate crisis, it's unclear why policymakers are talking about capping the state's best source of green jobs at all.  But that's politics for you.

The real victims here are potential solar customers, and smaller installers that can't move their operations to Southern California.

Going forward, we are working on plans b and c.  A special session of the legislature this fall may be forthcoming.  And we are working on another solution that we'd rather not talk about in case it falls on its face.  Stay tuned.

Add a comment

AB560

Buck — 11:57 AM Sep 20, 2009

A good friend of mine, a California Assemblyman once told me. " Fallow the Money". Who has more money to pass out to Politicions and the PUC. PG&E owns these guys. And there not going to let you and me put them (PG&E) out of business by starting our own small individual energy Company.

Thanks!

Gerard — 02:55 PM Sep 19, 2009

This is a fabulous posting, it's so refreshing to get a clear and detailed picture of what is going on. I'm curious as to how the IBEW got into this, and when the next legislative session will be held. Overall, many many thanks for taking the care to enlighten us all with this, and delighted to hear that the 3.5% cap was reversed with the help of VoteSolar members.

For Profit

Richard W. — 08:50 PM Sep 16, 2009

I would like to echo greg's comment and questions this morning. It is frustrating that the "for profit" PUBLIC utilities have the sympathy and support of our elected officials while their constituents, the utilities' customers, protest. We harness the free source of energy at our expense, and we contribute our excess energy to the network. Why shouldn't we be paid for that excess?

for profit

greg — 11:25 AM Sep 16, 2009

Excuse my idealistic ignorance, profit yes, but arent utilities first a public service? and if I can put solar on my roof and benifit in long run, cant they?. after payback the sun is free. to me as well as them?

AB560

SFMARK — 02:45 AM Sep 16, 2009

If Skinner and the PG&E area solar people are so panicked about the cap, then why are they getting in bed with the IBEW and allowing their unbridled greed to ruin the bill? Everybody in the solar community needs to stop coddling these predators with naive Chamberlain tactics and deal with them like the carnivores they have proven themselves to be. That is to say, not at all. The IBEW doesn't know or care a fig about solar, or renewable energy, or the environment. They care about money. We must forget about negotiating and pleasantries and quivering in our boots at the though of the big bad wolf's power. Their faux omnipotence came crashing down in Sacramento last week and we all must realize and own the power we have. That is to say the power of right and truth and commitment and expertise and a huge grass roots constituency of people who support us and solar. We need to drive them out of our industry and keep their greedy paws out for good or they will tie-up, slow down, price out and otherwise wreck our industry at a time when we need to promote, streamline, build and grow it for the benefit of the whole planet.

PG&E feeling the pinch

Whit — 10:33 PM Sep 15, 2009

I think, despite the billions they are worth, PG&E is feeling the effect of lower revenues from solar customers and the continued rise in operating costs. Their investments are doing as poorly as anyones, and added costs of early retirement packages, pension fund demands are magnified. The comment by Jerry Brown questioning the ownership of REC's from subsidized systems also threw a scare in them. They are pushing back where they can, how they can. They are, after all, a FOR PROFIT business first.

Keep up the good work!!!

Perfect opportunity for PG&E

— 09:26 PM Sep 15, 2009

Can't PG&E voluntarily request to raise their "cap" to whatever level? What a great PR move to prove they are 100% supportive of rooftop PV.

Well, 100% supportive would be no cap at all, but moving it to 5% on their own initiative would continue their dominance in PV nationwide.

Excellent summary

— 09:04 PM Sep 15, 2009

This is a superb summary of the recent history and possible future of AB560. Thanks for your excellent analysis. Can we post this on the blog of the Sustainable Business Alliance (www.sustainablebiz.org)?