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New Policies, Fading Rebates Build Strong CA Solar Market

licies passed for CA solar

New policies, fading rebates build strong CA solar marketPolicy news for the California solar industry has been mostly positive in recent weeks and industry leaders are confident the state’s solar energy will shine through possible clouds on the horizon.

Governor Jerry Brown signed AB327 earlier this week; the bipartisan utility and solar industry bill is now law.

“The way net metering law was set last year, it was set to expire by the end of 2014,” said Jackie Pitera, Strategy and Markets Manager for Borrego Solar. “This new bill will essentially guarantee it through 2017.”

Net metering laws require utilities to pay or credit customers who generate excess electricity with their distributed solar generation systems and put that power back onto the grid. Net metering policies, especially ones that require utilities to pay the full retail rate for power, have been threatened in several states recently, including California, Arizona, Louisiana and Colorado.

AB327 provides a framework for the California Public Utilities Commission to determine how net metering will be managed, which means there are still a lot of variables in play. The PUC still needs to determine how it will value solar for net metering purposes. It’s currently valued at the retail rate, so solar customers get as much credit for the power they put on the grid as they pay for the power they buy from the grid.

“When the governor signed the bill, he recommended that they credit the retail rate,” Pitera added.

She said the PUC is likely to weigh the governor’s recommendation heavily and she’s hopeful that California’s investor-owned utilities will continue paying retail rates for excess power generated from distributed generation systems.

AB327 also caps the amount of distributed generation utilities have to include in their net metering program at 5 percent. Currently, none of the investor-owned utilities are getting more than 1.75 percent of their energy from distributed generation, according to recently revised and standardized measures from the PUC. Pacific Gas & Electric Company is in the lead in this category.

Pitera stated that the new legislation gives the solar industry some long-term stability and predictability that will encourage growth.

The California legislature also recently passed SB 43, which creates an opportunity for community solar gardens up to 20 megawatts. The PUC is still developing the guidelines for those projects, but Pitera said the 600-megawatt allowance creates a lot of opportunity for families, nonprofits and businesses that can’t install solar at their physical locations.

Since community solar gardens can be as large as 20 megawatts, it also creates opportunity for Borrego Solar, which specializes in commercial-scale solar systems.

Community solar opens up a whole new market segment that wasn’t eligible for solar before and the positive legislation blends well with some sun setting incentives.

The California Solar Initiative rebates are essentially used up in PG&E territory. Borrego estimates that the rebates in Southern California Edison territory will last until February of 2015 and the incentives in San Diego Gas & Electric territory will last through the end of 2015.

The fading rebates aren’t bad for the California solar industry in the short term, however.  In fact, Pitera feels it could spur additional growth.

“This creates a sense of urgency,” Pitera concluded. “Customers are always trying to decide if the economics are better today or tomorrow and these different policies and programs make deals more favorable today.”

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