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Calif. PUC to consider limits on net metering credits for rooftop solar with storage

TheCalifornia Public Utilities Commission is scheduled on April 21 to consider aproposal to estimate and cap the net energy metering credits a rooftop solarcustomer could get by combining distributed generation with storage devices.

PUCPresident Michael Picker's proposed decisionwould adopt an estimation methodology for net energy metering credits, therebyproviding a cheaper alternative to costly metering equipment for distributedsolar and energy storage. Under the NEM credit system, when asolar customer's power production exceeds that customer's demand, the excessenergy goes through the electric meter onto the utility grid, thereby runningthe meter backward to lower the customer's bill.

Picker'sproposal would cap NEM credits based on modeled monthly production profiles forsolar photovoltaic facilities paired with small storage devices of 10 kW orless. A customer would not get credits above the modeledproduction estimate, so the customer would forfeit the benefit for any exportedenergy above the photovoltaic-plus-storage system's profile cap.Customers with solar and storage would still be allowed to install meteringequipment to measure the actual solar output to the grid for NEM credits, butdue to equipment costs most customers are expected to take the cap estimateinstead.

Thiseffort is directed at making sure customers with storage systems get NEMcredits only for solar power they export and not for any grid-supplied powerthey might also put into their storage units.

However,the Interstate Renewable Energy Council believes that purposefully storingoff-peak grid-supplied power for later grid supply at on-peak rates in order toclaim NEM credits would be uneconomical due to battery , limited differentials intime-of-use pricing, and storage efficiency losses of 10% to 20%.Accordingly, Picker's proposed decision concludes customer price arbitragingwith grid-supplied power is not a concern regarding small storage units pairedwith distributed solar systems.

Pickerwrote that the PUC has already determined that to qualify for NEM credits,customers with distributed generation and storage systems larger than 10 kWmust install non-export relay storage devices and interval meters at generatorsand points of common coupling to measure load and energy.

on the proposeddecision, SolarCity Corp.said any gaming opportunity would offset only 2% of a battery's costs, even ifutility calculations are used. Furthermore, inverters can be setfor DC-coupled storage systems so batteries can only be charged from the solarsystem. These systems should be exempt from the NEM credit estimation cap, thecompany said.

TheCalifornia Energy Storage Alliance said overall it strongly the proposed decision butrecommended the estimation methodology be used for solar with storage deviceslarger than 10 kW as well.

Estimation methodology debated

Nevertheless,much effort was spent debating which estimation methodology to use to keepgrid-stored power arbitraging to a minimum. The proceeding has attractednumerous parties.

Picker'sproposal would apply to customers of PacificGas and Electric Co., SouthernCalifornia Edison Co. and SanDiego Gas & Electric Co. subsidiaries, respectively, ofPG&E Corp.,Edison Internationaland Sempra Energy.

Theutilities contend a monthly estimation methodology will undermine the integrityof net energy metering by enabling customers to charge their batteries off-peakby drawing power from the grid. The utilities want to creditcustomers less by using an hourly rather than monthly credit system so solarcustomers could only claim credits for solar produced within each hour.Customers could not claim higher-valued credits for power generated earlier inthe day, stored and then released later in the day when time-of-use rates willbe higher.

Theutilities said the hourly credit system would be more accurate, less costly andeasier to implement if they could estimate the NEM-eligible output using anhourly production estimate. A lookup table of PV output could be integratedinto utility billing systems with a one-time modification, they said.

Solarinterests countered that the utilities' proposal would defeat a primary purposeof energy storage and run counter to the utilities' arguments that peaktime-of-use power prices should be shifted to later hours because of solargeneration.

Solar,storage and clean energy parties also said the hourly estimation would precludecustomers from using their PV-and-storage-paired systems to generate duringnon-peak periods and discharge energy to the grid during peak periods whentheir rooftop solar systems are no longer generating energy.

OnJan. 28, the PUC adopteda new NEM tariff that will soon put all future solar customers on time-of-userates. Utilities have been pushing for peak time-of-use prices tolater in the day to pay the costs of meeting peak power needs because solargeneration is causing a shift in peak use times from mid-day to late afternoonand evenings. Not only are distributed solar customers able to generate theirown power when the sun is high, therefore lowering grid demand, but they arecontributing to a trend toward mid-day oversupply of power by putting theirexcess power on the grid, the utilities argued.

Ifso, solar advocates questioned why utilities want to suppress the incentive forsolar generators to install storage devices in order to make their excess poweravailable during the later peak use periods. The California SolarEnergy Industries Association saidload-shifting through customer-sited energy storage systems should beencouraged as solar on the electric system reaches higher levels. Theassociation vowed to work for tariffs to encourage on-site storage.

Meanwhile,CALSEIA said the estimation methodology in the proposed decision is reasonable,though the calculator method tends to slightly underestimate solar production.