Photovoltaic users got a reprieve last week when the federal government and California’s Public Utilities Commission decided to continue tax credits for solar installations and the net metering system of charges, respectively.
The 30 percent federal tax credit for solar installations by homeowners and businesses was among the riders that made it through the appropriations bill passed by the House of Representatives on Friday. Its termination date loomed at the end of 2016, but it has been extended through 2021. The credit also extends to projects that begin, but are not finished, by the end of 2021.
While pointing out that the appropriations bill lifts a 40-year-old oil export ban that could affect U.S. jobs and the environment, Rep. Lois Capps applauded its bipartisan passage and noted: “It does include a number of important victories for American families including increased funding for our local schools and Head Start programs, nearly double the amount of funding to combat childhood hunger, and strong investments in medical research and clean energy technologies. … I am pleased the agreement includes long-term wind and solar tax credits that will reduce roughly 10 times more carbon pollution than the exports of oil will add. In addition, the bill does not include harmful policy riders that would hinder our nation’s ability to participate in the global climate change agreement reached in Paris last week.”
The federal bill came on the heels of a Proposed Decision announce last Tuesday by the California Public Utilities Commission (CPUC) in favor of maintaining net metering in the state, a system that lets customers who’ve installed solar arrays receive “payment” — in the form of an equivalent reduction of their electric bill — for the power they feed to the electric grid. Advocates credit the system with boosting the industry in the state. Solar employs 54,000 people and added nearly $12 billion in investments, according to the California Solar Energy Industries Association (CSEIA).
The Proposed Decision is spurred by AB 327, which directs the CPUC to review costs among users and providers, and encourage customer-sited renewable energy. Utility companies have proposed reductions in the amount customer-providers receive for the electricity they generate and also propose higher fees, said the CSEIA. For Southern California Edison’s part, the revenue is needed to operate and upgrade the grid that solar customers continue to use. Plus, Edison states, the cost of installing solar has gone down since net metering was first proposed and the subsidy isn’t as necessary.
The CPUC decision disagrees, mainly in the sections dealing with new solar customers. For existing customers with solar installations, net metering will continue for 20 years. For those who install new solar arrays, a onetime fee (likely to be in the $75-$100 range) will be charged for the costs of connecting to the grid. Non-bypassable charges (such as regional taxes or levies, which are used to fund low-income and efficiency programs) are paid by current solar users when they consume more electricity than they generate; the new proposal will assess non-bypassable charges on all electricity new solar users consume, regardless of the amount they generate. These charges are roughly 2-3 cents per kilowatt hour of energy consumed, according to the CPUC.
The crux of the matter regarding solar is usage at night or on cloudy days, Christopher Chow, a spokesperson at CPUC, pointed out. Sending power to the grid turns into drawing on it, and this unanticipated switch can affect the grid when other demands are high. To try to modify user behavior and also accommodate increased power purchases, a new time-of-use rate will go into effect in 2019 for all users. For those who begin net metering in 2018 or later, the time-of-use rate would begin once the power source goes online. Industry and commercial electricity users currently pay time-of-use rates, which go up during peak periods of use.
Adding solar arrays to multi-family dwellings in disadvantaged communities is another goal in the Proposed Decision. One program allows electricity customers, whether they own or rent, to participate in “virtual” net metering when solar is installed. A number of agencies and utility groups make recommendations in the Proposed Decision to add photovoltaics in such areas, though virtual net metering is a goal “in principle” in this decision with the specifics to be worked out in the next look at the net metering tariff.
The CPUC’s final decision will be made at the January 28 voting meeting in San Francisco.