CPUC NEM 3.0 discussion

[RKCRLR]

NEM is not a subsidy. In fact, residential solar NEM decreases utility costs.

Consider residential solar without export, i.e. no net metering. By covering some of the residences' load, this simply reduces revenue for the utility. It is just like using LED's for light or insulation to reduce HVAC demand. Of course they don't like reduction in revenue, but it is in no way a subsidy. (Some distortion does exist because of the volume pricing model which makes large consumers subsidize the fixed costs for low volume users. But that is not caused by NEM, and outside the realm of the current proposals.)

Now add in NEM. This is revenue neutral, with retail credit for exports to be applied to imports at a different time. In fact, the economic impact is a reduction in total utility costs, because all the solar export offsets otherwise needed generation and also reduces load on and needed capacity of transmission lines.

The cost shifting argument is based on a fallacy.

Another way to see through it is to notice that the proposed solution will result in a large increase in revenue for the utilities, with no balancing price reduction for non-solar customers. If NEM3 was just ending a significant cost shift, then it would be revenue neutral. Instead, it increases prices for solar users while not decreasing other's prices.

Now, CPUC's SGIP program, which funded many PowerWalls and other batteries was a rate payer subsidized program, largely for solar owners. But batteries have the effect of reducing peak hour loads, a high leverage cost saver for utilities and hence for all ratepayers. This is why PG&E invested in it's huge "Elkhorn" battery at Moss Landing, which is also paid for by ratepayers, but it results in additional guaranteed ongoing return on the investment for PG&E, also payed for by ratepayers.

SW

No, it isn't a subsidy but if solar exporters pay less money then some other ratepayers are going to pay more money (unless the utilities take it out of profits which would take a huge push from the government). As mentioned, until the utilities have a way to store the rooftop solar generation it isn't worth what NEM 1 & 2 generators get compensated during peak production hours. The whole rate structure needs to be changed so that rates are more proportional to what it costs utilities for infrastructure and power.

I wonder what the utilities are going to push for in the future as far as rates go. PG&E has been putting a lot of lines underground in my area. It sounds like the Mosquito fire was caused by PG&E equipment failure. And they have been doing a lot of clearing in my area. And not very efficiently. The latest is they had a crew of 4 people along our road for clearing a 50' radius around power poles (this is after they spent several months this summer clearing trees around power lines). One day I left to do some errands and noticed they were just sitting around. I returned a few hours later and they were still sitting around. I stopped and asked how they were doing. They said they had run out of trimmer string on their truck and were waiting for their company to deliver some more string - A weed trimming business that runs out of trimmer string. Additionally, there's a hardware store a couple of miles down the road that sells trimmer string in bulk.

 

[Dave EV]

Californians already pay much more for electricity than residents of other states do.

Only if you are a customer one of the big-3 for-profit utilities in California. The other utilities have much lower rates, in general.

This all goes back to the guaranteed rate of return granted to utilities for capital spending. Utilities should be managed as a non-profit, or at best, a flat rate. It's clear that the CPUC is doing a piss-poor job of managing utility costs.

NEM 3.0 is also coming at a bad time given the huge projected rate increases coming in 2023 due to the high price of gas.

I agree - it will kill residential solar and a lot of jobs. Who wants more big solar farms, when there are plenty of roof tops

Roof tops, parking lots, canals, etc...

 

[Dave EV]

Probably not, but as heat pumps replace gas heating, the seasonal loads may smooth out some, aggravating the winter solar shortage.

Heat pumps that replace gas heating in California will reduce net gas consumption, even if all incremental electricity came from gas.

A modern CCGT plan is 50-60% efficient and even simple peakers are 30-40% efficient. Heat pumps typically have a COP of 3-4 (300-400% efficiency) across a very wide range of temps and the newest ones can be even better.

That said, we will definitely need more renewable energy for the winter - I'm hopeful that offshore wind will help a bit there, but we will also need more south facing solar panels mounted at higher angles. But that type of install is often a pain and limits the total DC power of the system because of shading, so at the end of the day we just need to cover as many roofs as we can and encourage the installation of south-facing panels.

 

[swedge]

the argument from the utilities is that the solar export is during the time when they already have excess capacity. Only solar with storage can offset the export to when it is needed

I think the argument was that solar stops when the sun goes down, but load is still peaking. Therefore, solar customers still use the same peak import as non-solar folks. Storage was basically ignored because the "look-back" study looked back from 2018, before residential storage was a thing. Already, however, PowerWalls and others can, as you suggest, shift consumption out of peak, but also shift export into peak periods. NEM3, of course, completely ignores this present and future reality.

Regarding the "excess capacity" concern, all new residential solar inverters can be ramped down remotely by the utility if it becomes necessary to prevent excess generation on the grid.

Still I do find that a rich complaint. The argument against solar and wind used to me that it was worthless because it is intermittent, unable to meet fluctuating demand. This new complaint implies that utilities can not throttle back their own fossil and fissile fuel generators quickly enough. No doubt about it, electrons are a though business!

Anyway, PG&E's recent purchase of 180 MW of Tesla Megapacks in Moss Landing (equivalent to ~36,000 PowerWalls) suggest they recognize the advantages of load leveling. NEM3 will discourage new residential storage as well as solar, by reducing the financial incentive to time shift export.

(Hmmm... Under the new NEM3 proposal, average export credit will be around $0.05 per kWh. If the $0.03 NBC still applies, I can't imagine anyone using their storage to reap the remaining pennies.)

SW

 

[h2ofun]

I think the argument was that solar stops when the sun goes down, but load is still peaking. Therefore, solar customers still use the same peak import as non-solar folks. Storage was basically ignored because the "look-back" study looked back from 2018, before residential storage was a thing. Already, however, PowerWalls and others can, as you suggest, shift consumption out of peak, but also shift export into peak periods. NEM3, of course, completely ignores this present and future reality.

Regarding the "excess capacity" concern, all new residential solar inverters can be ramped down remotely by the utility if it becomes necessary to prevent excess generation on the grid.

Still I do find that a rich complaint. The argument against solar and wind used to me that it was worthless because it is intermittent, unable to meet fluctuating demand. This new complaint implies that utilities can not throttle back their own fossil and fissile fuel generators quickly enough. No doubt about it, electrons are a though business!

Anyway, PG&E's recent purchase of 180 MW of Tesla Megapacks in Moss Landing (equivalent to ~36,000 PowerWalls) suggest they recognize the advantages of load leveling. NEM3 will discourage new residential storage as well as solar, by reducing the financial incentive to time shift export.

(Hmmm... Under the new NEM3 proposal, average export credit will be around $0.05 per kWh. If the $0.03 NBC still applies, I can't imagine anyone using their storage to reap the remaining pennies.)

SW

I will not

 

[swedge]

it isn't worth what NEM 1 & 2 generators get compensated

Actually it is worth exactly what we get compensated, because that is exactly what they get paid for it by our non-solar neighbors.

Now if we get credited 5 cents for what PG&E sells at the same instant for 30 cents, now that is a subsidy. To PG&E.

I don't disagree that the whole rate structure needs revision. But on Dec 15th, CPUC may act in a way that kills the future of solar in Calif, a model for other state utilities to follow. Reworking the business model is not on the table, NEM3 proposal is.

I love your trimmer string story! Ratepayers paid for that sitting around, of course. Ah, but PG&E is legally required to profit from that wasted expense. Such a deal! Reminds me of the utilities in the Monopoly game. Oh, right, that is what this is, a monopoly game.

SW

 

[swedge]

I will not

If you have excess solar production, you could offer to recharge your neighbors' electric cars for half of what they'd pay PG&E. ;-)

 

[getakey]

Regarding the "excess capacity" concern, all new residential solar inverters can be ramped down remotely by the utility if it becomes necessary to prevent excess generation on the grid.

wow - is that true?
What I meant was that PG&E was ramping down their own solar/wind because of excess. Thus residential export during those excess capacity periods was causing them lost profits

 

[yblaser]

Now if we get credited 5 cents for what PG&E sells at the same instant for 30 cents, now that is a subsidy. To PG&E.

But the IOU can produce or purchase that extra kWh for <$0.05 from elsewhere instead they are crediting the solar customer $0.30. Even if solar was producing 24h/day buying back solar at the retail rate is a losing proposition except in times of extreme energy demand. That $0.30 they are charging is not just the cost of the kWh.

 

[swedge]

wow - is that true?
What I meant was that PG&E was ramping down their own solar/wind because of excess. Thus residential export during those excess capacity periods was causing them lost profits

It is not clear to me how decreasing their own generation would reduce PG&E profits. It didn't increase their revenue, only lowered their costs. I.e. increased their profits. Unless of course they were buying solar from themselves at inflated prices, i.e. cooking the books. That would explain it...

Perhaps their problem is that it is hard to throttle the nukes at Diablo Canyon. Those have to be ramped carefully to avoid, uh, problems. Throttling Chernobil down to quickly was what triggered that, a different design of course, but "baseline" generators are not agile beasts. Hydro is, gas peaked plants are, batteries are.

But PG&E blaming solar for their problems? It is politics of distraction. Think Paradise, San Bruno, Santa Rosa and PG&E CEO compensation if you wonder what they want to distract us from.

Don't get me wrong, I love electricity. It is magic to power half the state with a dam near Redding and wires strung from metal solders marching down the Sacto valley. But asking OUR government to bend rules to improve THEIR profits by taxing potential future solar owners out of existence, that is rude. And using profits derived from our electric bills to pay for the lobbying and cooperative consultants? Rude

Sorry for the rant.

SW

 

[getakey]

It is not clear to me how decreasing their own generation would reduce PG&E profits. It didn't increase their revenue, only lowered their costs. I.e. increased their profits. Unless of course they were buying solar from themselves at inflated prices, i.e. cooking the books. That would explain it...

if their own solar was producing at $.03/kWh and they could sell it at $.30/kWh, but then had to shut that down and instead but my power at $.30/kWh and sell it at the same price, their profit would be lower for the same revenue

 

[h2ofun]

If you have excess solar production, you could offer to recharge your neighbors' electric cars for half of what they'd pay PG&E. ;-)

I have offered to charge anyones car for free

 

[RKCRLR]

Actually it is worth exactly what we get compensated, because that is exactly what they get paid for it by our non-solar neighbors.

Now if we get credited 5 cents for what PG&E sells at the same instant for 30 cents, now that is a subsidy. To PG&E.

I don't disagree that the whole rate structure needs revision. But on Dec 15th, CPUC may act in a way that kills the future of solar in Calif, a model for other state utilities to follow. Reworking the business model is not on the table, NEM3 proposal is.

It doesn't work that way. I.e., if you purchase an item at retail price from a store and they sell the same item to other people at the same price it doesn't means it is worth it to the store to buy that same item from you for the retail price.
I do agree that the utilities should be required to purchase rooftop solar at the same price that they would be required to pay if they purchased the same energy from an energy supplier, or for what it costs the utility to produce the energy.
What I'm saying is NEM shouldn't force utilities to pay more for rooftop solar than energy from other sources costs them. And if that would kill future solar in California, and California wants distributed solar to continue, then other sources of funding outside of utility ratepayers (who are the one paying for solar NEM) should be found to keep it going.

 

[holeydonut]

I have offered to charge anyones car for free

PG&E is going to have you arrested for schilling power without giving them a cut hah.

H2ohno

 

[Redhill_qik]

It will probably achieve the utilities' goal of killing off rooftop solar. They like their monopoly on energy, but like any monopoly, enforcing it with regulation is not good for anybody except the utilities.

The new proposal sounds OK for us only because we would be grandfathered. But the new proposal is designed to divide us current solar owners from potential future owners and the industry. We really should support our neighbors and our solar suppliers, not to mention that every kWh of solar is one less kWh from fossil fuel. So don't fall for this!

Solar Rights Alliance held a one hour web discussion on Wed.

SW

I imagine the same thing was said about NEM 2.0 vs NEM 1.0, but people decided that the slower payback still made sense and installed solar. NEM 2.0 sites are paying off their investment and continue to reap the benefits. I need to completely revamp my NEM modeling, but I took a quick swag at some scenarios for my pre-solar usage and PVwatts modeled system and came up with the following:

Condition	E-TOU-C​	E-TOU-D​	EV2A​
No PV, No ESS	$2,316.11​	$2,635.14​	$2,684.43​
PV only without NEM	$1,352.71​	$1,525.93​	$1,685.77​
PV only with NEM @ $0.05/kWh	$933.05​	$1,106.28​	$1,266.12​
PV+ESS without NEM	$1,004.86​	$1,144.33​	$1,139.04​
PV+ESS with NEM @ $0.05/kWh	$652.00​	$791.47​	$786.18​

In 2020 my system cost $32,540 (8.16kW + two Powerwalls) when it was installed which would be $22,778 after the 30% tax credit with a savings of $1,664/year that pays off in 13.7 years with a NEM credit of $0.05/kWh

If it was PV only that would have been $17,800 or $12,460 after the 30% tax credit and with savings of $1,383/year ($2,316-$933) that would be paid off in 9.0 years which is coincidently the NEM 3.0 target pay off.

I need to look at some other options here to expand my modelling, for instance my Powerwall usage was modelled with discharge only during the 4:00-9:00pm Peak hours and with NEM 3.0 it would make sense to discharge the Powerwalls more in self-powered mode versus time-based-control to avoid more grid imports.

 

[Redhill_qik]

I have offered to charge anyones car for free

So says the person that is asking for recommendations on chargers that can also bill.

 

[Dave EV]

Perhaps their problem is that it is hard to throttle the nukes at Diablo Canyon. Those have to be ramped carefully to avoid, uh, problems. Throttling Chernobil down to quickly was what triggered that, a different design of course, but "baseline" generators are not agile beasts. Hydro is, gas peaked plants are, batteries are.

Well, another problem is that there is still a TON of gas (I refuse to call it "natural" any more - that's a pure marketing term) on the CAISO grid that is still running, even when renewables are being dialed back.

Let's look at two recent days this week, when an amazing Wednesday 11/16, when almost 2 GWh of renewables (about 1 GW peak) were curtailed, and on Sunday 11/13 when almost 6 GWh (about 2.5 GW peak).

http://www.caiso.com/Documents/Wind_SolarReal-TimeDispatchCurtailmentReportNov16_2022.pdf

http://www.caiso.com/Documents/Wind_SolarReal-TimeDispatchCurtailmentReportNov13_2022.pdf

We are throwing away a LOT of renewable, carbon free electricity in the middle of the day, but while we're doing it we're still burning a HUGE amount of gas!

Look at the 16th - ~8-9 GW of gas burning at a minumum all day. And for some reason, big hydro has dialed back to save that water for the evening peak.

And even on the 13th around 6 GW of gas burning at a minimum all day long.

WHY?

California ISO - Supply, Today's Outlook

View real-time and historical data on generation resources, including renewables, currently on the system.

www.caiso.com

Look at how much energy we've curtailed from Jan - Oct this year- I calculate around 2.3 TWh - that's an average of over 300 MW around the clock - just how many EVs would that power?

Are these gas plants getting paid to run even when not needed because of bad contracts? Why aren't we exporting more electricity instead of curtailing it? Why does big-hydro keep on ramping up in the middle of the day?

California ISO - Managing Oversupply

 

[swedge]

if solar exporters pay less money then some other ratepayers are going to pay more money (unless the utilities take it out of profits which would take a huge push from the government).

Solar exporters pay less because they use less utility energy. The credits they receive for exports under NEM only offset the payment they make for imports.

If someone adds solar and then buys less from the utility, the utility will have lower revenue, but also lower costs and lower profits as well, so the lower revenue is not necessary shifted to other customers. But the reductions are the result of less revenue due to reduced demand. NEM credits on the other hand, do not change demand and do not change revenue because they are balanced by the import billings for the very same amount of each customer's kWhs imported.

Solar and especially batteries reduce the amount of peak generation and transmission capacity required, and hence reduce the total grid system capital cost, the interest cost, the maintenance cost, and fuel cost. But perhaps adoption of EV's and heat pumps will prevent actual revenue decline for some time to come.

Please remember that NEM works over an entire year long "relevant period", not minute by minute. It allows retail credit for only on as many exported kWh as the customer imports. So it is only ever giving credit for energy the customer has paid for. The buy and sell transactions taken together are a net zero kW deal for both the consumer and the utility. So, while the bill says you get retail credit, it is not a net credit, but only a return of a purchase. No net revenue or cost.

Excess net exports (if more than imports) are credited at a much lower rate, around $0.05 per kWh, last time I looked. One year I did export more than I used, and got a check for $ 0.40, big whoop. Less that PG&E's average cost for those kWh. Again, all the other, retail credited exports are offset by payments for imports.

Time of use differences and monthly minimum charges do alter the dollar amounts but apply to all customers, not just solar. And these are set in the rates tariffs which change often, but are not part of the NEM rules which are being discussed.

SW

 

[swedge]

I do agree that the utilities should be required to purchase rooftop solar at the same price that they would be required to pay if they purchased the same energy from an energy supplier, or for what it costs the utility to produce the energy.

But NEM credits are not purchases of kWh. NEM credits are only allowed only on kWh that the customer imported. It is like the return of a retail purchase, not at all like a wholesale sale as you suggest.

NEM is contractual arrangement where, in effect, the utility stores your excess daytime and summer production, and returns it to you at night and winter. At the annual true-up, a solar customer pays full retail, but only for the power he consumes, net of what he exported.

Exports above what are imported are credited at a lowball wholesale rate. As a result, most solar customers are not energy suppliers, but rather energy lenders and energy consumers.

 

[swedge]

But the IOU can produce or purchase that extra kWh for <$0.05 from elsewhere instead they are crediting the solar customer $0.30. Even if solar was producing 24h/day buying back solar at the retail rate is a losing proposition except in times of extreme energy demand. That $0.30 they are charging is not just the cost of the kWh.

Utilities do not exactly "buy" energy from NEM customers. They only give retail credit to the NEM customer for energy the customer imports for consumption but returns when his solar production allows. The bills and credits are just a way to account for what is in effect the storage by the utility of temporarily exported production which is later consumed.

If an NEM customer does export more than he consumes over the course of the year, the credit on the excess is paid at a low wholesale rate, as you propose.

When we think of NEM customers as "selling" power, we ignore how NEM actually functions and why it was invented. The purpose was to facilitate solar adoption without costing anyone anything. And it has worked. It uses the grid as virtual energy storage, and uses the utility accounting system keep track so to prevent the sort of over-payment you describe. The virtual storage lets a customer's excess sunny and long summer day production be consumed during night, cloudy days, and short winter days. In the end, it reduces fossil and fissile fuel dependence and energy costs for everybody. The cost saving for the customer takes many years to repay the capital investment, but NEM makes it quick enough to be attractive.

Residential solar customers are not net suppliers of power, and certainly not competitors in the wholesale market. Utilities don't like solar because it does lower their revenue, and if utilities are allowed to charge solar customers more, not only will utilities make more profit, but they will also discourage future potential solar customers.