CPUC NEM 3.0 discussion

[Ampster]

No. This is because under NEM the utilities do not compensate solar producers at retail for power produced. This is enforced by the NEM rules and implementations.

You may not call it compensation but my Net generation shows up as a credit that offsets most of the other charges. My ROI on my solar investment is directly related to the reduction of costs which I previously incurred.

Unlike commercial generators of power, residential NEM customers are not a source of power

The CAISO can not measure the generation of residential customers because it shows up on the grid as a decrease in demand. At any point during the day, the 5kWs which my solar system exports when I have minimal loads also covers my neighbors' loads and presumably never makes it back to the closest substation.

Call it what you like but residential generation does have a significant impact on the shape of the Duck Curve. And it cannot be as easily curtailed as other sources of generation which are accountable to CAISO (the grid).

 

[STS-134]

Call it what you like but residential generation does have a significant impact on the shape of the Duck Curve. And it cannot be as easily curtailed as other sources of generation which are accountable to CAISO (the grid).

California Use Case for IEEE2030.5 for Distributed Energy Renewables - IEEE Smart Grid

IEEE’s Smart Grid website provides information, resources and expertise about smart grid. IEEE has been at the forefront of the global smart grid movement since the development of the smart grid concept.

smartgrid.ieee.org

Phase 3

The use of smart inverter systems can increase the life of distribution equipment by minimizing their operations, while at the same time improving the power quality for customers. Advanced functions will permit smart inverter systems to play an even more active role in distribution system stabilization, power system reliability, and overall energy efficiency. In March 2016, the SIWG completed technical analysis on the following candidate advanced smart inverter functions:

• Monitor DER Data – Ability to provide status information and metrology data
• Disconnect/Reconnect – Ability to provide a “cease to energize” state
• Limit Maximum Real Power – Ability to set a maximum limit on real power output
• Set Real Power Output – Ability to set the real power output level
• Frequency-Watt Mode – Ability to counteract frequency excursions by increasing or decreasing real power output
• Volt-Watt Mode – Ability to counteract voltage excursions by increasing or decreasing real power output
• Dynamic Reactive Current – Ability to provide reactive current support in response to dynamic variations in voltage
• Scheduling Controls – Ability to schedule DER controls for specific time periods

 

[Ampster]

The use of smart inverter systems can increase the life of distribution equipment by minimizing their operations, while at the same time improving the power quality for customers.

I agree with this whole concept and the bullet points you mentioned above.

.If the IOUs were rationalizing there arguments based on a need to upgrade infrastructure to accommodate this I would be more in favor of their proposals. The reality is the transformers on the poles serving our homes are bidirectional. As our solar power progresses toward substations the problem becomes the control mechanisms, switches and circuit breakers which were designed in an era when distribution was centralized and flow was only contemplated in one direction. Those capital costs need to be funded to modernize the grid to accommodate more and more distributed generation.

I once served on a task force for a small beach town that was applying for a grant to form a microgrid. The primary purpose was to power emergency services for the City when the grid went down in a regional emergency. One of the consultants participating in preparing that proposal pointed out a school district, in the Central Valley, which installed a micro grid. The result of that microgrid, was that some planned upgrades which PG&E had planned for that area, were no longer needed, saving several million dollars. I would like to see more proactive planning of that kind by the IOUs and the CPUC instead of the current process which we are witnessing.

 

[swedge]

I'm on NEM 2 and I get credited (I consider this compensation but I guess you don't) at the same rate as if I had drawn power at the same time (other than NBCs which are pretty small in comparison). To me it is pretty obvious that I'm getting compensated at a higher rate than other sources PG&E has (most of the time).

Of course! But you only get that while your total kWh export during the year is less than your total import. If you export more, you only get credited at wholesale price.

It really is not compensation, but only a credit against debits you incur in other months' bills. Does that help clarify it?

When you export less than you import through the year, you are not supplying any net kWh to the grid, you are a net consumer. You are not exporting and "selling" any to PG&E for retail that you didn't buy from them at retail. While it may be true at some moments, your total exports did not reduce the total amount which they needed to generate or buy elsewhere. You are not a net seller of electricity. You didn't make any money on your exports, You only got credited for what you paid for. Over the course of the year, PG&E does not loose any money or any revenue on your exports.

What they credit you at retail only offsets what they billed you for, no more.

If you export more than you import, you get actually do get paid, but only at wholesale price.

The NEM2 schedule is what sets the limit on credits, clear as mud, starting on page 20, Special Condition 5. It says you only get average wholesale price for any net surplus electricity, defined as generation which exceeds your consumption. (In this context, generation means export, and consumption means import because PG&E has no idea how much solar you use yourself because that does not go through their meter or wires.)

NET SURPLUS ELECTRICITY COMPENSATION (NSC):
​

Pursuant to P.U. Code Sections 2827 (h)(4)(A), this Special Condition was established to provide a NEM customer having Net Surplus Electricity,​

(defined as all electricity generated by an eligible customer measured in kilowatt-hours over a Relevant Period – as defined in Special Condition 2.h of this tariff – that exceeds the amount of electricity consumed by that eligible customer), with Net Surplus Electricity Compensation (NSC) for the Net Surplus Electricity, while leaving other ratepayers unaffected. A NEM2 customer who has Net Surplus Electricity will be known as a Net Surplus Generator.​

...​

b. The NSC Rate – The NSC Rate is defined as the simple rolling average of PG&E’s default load aggregation point (DLAP) price from 7 a.m. to 5 p.m., for a 12-month period. PG&E shall use the NSC Rate as the value of the electricity portion of its net surplus compensation rate.​

One year, long ago, I did actually export more than I imported, something like 100 kWh over the whole year. I actually got a check from PG&E for around $4.

Time of Use pricing does add some interesting wrinkles, but that is whole other can of worms.

You are reminding me of that poster behind Fox Mulder's desk... ;-)

Seriously, though, NEM is complicated, and there is nothing in the bills to clarify or explain. Too clever by half, the brits would say. But via the complexity, NEM is revenue neutral for utilities. Solar, on the other hand, is not revenue neutral because, like conservation, consumer solar does directly reduce utility revenue. But NEM (and it's strange bill credits) is not what causes the reduction.

I'm not asking you to trust me, I'm just trying to help you understand how NEM manages to do this, in spite of the obvious appearing excessive "compensation" you are seeing on your bills.

SW

 

[getakey]

When you export less than you import through the year, you are not supplying any net kWh to the grid, you are a net consumer. You are not exporting and "selling" any to PG&E for retail that you didn't buy from them at retail. While it may be true at some moments, your total exports did not reduce the total amount which they needed to generate or buy elsewhere. You are not a net seller of electricity. You didn't make any money on your exports, You only got credited for what you paid for. Over the course of the year, PG&E does not loose any money or any revenue on your exports.

What? After I got solar I use way less total kWh from the grid. That is a net reduction in demand on the grid and it did reduce the amount of kWh PG&E had to generate or purchase. You said exactly that in one of your earlier posts. You said your solar production and rate shifting with PWs reduced the amount of generation that PG&E had to do. Just because I am a net consumer on an annual basis doesn't mean I did not reduce total demand.

Over the course of a year, PG&E loses profit on my exports. They buy/sell my export at same price. If I had not exported they would buy low/sell high that same amount of kWh. They may not lose money, but they do not make money

 

[RKCRLR]

Of course! But you only get that while your total kWh export during the year is less than your total import. If you export more, you only get credited at wholesale price.

It really is not compensation, but only a credit against debits you incur in other months' bills. Does that help clarify it?

When you export less than you import through the year, you are not supplying any net kWh to the grid, you are a net consumer. You are not exporting and "selling" any to PG&E for retail that you didn't buy from them at retail. While it may be true at some moments, your total exports did not reduce the total amount which they needed to generate or buy elsewhere. You are not a net seller of electricity. You didn't make any money on your exports, You only got credited for what you paid for. Over the course of the year, PG&E does not loose any money or any revenue on your exports.

What they credit you at retail only offsets what they billed you for, no more.

If you export more than you import, you get actually do get paid, but only at wholesale price.

The NEM2 schedule is what sets the limit on credits, clear as mud, starting on page 20, Special Condition 5. It says you only get average wholesale price for any net surplus electricity, defined as generation which exceeds your consumption. (In this context, generation means export, and consumption means import because PG&E has no idea how much solar you use yourself because that does not go through their meter or wires.)

NET SURPLUS ELECTRICITY COMPENSATION (NSC):​

​

Pursuant to P.U. Code Sections 2827 (h)(4)(A), this Special Condition was established to provide a NEM customer having Net Surplus Electricity,​

(defined as all electricity generated by an eligible customer measured in kilowatt-hours over a Relevant Period – as defined in Special Condition 2.h of this tariff – that exceeds the amount of electricity consumed by that eligible customer), with Net Surplus Electricity Compensation (NSC) for the Net Surplus Electricity, while leaving other ratepayers unaffected. A NEM2 customer who has Net Surplus Electricity will be known as a Net Surplus Generator.​

...​

b. The NSC Rate – The NSC Rate is defined as the simple rolling average of PG&E’s default load aggregation point (DLAP) price from 7 a.m. to 5 p.m., for a 12-month period. PG&E shall use the NSC Rate as the value of the electricity portion of its net surplus compensation rate.​

One year, long ago, I did actually export more than I imported, something like 100 kWh over the whole year. I actually got a check from PG&E for around $4.

Time of Use pricing does add some interesting wrinkles, but that is whole other can of worms.

You are reminding me of that poster behind Fox Mulder's desk... ;-)

Seriously, though, NEM is complicated, and there is nothing in the bills to clarify or explain. Too clever by half, the brits would say. But via the complexity, NEM is revenue neutral for utilities. Solar, on the other hand, is not revenue neutral because, like conservation, consumer solar does directly reduce utility revenue. But NEM (and it's strange bill credits) is not what causes the reduction.

I'm not asking you to trust me, I'm just trying to help you understand how NEM manages to do this, in spite of the obvious appearing excessive "compensation" you are seeing on your bills.

SW

View attachment 876328

Yes, but instead of buying the power from PG&E at retail price and keeping it I "sold" it back to them at almost the same price I would have paid for it, I sold it back to them at a higher price than when I actually purchased it, and probably at a time that they didn't have much need for it. They still had all their infrastructure costs, etc. They would have made a lot more money from me if I had purchased power at peak time and they weren't forced to "buy" my power back. This definitely effects their profit.

 

[swedge]

Yes, but instead of buying the power from PG&E at retail price and keeping it I "sold" it back to them at almost the same price I would have paid for it, I sold it back to them at a higher price than when I actually purchased it, and probably at a time that they didn't have much need for it. They still had all their infrastructure costs, etc. They would have made a lot more money from me if I had purchased power at peak time and they weren't forced to "buy" my power back. This definitely effects their profit.

You had me at yes.... and then you stopped making sense. (Talking Heads?) How do you buy power from PG&E and keep it? How did you sell it back to them for a higher price than when you "actually purchased it"? And why would the price be higher "at a time they didn't have much need for it"? Sorry, I just don't follow your scenario. Perhaps there are some typos which confuse me about your hypothetical. (I know I do plenty of confusing typos!)

But as to infrastructure, solar NEM customers always pay a monthly minimum fee which includes distribution costs. These are the local lines and transformers through which exported solar flows to the non-solar neighbors. So, solar customers do chip in for that, credits or no. What residential exports do not use are the long distance transmission lines and generation. These transmission lines are hundreds of miles long, and have been the cause of devastating losses of forests, towns and lives. They are very expensive to build and maintain. Local solar generation does not use this transmission infrastructure. You say utilities "still had all" these costs, but solar has been growing for many years, and total demand for transmission has not shrunk, so there has been no abandonment of covered uses of these assets.

I will say it again. The issue at hand is proposed revisions to the NEM rules. The current rules are revenue and profit neutral, the proposed changes increase costs for solar customers without any proposed relief for non-solar customers. Using residential solar production (wether in real time or at some other time via NEM) certainly does impact utility revenue and profit, because they don't get to sell what folks don't need from them. Of course that is what this is all about: utilities are trying to kill solar. They would have outlawed LEDs if they could. They used to argue that coal was good only till it became more expensive that solar. (Even without the added expense of fabled "clean coal" carbon capture and sequestration.)

Economists call this regulatory capture, where the regulated monopoly influences the regulator to curtail completion. In this case, the feared competition is from customer who would prefer invest in solar themselves rather than buy power from utilities who add all their infrastructure and lobbying profit to the bills. Regulation is supposed to protect consumers from predatory monopolies, but when the monopolies gain power over the regulators, it serves to reinforce the monopoly. The NEM3 proposals are an example of this.

Your misunderstanding of the nature of NEM is a result of our utilities doing their darndest to confuse their customers. Non solar customers are told their rates are high because solar customers get paid retail for their exports which raises non-solar rates. Solar customers are now told they won't be affected because they will be grandfathered for 20 years. The result is a political standoff which will allow CPUC to placate the lobbyists and kill off the solar industry in the name of being fair to utilities.

Please note, and I think I said this earlier, if the new proposed NEM rules did eliminate the unfair shifting of costs which you preceive, it would raise costs for solar (which it does) and would decrease costs for non-solar, which is does not do. It is a scam.

When people claim that PG&E is paying them more for NEM credits than they could pay for kWh elsewhere, they are spreading confusion and misinformation. The reality is complicated, but that claim is simply deceptive. NEM is a year long process which offsets exports with imports. When you leave out the matching imports, you are not describing NEM.

Assuming you are not exporting more than you import, If you take the total yearly imports and subtract the total exports, you will have the amount of juice you bought and paid for at retail. The NEM retail credits are only for exports matching what you imported. In the totals, no net power changed hands, and no net costs incurred.

Your repeated premise of buying the kWh from some other source has another flaw. The load drawn from the grid dictates exactly the power which must be put onto the grid. You can not put more power on the grid that is coming off. So, to substitute some other source for solar, you'd have to cut off the solar. That is the non-NEM, non-export situation which pertained before NEM was enacted, and during which solar languished. In any case, the substitution with less expensive power you describe is not possible with the installed solar hardware.

 

[swedge]

You said your solar production and rate shifting with PWs reduced the amount of generation that PG&E had to do.

At least in one of my rants, I said it reduced the generation required during PEAK hours:

They can actually export power during peak hours, further reducing grid generation and transmission loads.

This relates to using batteries to address the "duck curve" (which is not quackery...) , where solar production falls off before demand does. Batteries can effectively time shift pv power to peak demand times which reduces the hight of the peak, and hence the utilities generation and transmission capacity requirements. Tesla PowerWall's new Grid Charging and Export Everything allow them to not only prevent consumption during peak periods on short or cloudy days, but even to export to the grid during peak hours after dark.

 

[swedge]

Over the course of a year, PG&E loses profit on my exports. They buy/sell my export at same price. If I had not exported they would buy low/sell high that same amount of kWh. They may not lose money, but they do not make money

Having solar does, of course, reduce your annual total net draw on the grid and hence how much you pay the utility for electricity. That is why you bought solar. This obviously does reduce your utility's revenue and profits relative to you not having solar. From the utility's point of view, you reduced your consumption, so they sell less to you.

I looked up PG&E's revenue history, and it is not shrinking. So however much damage you have done to them, they have managed to hang in there.

Most of my recent comments relate to misunderstandings of the retail credits under NEM, and trying to explain why it is not those credits which create the lost revenue. Sorry if that was not clear.

NEM3 proposals are the topic of this thread, but it is not very clear what problem NEM3 is trying to solve. Cost-shifting? Duck curve? Electricity prices? Carbon footprint?

 

[getakey]

I looked up PG&E's revenue history, and it is not shrinking. So however much damage you have done to them, they have managed to hang in there.

rates - look at rate history. They hang in there with the blessing of the CPUC

 

[swedge]

rates - look at rate history. They hang in there with the blessing of the CPUC

Good point, rates have been jumping up.

I don't recall. Do you know the trend it the energy delivered and/or peak grid load?

I also wonder how they are funding those liability payouts for San Bruno (gas, not electric problem), Paradise, Santa Rosa, etc.

SW

 

[Ampster]

I also wonder how they are funding those liability payouts for San Bruno (gas, not electric problem), Paradise, Santa Rosa, etc.

Those had to be addressed in the Bankruptcy. I think the liability for fires was what caused them to enter Bankruptcy.

 

[J0hn_]

Ratepayers will get bill credits after a judge declared unconstitutional the city’s practice of charging more than the cost of delivering power​

$21.75 million in refunds on way to Riverside electricity customers

Ratepayers will get bill credits after a judge declared unconstitutional the city’s practice of charging more than the cost of delivering power.

www.pressenterprise.com

 

[Ampster]

Ratepayers will get bill credits

Riverside is a Municipal Utility which is not regulated by the CPUC. Interesting case but I am not certain about the relevancy to CPUC and NEM 3.0.

 

[power.saver]

From the Los Angeles Times.

Editorial: The new plan to slash rooftop solar incentives is better — but still too extreme

California regulators revise plan to slash incentives for rooftop solar. It's not as drastic as before, but that doesn't make it a reasonable compromise.

www.latimes.com

 

[getakey]

any bets on whether this goes through as is?

California to cut solar net-metering payments by 75%

A vote is expected mid-December on a regulatory change that could severely dampen the value of new residential rooftop solar installations in California.

www.pv-magazine.com

 

[Redhill_qik]

any bets on whether this goes through as is?

California to cut solar net-metering payments by 75%

A vote is expected mid-December on a regulatory change that could severely dampen the value of new residential rooftop solar installations in California.

www.pv-magazine.com

I would give it a 80% probability of going through as-is. Below is from my post #2695 a few weeks ago.

I took a quick swag at some scenarios for my pre-solar usage and PVwatts modeled system and came up with the following annualized costs

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.

 

[getakey]

Personally, I would not buy solar with a 9+ year payback. Considering lost opportunity cost, the real payback is longer. Better to calculate ROI over 15 years and compare to what you can get on investments.
If it goes in as is, resendential solar will virtually stop

 

[Redhill_qik]

Personally, I would not buy solar with a 9+ year payback. Considering lost opportunity cost, the real payback is longer. Better to calculate ROI over 15 years and compare to what you can get on investments.
If it goes in as is, resendential solar will virtually stop

The payback period that I was calculating, I'm not sure how it was done for the NEM3 proposal, assumed no change to rates, but in the real world the TOU rates will be going up, although the NSC rate stays the same for the 9 years unless you opt out. Looking at the rates from 2019 to 2022, they have compound annual growth rate of 5.62%, so after 9 years the tariff rate would be 63.6% higher and making the payback period sooner. The panels don't stop working at 9 years and after 20 years the rates would be expected to be 2.95% higher increasing the savings.

 

[holeydonut]

Yeah assuming TMC users are not representative of normal people (har har, nerds)... the average consumer simply cannot understand implications with all this glide pathing, ACC, TOU, blah blah blah.

Go find me a normal person who knows their daily energy usage by hour, by season, and by appliance. Those people simply don't friggin exist in the real world. I'd actually go so far to say that your average person doesn't want to know that stuff at all. They got enough problems than wondering how much kWh their dishwasher used after the dinner dishes were loaded up.

So all this crap from the IOUs telling people "their savings could be XYZ IF ... blah blah blah" is just ridiculous. People know what they pay each month. They know that bill is outrageously high. Solar could be a way to reduce that monthly bill. If a non-solar customer's monthly bill is on average $300 today... they want to know that installing solar means a bill of something less than $300. That's it. They don't want to know about TOU shifting... or how they need to charge an EV from noon to 3PM... or when to run their ACs.

Unfortunately the vast majority of solar is paid for with leases and loans, so please remember the cash-only-solar contracts are skewed here on TMC. Many normies are doing monthly PPAs.

I already need @Redhill_qik to explain how this completely BS black and white bill works under NEM 2.0. Do you know how absolutely insane/rubbish this same bill will be on NEM 3.0 once there are there rates for imports and ACC-exports by hour? The bill is going to be 90 goddamn pages long!

I don't think this new NEM 3.0 provides the solar companies with any way to effectively message the ridiculously complicated glide path of possible monthly bills. With the latest NEM 3.0 proposal, we know it is better than the previous PD. But, we also know that in the future, some homeowner is going to install PV+ESS and somehow their monthly bill will go up compared to before (especially in the Winter months). And that's going to be the end of residential solar for the masses... since most people aren't resourced to waste money on solar arrays because they're bored.

If it's not simple, your average customer is going to say "no."