Part II--The other shoe drops--the electricity corporation's hand in CA

Hey solarDwellers:

So, the other day I was complaining in a post because California Public Utilities Commission is going to get less generous with the amount of rebate money people who install solar pv will get next year. The example I used: a nice-sized, 2.5kW single-home system net price could go up from $15,800 this year to $17,000 next year because of a lower state rebate, unless of course your nice, neighborhood installer decides to keep the price toward the lower end to keep demand high, with the effect of lowering his/her own profit margin.

And if these possible state-level changes weren't dizzying enough for installers and consumers, PG&E (the other shoe, the California electricity corporation), decided to change its electricity rate structure beginning May 1 of this year(2006).

The biggest change was in their "Time of Use" rate, which is the type of rate which most solar owners have chosen historically and found most beneficial economically for the solar power they sell "back" to PG&E during "peak hours." Anyone can choose a "time of use" rate, which just means the utility will charge you more for power you use between 12-6pm(peak hours), and charge you less for all other hours and weekends(off-peak). Doesn't sound good if you use much power during those peak hours. But if you have some nice solar panels on your roof, and you don't use much power during those peak hours, you get to EXPORT that power to PG&E at the HIGHER peak-hour rates, while you pay PG&E LESS for off-peak power at night.

This was a great deal for solar, because on the old "time-of-use" schedule, called "E-7" in PG&E language, in the Summer PG&E would pay or credit the solar owner for their solar electricity at $.29/kWh between noon and 6pm, and only charge that owner around $.09/kWH to use the utility's electricity outside those peak hours. This large differential for the solar owner between the price to sell and buy, in effect, made it possible to buy a PV system that produced only 65% of their electricity usage but REDUCED the electric bill by 95%. In other words, a PV system producing 65% of your electricity needs could produce 95% of economic savings.

Now, the problem: solar owners can't get the old "E-7" rate with such a wide differential between peak and off-peak prices. Now you have to go with the "E-6" rate schedule. Instead of earning $.29/kWH peak and paying $.09/kWh off-peak in Summer, the new rates are $.21/kWh peak and $.095/kWh off-peak. They're paying you less for your solar during the day and charging you more at night for power!!! What a deal!!

So, what's it all mean!? Basically, the magic of a PV system producing only 65% of your electricity but reducing your bill by 95% is not so magic any more, because the utility is buying your solar for less between those prime noon-6pm hours when solar panels produce at their best. The reality now is that you need a bigger, more expensive PV system than you would have needed under the old rate to get that same 95% economic savings benefit.

All in all, future solarDwellers, it's been a pretty disappointing double whammy from the state(potential reduced rebates) and the corporation(reduced price for your solar exports) at the same time. Don't get me wrong! This is just a bump in the road in the rebirth of solar in California and nationwide.

Buying solar for your abode still is guaranteed to pay you back on your investment and guaranteed to reduce your carbon footprint A LOT!!!! You'll be glad to know if you put a 2.5kW system on your house, it's roughly the carbon equivalent of not driving your car 10 months out of each and every year that your solar panels are on your roof. So, stick with your current car and buy solar instead of a new car, or try not driving for the 10 months out of every year . . . .You gotta do what works for you.

--the solarDweller
Categories: solar, solar+power, solar+energy, green+power, alternative, renewable, sustainable, economicsofsolar, psychologymarketing,