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,

Solar funding tremors in California--a rant Part I

Hey solarDwellers:

Man, my longest posting absence(two weeks)since solarDweller began last November. Thanks for checking back--yes, the solarDweller blog is alive. IT'S ALIIIIIVE. Partly a break form writing solar-all-the-time, and busy with other solar "activities" and work beyond the internet world.

But, it's amazing how just two weeks in solar time can be like lightyears with how fast solar regulatory/economic faultlines can shift. Enough to confuse and even worry your potential average solar pv consumer, and enough to test the nerves of your average local, hard-working installer. So, here's a version to give you the gist . . .

First, those average PV consumers and installers were all happy, even making a clean-energy toast, when the California PUC authorized the 10-year solar rebate funding plan back in January. Finally! A long term priority given to solar, along with a brand spankin' new $2,000 federal tax credit for solar as well. Woo-hoooooo!

Then, fast-forwarding a mere 4 months, with the clink of champagne glasses still ringing in our ears and the bubbly still tickling our noses, a double-whammy from two entities with a hand in solar pv: one a California state commission and the other a corporation. Today's post: the state's hand . . .
The same commission that just passed that wonderful long-term rebate funding this past January, the California Public Utilities Commission that is, came out with a draft proposal just last month saying,(liberal paraphrasing here):

"Well, maybe we're being too generous with that 10 years of $2.8 billion of rebate money we just approved(contributed at the rate of $.75/month from each electricity customer). We mean, like, you solar freaks just got that $2,000 credit from the feds, so let's drop your $2.80/watt California solar rebate to $2.25/watt beginning Jan 2007. Oh, so sorry that's only 8 months away and it was only scheduled to drop to $2.60/watt . . ."

So, for a typical single-family home 2.5kW solar PV system, this proposed rebate cut is like increasing that system cost by roughly $1200 in 8 months. I guess you can already see the PUC's thought process: "So, we increase the 2.5kW system cost by 1,200 next year. But with the new $2,000 fed tax credit, those solar pv consumers are still $800 better than they were in 2005 before that new fed credit."
Not so bad, right? The net effect(rough estimate on the high side):

2007 2.5kw system Price might be $17,000 (next year?)
2006 2.5kW system Price is $15,800 (now)
2005 2.5kW system Price was $17,800 (before)

You can see why these price girations are enough to make a future solarDweller or solarInstaller dizzy!!!

My take: if we're really serious about EXPANDING the use of solar power on a ten-year plan, taking into account the reduced greenhouse gases and environmental benefits, you AGGRESSIVELY incentivize solar at the beginning, and bring the rebate down gradually as solar production costs come down in tandem. This year's 2.5kW net price of $15,800 from the example above is NOT TOO GENEROUS in my eyes. That extra $2,000 fed tax credit was just that nice extra push to get more people in the solar market faster! I just think it's wrong-headed that the PUC now wants to SLOW that demand down because it feels we're being too generous with subsidy money.

Remember those HUGE tax breaks oil drillers got in the 2005 Energy Bill for domestic off-shore drilling in the Gulf of Mexico? How much did Exxon make this year in record profits? Where are our priorities????

Pardon my negative enthusiasm. It's that JUST when things got REALLY good, they quickly got a little less really good. A downgrade to medium good. If your a glass-half-full type person, using the numbers above, at least we're doing better than treading water. 2007's guestimate of $17,000 for the avg system is still better than last year's $17,800 price-tag . . . .
End post with a smile :-) and, if you can, BUY SOLAR THIS YEAR while we're still at "REALLY good", especially if you're at all close to making that "solar-decision." You can even get a nice, smaller system for around $9,000 bucks. It's all good if a lot of us even go a little green!

Next post: Part II--The other shoe drops--the electricity corporation's hand.

--the solarDweller

P.S. Thanks to my solar insider "source" for bringing to my attention this recent PUC solar rebate reduction draft proposal.
Categories: solar, solar+power, alternative, renewable, sustainable, whatsnews, economicsofsolar