California plans to kill the residential solar industry

We have ended nuclear and coal as sources of energy, leaving us with solar and wind turbines.  Now Sacramento Democrats, with the support of Gov. Nuisance, wants to use economics to kill off the solar industry—after spending billions in tax dollars to create it.

“At least, that was the deal. Enter the California Public Utilities Commission which has apparently decided it’s time to alter the deal. This new plan called Net Metering 3.0 hasn’t been passed yet but is expected to be voted on next month. If it does pass, the state will start charging new solar installations a fee based on the size of their system. The fee is $8 per month for every kW of generating equipment you have installed on the roof. So if you have an 8kW system, you’ll owe SCE an additional $64 per month or over $700 per year. You don’t get anything for that money, it’s basically just a tax on everyone who installs solar equipment.

In addition, the new plan will reduce the amount the power company pays you for your excess energy from about 25 cents per kilowatt hour (still less than what the power company charges you for a kilowatt hour of power) down to about 6 cents per kWh. And that means there’s no way to break even on your bill anymore unless you also install an expensive battery system to save the excess energy for your own use. Of course the batter costs almost as much as the entire system.

While mandating emission free energy, government is going to make it so expensive that only the rich could use it.  The rest of us will have to ration our energy use or go without.  It is looking like a dark future for Californians—at least those who stay.

California plans to kill the residential solar industry

John Sexton, HotAir,   12/18/21   

Admittedly, this isn’t going to be a post that’s of interest to everyone. It’s primarily of interest to me because a) I live in California and b) this summer I had a Tesla solar system installed on my roof. And now, just months after I had that installed, the state is planning to change the incentives offered to homeowners in what is effectively a tax on solar. Why would a state completely run by Democrats want to make it less likely for people to install home solar? Because they need more money of course. Read on and I’ll explain the details.

To follow this mess there are several things you need to know about California’s electricity grid and current solar incentives. First of all, California (at least southern California where I live) doesn’t charge one flat rate for electricity. Instead my electricity provider, Southern California Edison (SCE), has what are called Time of Use rate plans. There are actually three different plans you can enroll in (plus discontinued rate plans that some customers still have) and all of those plans vary between summer and winter. But the general idea is that late and night and for most of the day power is at one price (29 or 30 cents per kilowatt hour) and during the peak hours of 4-9 pm the price spikes (to between 41 and 59 cents per kilowatt hour) depending on the exact plan you have.

The billing gets way more complicated than that, unfortunately, because the provider also charges you based on tiers of total usage for the month. So if you use a small amount of power you get charged at lower tier one rates but once you pass a certain number of kilowatt hours you flip into tier 2 where all the rates go up and so on until you get to tier 3 where the cost of your power really hits the stratosphere.

That’s how the system works for most customers. But California also offers some big incentives to install solar power. The system is called “Net Metering.” Basically, the idea here is that if you generate more power than you use, your provider is required to buy that excess power back from you. So on a sunny day, my system might be generating 6 kilowatt hours around noon but my house is probably only using about 1 of those six kilowatt hours to run a few lights and maybe a couple of computers. So that excess goes back onto the grid and my electricty meter effectively spins backwards. The credit I get from SCE for all of the excess power during the day gets deducted from whatever power I used at night when my solar system isn’t generating.

That’s basically why I bought solar. I won’t go into all the numbers but under the current net metering system I paid for the physical system (panels, inverter, installation) up front and then have an annual electricity bill around $150, which is less than I was previously paying per month. So over the course of roughly 10 years, the monthly savings equal the up front cost of the system. After that break even point, all of the energy I generate for the next 10-15 years is effectively free. Given the cost of electricity in California, that could mean saving $10,000 to $15,000.

At least, that was the deal. Enter the California Public Utilities Commission which has apparently decided it’s time to alter the deal. This new plan called Net Metering 3.0 hasn’t been passed yet but is expected to be voted on next month. If it does pass, the state will start charging new solar installations a fee based on the size of their system. The fee is $8 per month for every kW of generating equipment you have installed on the roof. So if you have an 8kW system, you’ll owe SCE an additional $64 per month or over $700 per year. You don’t get anything for that money, it’s basically just a tax on everyone who installs solar equipment.

In addition, the new plan will reduce the amount the power company pays you for your excess energy from about 25 cents per kilowatt hour (still less than what the power company charges you for a kilowatt hour of power) down to about 6 cents per kWh. And that means there’s no way to break even on your bill anymore unless you also install an expensive battery system to save the excess energy for your own use. Of course the batter costs almost as much as the entire system.

Summing all of this up, anyone looking at installing solar has to add that new costs into the calculation about when they could break even on an install. And in my case it would have moved my break even point from around 10 years to more like 18-20 years. If you assume the system lasts 25 years, there’s still some meager advantage overall but it hardly seems worth it.

Fortunately for me, I got in before the new plan was passed and, according to SCE. my installation will be under a grandfathering provision which lasts 20 years from the time I turned it on. So maybe by the time all of this is passed I’ll get about 19 years (10 to pay for the system and 9 years of free power) before I have to start paying the power company a tax for having a solar system on my roof.

Why is this happening? Because California wants more money. According to the California Public Utilities Commission so many people have installed solar to get out of paying their montly electric bill that utilities can’t cover the cost of maintaining the distribution system, i.e. the power lines that keep setting parts of the state on fire. Increasingly, the cost of maintaining those lines is falling on people who can’t afford to install solar who tend to be lower income people. And that’s unfair according to the PUC and California won’t allow that. So they’re creating a new tax on those who can afford to pay it.

Supposedly the other goal of this change is to force more people to get batteries like the Tesla Power Wall. That would help the state keep the lights on in the evening when the price of power spikes everyday because everyone is using it at the same time. Meanwhile, California just shut down its last nuclear power plant about 30 miles south of my house, a plant that could have provided power for many more years. Shuttering nuclear plants in the midst of a power crisis makes no sense as even Vox admitted a couple months ago.

The result of Net Metering 3.0 is likely going to be the end of the residential solar industry in California. I have a neighbor who was interested in possibly getting a system after I had mine installed. Like me, he figured that after 10 years he’d break even on the cost and still get years of free power. But under the new system his break even point would be 18 years or more so now he doesn’t see the point. A lot of other people are going to run the numbers and reach the same conclusion. Solar installers are about to see their orders drop off a cliff which doesn’t make much sense if the goal was to shift people to green energy. Earlier this week, Elon Musk (who owns one of the major solar installers) called the new plan “insane.”

Here’s a local news report about the plan.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

Comments

  1. Protecting the poor from harmful climate and energy policies are proving to be systemic racism on the less fortunate.

  2. What the government giveth, the government taketh. This is why ALL subsidies should be eliminated. Let the free market guide innovation, not the government picking winners and losers.

    I put solar in 13 years ago for economic reasons only, not man-made climate change misinformation. Had a credit of between $250 to $400 each year. Now with the new rules and Time-Of-Use schedules I will end up paying more than $1500 this year and more next year. Another example of switch and bait.

    The same will happen with all the subsidized electric cars. As the government loses tax revenue at the pump they will tax the customer at the electric charging stations (which is feed through gas and coal electric plants) and eventually try and tax every person/per mile that you drive.

    The greater the government the greater the poverty. The greater the freedom, the greater the wealth

  3. The stupidity of this government increases exponentially. People said that you break even on a solar panel installation after 10 years – but after 10 years the solar panels wear out and you need to replace them!

    The solar panel industry is controlled by the Chinese anyway, they make two of the main components required, so if people stop buying solar it’s one less critical utility that the Chinese could just cut off at a whim if they were unhappy about something the U.S. was doing. We need to put conservatives in charge and support clean burning natural gas.

    • Aidan Downey says

      panels typically generate at least 70% of their rated capacity after 25 years. never heard of panels only lasting 10 years.

  4. Boris Badenov says

    Allow me to toss in a few things. I have a solar system on my house. Did it when we remodeled back in 2005. Net cost was about $24,000 for a 3.2Kw system using top of the line panels back then. Chugging along to 2019, my inverter went out, so now my $24,000 system now cost $27,000. NOW, it turns out that my 40 year roof that my crooked contractor put on was closer to a 25 year and is failing, so……I have to have the panels removed, a new roof put on and panels reinstalled. HERE is the issue, if I put on upgraded panels I’m out another $8,0000 AND odds are it’ll trigger this new tax and then I’m really shafted. So, WHY BOTHER.

    As a note I know darn well that this Climate Change nonsense is, well nonsense. Solar and wind are just ways to make a few people very rich and shaft the rest of us and destroy the envoirment far worse than MMGCC could ever do. LGBFJB

  5. One errata in the article: Diablo Canyon nuclear plant in San Luis Obispo county is still operating, and has been extended to operate beyond its projected 2025 shut down because the renewable energy can’t be relied on at night, cloudy days or windless days.

    Good for the CA PUCN. It is time the solar industry stopped its Ponzi scheme and paid the fully-burdened costs of its sketchy production plans. Paying residential customers the full retail price that utility companies purchase or sell electricity for from large-scale producers does nothing to cover the cost of maintaining the electricity grid or transmitting the electricity to the service address.

    That people who are foolish enough to spend $20,000 or more on a solar array at their houses think they should be subsidized is an insult to thinking people. None of these costs include repairs and replacements of equipment, which makes the economics of solar even worse. Battery storage has not developed to the point where it can power cities for an extended period of time, or even a household that needs air conditioning overnight in the height of summer heat.

    • Just a note to Rick. When I get a “credit” for the Year in my True up Period, I do NOT get the retail cost of a KWH of power, I only get the same that PG&E buys power from out of state, about 4 cents/KWh. So PG&E gets to use my excess power during the day and charge other customers up to 50 cents +/KWh during peak periods and yet only will pay me 4 cents/KWh. Now THAT’s a scam!

      Time to get off the grid for good.

  6. actually i agree with this plan. all solar and wind ONLY works with subsidies. when the free market is at play we will see more innovation and technology created. subsidies only delay and destroy innovation. China makes the majority of solar panels anyway. so lets change that as well.

  7. Aidan Downey says

    the argument by the utilities is total crap. what they are saying is that solar panel owners are not paying their fair share of FIXED costs. My water bill is split into two parts: a capacity charge (system fixed costs) and variable costs (water used). Why are not electric costs billed the same way?

  8. NEM 3.0 is a ruse by the electric utilities to try to remain relevant as the shift in energy generation and storage (microgrids) is not only now technically feasible but economically viable WITHOUT subsidy. What is happening is the electric utilities are forcing the move to microgrids at a time when a pandemic took the wind out of battery storage manufacturing and the world is literally battery constrained. An issue that will take around thirty-six (36) months to rectify to pre-pandemic time though with the forced requirement by the utility monopoly they are ensuring useless solar fields that are vulnerable to black-outs, terrorist attacks and increased gird infrastructure costs. Guess who will pay for this mistake…CA Ratepayers. Have no fear though this is the last stand for the electric utility monopoly and their lobby. Their costs will continue to increase as record pace and solar + battery storage costs will continue to decrease to the benefit of ALL Californians of all income brackets. Good bye to the 130 year-old model of central generation and delivery of electricity and welcome to the rapidly emerging, next generation replacement with solar photovoltaic and Energy Storage Solutions (ESS) whose technology was invented for small spaces for this very reason…to replace excess waste and inefficiency @renova_energy

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