It’s easy to see why California’s public sector has been at the forefront of solar and energy storage adoption. Solar and storage allow schools, cities, and other government agencies to save taxpayer money, meet their sustainability goals, and take control of their energy futures. If you are considering solar or storage for your public sector facility, there are five key public California solar policies you should know about.
1. Net Energy Metering
Net energy metering (NEM) is a billing arrangement that allows solar customers to receive utility bill credit equivalent to their retail energy rate for any solar energy they feed onto the grid in excess of what they consume on-site. NEM essentially allows the utility meter to “spin backwards,” so that over the course of a year, solar customers pay only for the net amount of electricity pulled from the grid beyond the amount of electricity generated by their solar system. If you are served by a Community Choice Aggregator (CCA), you may be eligible to receive NEM compensation for solar generation at rates that are even higher than retail.
While the NEM program is uncapped, the California Public Utilities Commission (CPUC) plans to revisit and revise the NEM tariff in the next few years, so now is the time to consider a solar investment. Regardless of any changes to NEM that the CPUC adopts in the future, energy users that install solar now will have their current arrangement protected for 20 years.
2. Renewable Energy Self-Generation Bill Credit Transfer (RES-BCT)
Local government agencies and public college campuses can participate in the Renewable Energy Self-Generation Bill Credit Transfer (RES-BCT) program. Whereas the NEM program applies (with limited exceptions) only to solar installed onsite, the RES-BCT program allows a solar project located on one property to benefit one or multiple utility accounts elsewhere. RES-BCT unlocks economies of scale (up to the 5 MW limit) as well as access to solar for public agency offices that may be unable to go solar onsite. RES-BCT credits solar exports at the generation rate, which is slightly less than the full retail rate offered by NEM. The RES-BCT program is capped at 250 MW, divided among PG&E, SCE, and SDG&E. While plenty of capacity remains in the program, interest has picked up recently in PG&E’s service territory.
3. SGIP Energy Storage Incentives
The Self-Generation Incentive Program (SGIP) provides incentives for energy storage (a term of art for large batteries connected to software), which can help public sector energy users save money on their utility bills. First, energy storage reduces costly demand charges by discharging energy behind the energy user’s meter as electricity use begins to spike. Second, it helps align solar customers’ energy use with the new time-of-use rates, which shift the peak periods, when electricity is costliest, to later in the day when solar production is low. With a battery-paired solar system, a public sector energy user can generate electricity in the middle of the day, store it until the late afternoon peak period, and use it when drawing on the grid is most expensive. SGIP offers a lucrative incentive that declines in value as funds are awarded, so don’t wait consider whether battery storage is the right fit for your agency.
4. Solar- and Storage-Friendly Rates
Option R is a rate tariff that features lower demand charges and higher charges for energy usage. Though a higher energy cost (dollar per kilowatt-hour) sounds like a bad thing, it actually works in a solar customer’s favor because the credits earned by exporting solar energy to the grid can be used to offset energy charges, but not demand charges. Option R creates less opportunity for a public sector energy user to incur costly demand charges and more opportunity for it to offset electricity usage via solar credits.
While energy users served by PG&E and SDG&E have unlimited access to the Option R tariff, regulators have imposed a 400 MW cap on Option R in SCE’s service territory. The solar industry has been advocating for the CPUC to lift the cap, which has very little capacity left. We anticipate a resolution of this matter in the first half of 2018.
5. Meter Aggregation
Meter Aggregation (NEM-A) allows public sector energy users to install solar on one property and use the full retail rate NEM credits it generates to offset electricity usage on contiguous properties. This is a great tool for school districts and college campuses with multiple facilities that are adjacent to one another. NEM-A offers economies of scale, allowing an energy user to build a larger system whose solar generation can offset the electricity use of multiple meters.
Lastly, an exciting legislative initiative led by Senator Scott Wiener could create new solar opportunities for public sector energy users that face barriers to NEM, either because they lease their space or have insufficient space on-site to meet their electricity demand, or for whom RES-BCT is too restrictive. SB 1399 would enable public sector energy users to partner with previously developed sites — such as warehouses, parking lots, or brownfields — and redevelop those sites with clean, local renewable energy. The program would enable public sector energy users to receive utility bill credit for the offsite solar generation. We are excited about this important policy initiative and hope to see it become law this year.