California Utilities Say Solar Raises Costs for Non-Users
By Christopher Martin & Mark Chediak - Dec 17, 2012 8:09 AM MT
Booming rooftop solar installations in
California are bringing an unwelcome surprise to the homes and businesses that don’t have the devices: an extra $1.3 billion added to their annual bills.
Power companies in the biggest U.S. solar state are required to buy electricity from home solar generators at the same price they resell it to other customers, meaning utilities earn nothing to cover their fixed costs. The rules are short- sighted because eventually rates must be raised to make up the difference, according to Southern California Edison, which has joined with competitors to estimate potential losses.
Dec. 11 (Bloomberg) -- James Evans, senior analyst in solar and wind power at Bloomberg Industries, discusses the outlook for the renewable energy industry in 2013. He speaks with Manus Cranny on Bloomberg Television's "On the Move." (Source: Bloomberg)
As more homes and warehouses get covered in solar panels, higher rates imposed on traditional consumers risk a growing conflict between renewable-energy advocates and power companies that foresee a backlash in California and 42 other states with similar policies. The tension has also emerged in countries including Spain and
Germany, where solar investments are curbing investment in the power grid.
“You get into a situation where you have a transmission and distribution system with nobody paying for it,” said Akbar Jazayeri, vice president of regulatory operations at Edison, a unit of
Edison International (EIX) and California’s second-largest electric utility.
To deter losses as solar abounds, states typically set a cap on the amount of photovoltaic power utilities must buy under so-called net-metering policies. Those allow a meter to run backward during the hours a day when a home or business is selling the power to the utility. California’s limit is 5 percent of a utility’s aggregate peak load.
New Customers
About 20,000 customers of San Diego Gas & Electric had connected 146 megawatts of solar panels to its grid as of Nov. 1, accounting for 1.2 percent of its peak load. The company is adding 409 new net-metering customers a month, said Stephanie Donovan, a spokeswoman for the state’s third-largest utility.
<MORE>
Passing Costs
Southern California Edison will transfer about $400 million in annual costs to people without solar systems when the state hits the cap, David Song, a spokesman, said in an interview.
PG&E Corp. (PCG)’s Pacific Gas & Electric, the state’s biggest utility, will pass on about $700 million a year, according to Denny Boyles, a spokesman, for a total of $1.3 billion from the three utilities.
That’s about 3.9 percent of the $33.5 billion spent on electricity in 2010 in California, based on the latest figures available from the U.S. Energy Department.
<MORE>
Solar Growth
Installations of U.S. residential and commercial
solar systems totaled about 1,050 megawatts in the first three quarters of the year, according to the Solar Energy Industries Association, compared with about 1,100 for all of 2011.
<MORE>
Raising Caps
The growth is also driving efforts to raise net-metering caps. California revised the way it calculates its limit in May, effectively doubling to about 5 gigawatts the amount of solar energy that state utilities will eventually be required purchase.
<MORE>
Easing Stress
And solar developers say rooftop systems actually benefit the
power grid by providing power during the hottest parts of the day. That eases stress on wires and transformers and helps utilities defer maintenance and upgrades, said Todd Pedersen, chief executive officer of Blackstone Group LP’s Vivint Inc., which installs residential solar.
<MORE>
German Backlash
People in other countries are protesting higher rates stemming from net-metering programs. In Germany, the world’s largest market,
Chancellor Angela Merkel is facing a backlash against higher power bills related to renewable energy. Grid fees will boost household bills an average of 10 percent next year, according to industry analyst Verivox.
<MORE>
To contact the reporters on this story: Christopher Martin in New York at
cmartin11@bloomberg.net; Mark Chediak in
San Francisco at
mchediak@bloomberg.net
To contact the editor responsible for this story: Reed Landberg at
landberg@bloomberg.net
