Orders for solar power systems have been surging in Northern California, but a legislative technicality is threatening to trip up the sector's growth.
The 2006 bill that created California's "million solar roofs" program provided generous ratepayer-funded subsidies for solar electricity. But, in part to allay electric-utility anxieties about runaway growth of self-generated power, it also set a limit on how much solar capacity could be set up for "net metering."
Net metering is a billing arrangement that allows the meter on a solar-equipped home or business to run backward when the system is producing more energy than the building is using. The excess power flows into the electrical grid. When the building needs more power than the solar panels produce, it draws power from the grid, and the meter runs forward.
Net metering cuts the effective cost of solar power substantially.
The solar roofs law set the net metering cap at 2.5 percent of a utility's peak load. In Pacific Gas and Electric Co.'s service area, photovoltaics have been so popular that the industry is projecting orders for new systems will hit the cap – roughly 500 megawatts – in the first half of next year. The state's other large utilities are still well below the 2.5 percent cap.
Assembly Bill 560, by Assemblywoman Nancy Skinner, D-Berkeley, would have raised the cap to 5 percent. While the bill was supported by PG&E, it foundered in committee last week following changes backed by labor groups that added new licensing requirements for solar contractors. The amendments sparked a flurry of opposition – including from some solar installers – that stalled the bill.
The bill could be revived next year.
A utility could voluntarily raise its own net metering cap, but the solar industry is worried that the lack of a net metering guarantee will scare off customers.
"It just really makes the situation much more uncertain," said Angiolo Laviziano, chief executive of San Luis Obispo-based REC Solar, the leading installer in Northern California.
The industry also fears that the cap could jeopardize federal stimulus funding for solar projects on school and government buildings in PG&E's service area.
PG&E spokeswoman Cindy Pollard said the utility shares the solar industry's concerns about the impact the cap could have on sales.
In the past, electricity providers have expressed concern that substantial adoption of net-metered solar power would cut utility revenue and force rate hikes. The state Public Utilities Commission is studying that issue and is scheduled to release a report in January.
The solar industry did notch one clear legislative victory last week with the passage of Assembly Bill 920 by Assemblyman Jared Huffman, D-San Rafael. The bill would obligate utilities to pay solar customers who send more power into the grid than they draw. Under current net metering rules, the best a customer can do is break even – not owe any money on a bill. The utility gets any additional power for free.
Gov. Arnold Schwarzenegger's office didn't respond to an inquiry Monday about whether AB 920 is likely to be signed.
Call The Bee's Jim Downing, (916) 321-1065.
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