Lions and tigers and bears, oh solar!

Over the past month or so, three regulatory and financial developments have strengthened the investment viability for homeowners who go solar. I love lions, tigers and bears ... let's review the three solar life springs.

1. The 30% Federal Investment Tax Credit was, surprisingly, extended for four years. Originally set to expire at the end of 2016, the tax credit was extended thanks to a bit of horse-trading between  Dems and Republicans in Congress. Via the Omnibus spending bill, Republicans were granted removal of the 40-year ban on exportation of domestic oil. Democrats received an extension of the solar tax credit. An all-of-the-above energy approach? Yes, but to the benefit of homeowners who repower with solar.

2. Today, the California Public Utilities Commission extended solar net-metering for PG&E (and the other two investor-owned utilities') ratepayers. This comes on the heels of the PUC grandfathering -- for 20 years -- net-metering for existing solar customers. Big deal? Yes. It is a continuation of compensating PG&E solar customers at the full retail rate. Doesn't get better. Here's a good overview of the PUC's decision.

3. Commencing January 1, 2016, PG&E raised residential electricity rates 8.7%. Across the board. Predictable but painful (for homeowners who do not have solar). But, higher rates increase the avoided cost -- what you would pay PG&E -- for solar homeowners, thus boosting their investment returns.

Importantly, extensions of the tax credit and net-metering programs temper the urgency to go solar. Homeowners we work with obviously want to monetize the tax credit and receive full value for their solar-generated electricity. They're locked. That said, the primary urgency in their decision is twofold: Do the right thing (for environmental reasons) and stop paying PG&E.

Please contact us if you would like to elaborate any or all of the above. Quite a trifecta in the solar world, and a great month for Yolo County homeowners.

Understanding Net Energy Metering and Solar's Relationship with Public Utilities

[Originally published May 12, 2015]

We launched Repower--a community-focused, group purchase program to help our friends and neighbors in Yolo County go solar--18 months ago. After more than 40 residential solar installations, here are a some  observations from PG&E country:

Net Energy Metering (NEM). Net metering helps solar customers, especially when their usage is low in the spring and fall (less air conditioning and heating). In those months, customers bank their surplus energy production and use it to offset summer and winter usage.

ROR. Repower's 40+ installations generate an average of approximatley 6.5 kw--a bit higher than the state average--and customers get their money back in about 6 years, for a rate of return in the 12% range. I characterize solar as a bond investment, i.e., very low risk and steady returns for long periods of time.

Greater Personal Power. Our homeowners value and enjoy the feelings of independence and control that generating their own clean power gives them. Yes, they are tied to their utitlities through Net Energy Metering (NEM), but they are no longer subject to its rate hikes and complicated fee structures. 

Community Choice Aggregation Districts. The Investor Owned Utility's (IOU) general reluctance to change their business models to support locally-generated power is forcing many communities to consider setting up their own Community Choice Aggregation Districts, another poke-in-the-eye to IOUs.

One IOU's Approach. The Modesto Irrigation District, which serves a relatively large customer base in the Central Valley, generates its own power. Because its Net Energy Metering program has already reached capacity, it's no longer available. Instead, solar customers qualify for a new rate structure that lowers their rates across the board. Installing a solar system instantly reduces the total bill by more than 25%, without taking into account the value of the solar generated electricity. While better than nothing, Modesto Irrigation District's fix still falls short of the ROR that homeowners should be getting for the surplus electricity they generate.But, it's a start. 

A Big Game Changer ... Down the Line. On April 30, Tesla CEO Elon Musk revealed the new Tesla Energy battery for businesses and utility companies. Tesla's relatively inexpensive battery solutions for storing solar-generated electricity will be a game changer, but the extent of the transformation depends in part on the utilities developing favorable rate structures. The other major factor rests with battery development. Tesla's announced battery is intended for backup power supply, not for leveling usage. While Tesla's innovation is exciting, it will take years before it becomes pragmatic and adoptable for IOUs.