Utilities and rooftop solar companies ally to push bill to boost Calif.’s renewable energy goals

Source: Debra Kahn, E&E reporter • Posted: Thursday, August 6, 2015

California’s pursuit of ever-more renewable energy is pushing odd partners into a debate over the role of rooftop solar.

The past few years have brought bruising fights between utilities and small-scale renewables companies over policies that compensate rooftop solar systems for putting power back into the grid. The two sides have been lobbying against each other in California, Arizona, Florida, Nevada, Utah and other states over claims that rooftop solar doesn’t pay its fair share for using the grid.

This time around, rooftop solar companies like SolarCity and Sunrun are finding themselves lined up in Sacramento with traditional investor-owned utilities. Their combined muscle could influence California’s Senate President Pro Tem Kevin De León (D). He is writing a bill, S.B. 350, that would extend the state’s current renewable portfolio standard (RPS) to 50 percent by 2030, beyond the current target of 33 percent by 2020.

“Rooftop solar industry and utilities are totally united on this,” said Bryan Miller, vice president of public policy at Sunrun, which previously led the charge against utilities’ attempts to cut back on payments for rooftop solar generation. “I’m not sure we’d agree on which direction the sun comes up in the morning, but here we are lobbying hand in hand with them.”

Utilities as well as solar installers are advocating for rooftop solar to count toward the target; it currently does not, except in a roundabout way. Utilities are allowed under the current system to purchase a small percentage of their renewables in the form of renewable energy certificates, which rooftop solar generates. Counting it alongside large-scale power plants as a main option on the menu would allow utilities to buy less from the large facilities; rooftop solar currently constitutes about 5 percent of the state’s renewable power.

Large-scale renewable developers oppose

Large-scale renewable developers are pushing back. First Solar Inc., NRG Energy Inc., SunEdison and SunPower Corp. are among those who are lobbying for distributed generation to remain in the background. First Solar and the Edison Electric Institute released a report earlier this month finding that utility-scale solar is far more efficient and cost-effective than distributed systems. The study was of Xcel Energy Inc.’s business in Colorado, but it finds that the results should hold true “for most U.S. utilities with significant solar potential.”

“Raising the state’s RPS to 50 percent is not about figuring out the easiest way to comply,” said Michael Wheeler, vice president of policy initiatives at solar developer Recurrent Energy LLC and board president of the Large-Scale Solar Association. “It’s about sending a signal to the market.”

Utilities are arguing that including distributed energy would reduce costs for customers. Pacific Gas & Electric Co. sent a letter last month to Anthony Rendon (D), the chair of the Assembly Committee on Utilities and Commerce, saying he was “getting anxious” at the lack of progress on the bill.

“We would ask you to consider what your neighbors would say in response to two simple questions: 1) do the solar panels on your roof generate renewable energy; and 2) in your own investment decisions, do you believe there are benefits to having a diverse set of options available?” wrote Kent Kauss, PG&E’s senior director of state government relations.

Including rooftop solar could also give it a boost in another California policy currently being written: new rules around net metering, or how much utilities must pay rooftop systems for the excess power they generate. If utilities are allowed to count rooftop solar toward the RPS, they could conceivably compensate system owners more in terms of net metering. The California Public Utilities Commission is currently accepting proposals on what form the new rate structure should take.

Room for compromise in ‘a complex bill’

Environmental groups say including rooftop alongside utility-scale renewables would pose logistical challenges and would likely reduce the future build-out of renewables in the state, but they are open to considering it.

“We had an effective approach, which is RPS for wholesale power, net metering or its successor for distributed behind the meter power, and it’s worked really well,” said Peter Miller, a senior scientist with the Natural Resources Defense Council’s energy and transportation program. “We’ve succeeded in both areas.”

It remains to be seen whether De León will give the nod to rooftop solar interests or to large-scale developers, who also come with strong support from labor unions. The overall bill is sweeping enough that it could end up appeasing all parties to some extent. In addition to a 50 percent RPS, the bill mandates a 50 percent reduction in petroleum used in motor vehicles and a doubling of the energy efficiency of existing buildings by 2030 (ClimateWire, June 11).

“It is a complex bill, and there’s going to be multiple opportunities to compromise or seek agreement to get a final package through,” Miller said.

The bill, which passed the state Senate last month, is expected to come before the Assembly Appropriations Committee in September, when the Legislature reconvenes. This year is the first in a two-year legislative session, so the bill doesn’t have to become law this year — but it could, observers said.

Gov. Jerry Brown (D) has been vocal in urging sub-national governments to adopt climate-friendly policies to put pressure on national governments attending U.N. climate talks in Paris this December. A sweeping new suite of policies would bolster his arguments, Miller said.

“The one thing that’s driving this I think toward resolution this year is the governor has already mentioned the bill and seems eager to get resolution this year, perhaps in anticipation of the meeting in Paris, to emphasize California’s leadership,” he said.