Solar tax credit extended; What’s next for PG&E net-metering?

This is a bit of a paste-eating (read: boring to most all but we the solar geeks) blog post, but we feel it’s valuable to share a few important updates for property owners who are considering going solar.

Federal Investment Tax Credit (ITC)

In late December, as part of the $900B Covid-19 relief package, the 26% Federal Investment Tax Credit for solar systems was extended through 2022. (It was slated to drop to 22% this year.) Even through the lens of a rah-rah solar practitioner, it’s difficult to see the relationship of our industry to the pandemic … but, we’ll take it (and, it’s a benefit that accrues to homeowners who invest in solar). Good news.

PG&E Net-Energy Metering

In August 2020, the California Public Utilities Commission (CPUC) commenced deliberations for Net-Metering 3.0. (Background: “Net-Metering” is the accounting mechanism by which PG&E, as mandated by the CPUC, is required to compensate property owners for their solar generation. From 2005 through late 2016 [Net-Metering 1.0], property owners were compensated at the full retail rate [the same price PG&E charges for electricity] for their excess solar generation. Under the current program, Net-Metering 2.0, solar owners receive full retail compensation with two changes: a nominal “non-bypassable” charge, essentially a tax or toll, that totals ~$100/year; and, a requirement to enroll in a time-of-use rate plan.)

We were recently briefed by sages at the California Solar + Storage Association regarding the timing and key, to-be-negotiated levers of what’s next (Net-Metering 3.0). Important tenets:

- It’s anticipated the sausage-making process (CPUC deliberations) will continue through 2021, with a formulated program finalized in early 2022. Thereafter, it will take three-to-six months to initiate the program. Any prospective solar owner who has submitted Phase 1 of their PG&E Net-Metering application (by that date) will be grandfathered in to the current (Net-Metering 2.0) rules. Good news.

- Reprise: Anyone who has gone solar or goes solar prior to commencement of the new program is safe (i.e., you’re enrolled in Net-Metering 1.0 or 2.0); PG&E cannot retroactively change the rules or accounting treatment.

- It is likely solar-tied storage (batteries) will be part of the new program … again, details TBD. Could be good, could be penal.

- There are three key imperatives, or consumer protections, our industry is keenly focused on: Do not touch behind-the-meter (solar generation less consumption) electricity; no solar-specific fixed charges (ala SMUD and other utilities); and, any change/new program must be gradually implemented.

One note: There is no urgency, through our lens, to go solar. Unfortunately, several homeowners each week relay they were told (by one or more solar companies) that they had to go solar by (insert a fictitious date) for (insert an erroneous reason). Don’t buy it; take your time, do your due diligence.

As always, feel free to contact us if you’d like to learn more about the above and/or if you’d like us to help you evaluate whether solar makes sense.

PG&E's EV rate with solar: No bueno

In October 2019, PG&E disseminated a rosy communique to homeowners who were enrolled in their “EV-A” electric vehicle rate schedule. The letter trumpeted the benefits of their new (“EV-2”) rate schedule: Extended off-peak period, lower peak rates, the world’s now a better place … all thanks to Pacific Gas & Electric Co.

Approximately one-third of homeowners Repower has helped go solar own, or plan to acquire, an electric vehicle. And, why not? If your amortized cost to generate solar electricity is ~8 cents/kWh and you garner four miles of range per kWh, driving via sunshine (trite!) is beyond cheap, let alone ecologically awesome.

Background: In February 2019 we encapsulated and quantified the benefits of PG&E’s “EV-A” rate schedule in a blog post, specifically for homeowners who enjoyed solar and drove electric vehicles. In short, under EV-A there was a good degree of arbitrage for solar+EV owners: If you played the game, your solar system only needed to generate ~75% of the electricity you consumed to, at annual net-metering true-up, zero out your bill. This was accomplished by shifting your electrical loads — charging your car, doing laundry, running your pool pump — to off-peak periods, when electricity was valued at ~13 cents/kWh. Conversely, if your solar generation exceeded your household electricity use during peak period (2-9 p.m., Monday-Friday), you racked up credits at 45-50 cents/kWh. Simple and viable.

Today, PG&E’s electric vehicle rate schedule (EV-2) is not viable. (Side note: EV owners who enrolled in the original, EV-A, rate schedule prior to October 2019 were grandfathered in for five years, commencing the date you enrolled; such homeowners will be transitioned to EV-2 after five years.)

The net-metering calcs are stark, when contrasting three PGE time-of-use rate schedules: EV-A, EV-2 and TOU-C (PGE’s de-facto time-of-use rate schedule, whether you do or do not own an EV). The below examples are actual net-metering data from a Repower homeowner who purchased an EV (after going solar). At annual true-up, they consumed 2,157 kWh more than their solar system generated. They charged their car and did laundry at night, and programmed their pool pump to run during off-peak periods too.

First, annual metrics for a solar + EV homeowner under the original EV-A rate schedule:

Next, here’s the same homeowner under EV-2:

And, here are the results if the homeowner enrolled in TOU-C:

Same electricity use pattern, same solar generation profile, three different annual financial results: 

- EV-A: $211

- EV-2: $959

- TOU-C: $623

Hence, since EV-A is not available, this electric vehicle-owning homeowner should enroll in TOU-C (and, thereby, save $336/year versus EV-2). If the homeowner had been enrolled in EV-A and was then switched, automatically by PG&E, to EV-2, their annual electricity costs would have increased $748. Ouch.

PG&E can be a pain in the posterior, particularly if you endeavor to keep up with their always changing rate schedules, time-of-use periods, and rates. If you are considering solar — and own or are contemplating an EV — feel free to contact us to receive a no-cost analysis of your net-metering options.