GreenBeat

PG&E, California’s largest electric utility, objected yesterday to two pieces of state legislation that would encourage consumers to invest in solar energy. Its opposition is just the latest in a stream of evidence indicating poorly-structured U.S energy grid policy.

California Assembly Bill 560 would increase the amount of “net metering,” or the amount of credit given to customers who own solar panels and who transfer their surplus power back to the utility. The bill would force PG&E to accept net metering until it hit 10 percent of its peak electricity demand, up from the 2.5 percent cap currently. The second bill, AB920, would change the way customers with solar installations get their credit for such transfers. The credits appear on a customer’s energy bill, and are given to offset the solar customer’s energy consumption at other times, like nighttime. The new bill would also allow credits to get rolled over to the next year instead of being zeroed out at the end of the year if they are not used.

Both measures are clearly favorable to the solar business, in the spirit of the state’s goal to hit 1 million solar rooftops by 2016. In fact, it might come as some surprise that PG&E is giving them such a hard time, considering how much effort it’s put into rebranding itself as a proponent of renewable energy sources. Of course, that’s a common marketing ploy these days — what with the BPs and Chevrons of the world greening their advertising strategies as fast as they can. But the utility seemed sincere — inking large power-purchasing deals with solar providers like NextLight and Martifer while touting that there are many more to come. Perhaps, with consumers increasingly fixated on eco-friendly practices, it had little choice.

Federal law has given states jurisdiction to regulate their utilities, and these regulators have shown little ability to change utilities’ basic business model — which essentially is to sell more electrons so that the utility can make more money. There’s little incentive to invest in conservation. There’s been change of late, with California leading the way on something called “decoupling,” a policy disconnects revenue from sales. In other words, it encourages utilities to conserve by allowing them to charge higher rates to customers to compensate for their cut backs in production. And the Obama’s Administration’s stimulus package proposal also calls for “decoupling” policies in cases where it dishes out money to utilities. But even then, incentives get out of whack. Because the utilities get paid for pretty much any policy them implement, they often don’t have the incentive to do the right thing — and they can stall the process when they’re in doubt.

This latest example is a case in point. PG&E says the bills would increase costs for non-solar customers. This is because solar customers buy less electricity from the utility, so they contribute less to cover transmission and generation costs of providing non-solar electricity. And forcing PG&E to pay more for the solar energy transferred to the utility would also push up costs for non-solar customers. PG&E wants to review a cost-benefit analysis of net metering, to be prepared by the state’s Public Utilities Commission by January.

This all makes sense of course, from the logic of PG&E’s bottom line. But it continues to show how we’re braking the incentives of people to invest in solar, simply because we’re not being creative enough with our policy, and letting utilities deliberate for way too long. Surely, that excess solar power should not be penalized from being transferred back into the grid. Some credits, no matter how small, should be given to solar producing customers to keep it all coming. This would a no-brainer policy that we all want to help us getting chocked out of existence from carbon-based pollutants.

This week, the White House issued the grimmest reports ever about climate change. It said urgent action is needed, because “serious consequences” are already emerging.

They include rapidly retreating glaciers in the American West and Alaska, altered stream flows, trouble with the water supply, health problems, and changes in agriculture. Winters in parts of the Midwest have warmed by 7 degrees in just 30 years and the frost-free period has grown a week, the report said.

Decoupling may sound smart, but it’s clearly not the solution. In the end, we’re still beholden to utility giants that need to make a certain amount of money, regardless. And somehow utilities have earned the right to hold up the process, to deliberate whether to move forward on smart policy. We all know that’s not possibly any longer. There’s got to be a way where all of us — solar producers, and non-solar producers — can share the burden, be it in slightly higher energy or tax bills — whatever it takes –  to make sure we bring on as much solar power as quickly and efficiently as possible.

Earlier this month, I talked with Suedeen Kelly (right), a commissioner on the Federal Energy Regulator Commission, after she spoke on a panel at Capital Connection, a conference hosted by the Mid-Atlantic Venture Association. She was outspoken about the problem posed by the energy utilities’ business models. She cautioned that it may take many years — much longer than the two or three that most wide-eyed cleantech entrepreneurs may think — for serious changes in the grid. Startups wanting to sell things that improve the grid, whether it be solar power or by selling things like advanced meters, should be forewarned: “Just because it lowers cost, it doesn’t mean it lowers costs for the utility. The interests aren’t aligned. You have to understand the interests of the utility. Really simplified, it’s business model is to sell electrons. If you want the utility to invest in something that results in selling fewer electrons, you have to realize its not consistent with the utility’s existing business model.”

Vivek Kundra, the recently appointed federal CIO (left), was also at the conference and expressed his commitment to a new, open smart grid for our power needs. But it’s time for him and his crew to come up with smart ideas for quick change.

[Image credit: Katerba]

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