A new California regulation that allows companies to package energy from small producers and sell it on the wholesale market is good news for the long-term viability of rooftop solar.
As utilities push back against paying the full retail rate for the power solar customers feed onto the grid, some expect the popularity of rooftop solar to wane. News outlets this week have noted that the meteoric rise of rooftop solar could slow when the 30 percent national investment tax credit declines in 2016 and as utilities reduce net metering payments.
But the cost of solar panels has continued to decline and business innovators have continued to come up with creative new ways to make solar affordable. So, just as utility companies prepare to reduce net metering benefits, private industry swoops in with a viable solution that could keep the rooftop solar industry growing 50 percent a year in California.
The Independent System Operator Corporation, which manages the California energy grid, approved a new regulation that allows private companies to buyer power from individual producers, bundle it and sell it on the wholesale power market.
Now, a home or business owner with rooftop solar panels can decide between selling excess power to a wholesaler or taking whatever net metering credit his or her utility will grant. While net metering benefits are likely to be more lucrative than selling to power wholesalers in the short term, that won’t always be the case.
If a utility is only paying a homeowner the avoided cost rate for excess power, that could be less than a homeowner could get for the power from a wholesaler. There could also be instances where home and business owners don’t have the opportunity to participate in net metering for some reason.
Either way, this is a bold new precedent that could bleed over to other regions outside of California where it will be even more impactful.
The decision is “an important first step toward expanding access for distributed solar and storage in wholesale markets,” SolarCity Corp. spokesman Jonathan Bass told the Chicago Tribune.
This shift could give birth to new power wholesalers throughout the country and maybe even to electric retailers who could compete with the existing monopoly utility model.
Regardless, the decision, which also allows wholesalers to buy and bundle stored energy from batteries and electric vehicles, means people who invest in rooftop solar will have options and will be able to get a return on their investment even as utilities work to diminish net metering and other benefits paid to solar customers.