Will CA utilities blow out the solar flame or feed it?

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Could the utility war on solar be so catastrophically timed as to spur mass grid defection?

If California utilities had proposed slashing net metering benefits in half and tacking on an $18 monthly connection fee for solar customers three years ago, it might have stifled the growing industry. Instead, the proposal to the California regulators is timed to coincide with the release of the Tesla Powerwall.

So, will utility efforts to smother the rooftop solar flame successfully snuff out an industry that grew more than 50 percent last year and is on target to grow even more rapidly this year? Or will it be bit like trying to blow out a small fire just when it’s gotten big enough for a breath to feed it instead?

It’s hard to say.

California utilities have proposed rate reforms that would increase connection costs for solar customers and that would just about halve net metering payments for the electricity solar customers feed onto the grid. SolarCity CEO Lyndon Rive told the LA Times this week that the changes would be “catastrophic” for the solar industry, which employs thousands of people in the state and hundreds more every month.

The state’s utility regulators have agreed to hear arguments on the proposal and will not likely make a decision until 2016.

Meanwhile, Tesla is unveiling its Powerwall product – battery storage designed for home and business owners with rooftop solar installations.

The 7- and 10-kilowatt systems are not designed to enable homeowners with rooftop solar to defect from the grid. And most analysts have said there’s no reasonable or affordable way for the battery systems to assist in grid defection as they are.

However, Tesla plans to launch another version of the Powerwall in 2016 that will help Hawaiian families gain true energy independence.

It’s still unlikely the Hawaiian Powerwall solution would be cost competitive for new solar customers in California. New solar customers with battery storage would probably be paying significantly more than their grid power costs.

But – what about existing solar customers?

The LA Times interviewed a homeowner who made the investment in rooftop solar because it made economic sense. He felt like it was a wise use of money. And only tyrannical governments in far-away lands enact policies that change the rules of the game on average citizens once corporate profit margins are threatened, right?

Well, there are some protections in the proposed regulations for exiting solar customers who have already made the investment in California’s clean energy future, but not enough to avoid negating any economic advantage solar customers saw when they initially made the decision to put PV on their roofs.

So, it will be interesting to see what those homeowners do if regulators give utilities the ability to erase their cost savings.

It’s getting breezy in California with all those utilities blowing hard on the solar flame. Will it flicker and die? Or …