NEM 3.0 Summer Update
A brief look at one intervenor's analysis of California's Net Energy Metering redesign
A while back a reader alerted me to something called the “Value of Resilience” (VOR), a methodology for scaling energy storage to critical facility loads, as proposed by a California group called the Clean Coalition.
The methodology purports to quantify the value of renewables-driven resilience “at any facility type, in any location.” I wrote about the VOR here, appreciative of its attempt to quantify and measure in this ideological world where confirmation bias and wishful thinking seem to color the findings of various energy transition policy studies.
And then, earlier this summer, I noticed the Clean Coalition provided comments in the California Public Utilities Commission proceeding that seeks to revamp the state’s Net Energy Metering tariff (here are their June opening comments, and here are their July reply comments).
Briefly, here’s a quick recap of the NEM proceeding: As discussed here, parties to the proceeding were granted a limited opportunity this summer to provide additional comments on the development of a “NEM 3.0” tariff,1 which has generated extreme controversy in California.
A May ruling requested party comments on three narrow issues:
A “glide path” to transition existing rooftop solar customers to the new NEM 3.0 tariff. The glide path entails a credit to customers (separate from and additional to) electricity bill credits provided for exported energy. The CPUC’s currently proposed glide path is based on hourly “Avoided Cost Calculator” (ACC) values. The ACC is a tool used by the CPUC to gauge the benefits of distributed energy resources (DERs); its outputs inform DERs cost-benefits analyses.
A non-bypassable charge on gross consumption. Non-bypassable charges are per-kilowatt hour charges that are baked into utilities’ electric rates. They are often used to fund low-income assistance programs or energy efficiency initiatives. The May ruling suggests that the CPUC is giving consideration to a non-bypassable charge proposal of the Sierra Club, which should raise peoples’ skeptical antennae at least a little bit given that the Sierra Club is one of the parties most gung-ho about shutting down Diablo Canyon.
Community DERs. The May ruling requested feedback on a community solar program model. Currently, low-income customers who are unable to install solar on their roof have the option to participate in a program that enables them to benefit from local solar projects and receive a 20% bill discount.
Clean Coalition Comments on NEM Redesign
Given their legitimate efforts to provide quantification and empirical measurements with the VOR methodology, I was curious to see what the Clean Coalition’s take on these NEM 3.0 issues were. Here’s a quick summary.
Right off the bat, this comment sets the tone (emphasis added):
Conveying to Californians that self-generation is a right, not a threat to the grid that must be managed, is part of a shift in consciousness to think of each built environment as an energy system, ideally equipped with energy efficiency measures, generation, a dynamic rate/tariff, and some sort of energy storage (whether that is a behind-the-meter, front-of-meter, or vehicle-to-grid).
I think this is a thoughtful remark. Whether intentional or not, the message the CPUC seems to be sending to rooftop solar advocates is that they are exacerbating the various grid problems that are currently in play. This is ironic, of course, given that the CPUC’s policies are probably more of a threat to the grid than the activities of rooftop solar aficionados are. But I digress.
The Clean Coalition makes the following overarching points:
The Commission must not tax NEM facilities by extending nonbypassable charges to gross consumption.
Self-generation that is consumed on-site is similar to energy efficiency because it never utilizes grid infrastructure.
Façade-Integrated Solar is a pertinent case study about generation resources that are intended only for self-consumption.
Façade-Integrated Solar should be labelled as “energy efficiency” and exempt from the Net Billing Tariff.
Community Solar is a good idea to help NEM reach a greater range of ratepayers. However, the RECs must be guaranteed to ensure the energy content is as clean as promised.
A successful Net Billing Tariff should include other innovative proposals for Community DG, including front-of-meter (“FOM”) energy storage.
Admittedly I have no idea what “facade-integrated solar” is, so I investigated. According to the Clean Coalition:
The term “Façade-Integrated Solar” encompasses a number of generating technologies that are deployed directly into the building envelope. These resources — like solar windows and solar shades — help maximize the efficiency of a facility as a generating resource, without increasing grid usage due to increased energy exports. Façade-Integrated Solar can only sustain a fraction of the real-time load at any given time, meaning that all energy generated will be used on site with no export/back feed. Even during periods of peak solar production, a facility that has fully integrated Façade-Integrated Solar will not produce enough energy to completely net zero the property. Therefore, Façade-Integrated Solar is a great complement to rooftop solar and other traditional generating resources, particularly when paired with energy storage that can provide a layer of resilience.
In short, the Clean Coalition posits that facade-integrated solar ultimately has the same effect as energy efficiency. “Customers should not be penalized, via nonbypassable charges,” says the Coalition, “for increasing the efficiency of a facility without increasing strain on the grid.”
The Coalition concludes that a NEM tariff that levies non-bypassable charges on gross consumption rather than energy imports “sets the stage for a devaluation of energy efficiency measures.”
“For that reason,” the Coalition states, “nonbypassable charges should not be applied to gross consumption and generation that maximizes the use of the facility, namely façade-integrated solar, should be exempt from NEM 3.0 requirements and instead categorized as energy efficiency.”
NEM 3.0 remains in limbo. It’s not clear what the CPUC’s next steps will be.
For those interested, the Clean Coalition is hosting an August 31 webinar at 11 a.m. PST to discuss a tool called the Resilient Energy Subscription, which the group describes as a market-based approach to financing community microgrids.
NEM 3.0 is a successor tariff currently in development to overtake the existing NEM 2.0 tariff.