DTE Energy’s rate case slashes home solar economics, pumps money into coal, is opposed by environmental groups

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The Michigan Environmental Council, Natural Resources Defense Council and Sierra Club are sounding the alarm on DTE Energy’s Rate Case, claiming it is “unprecedented in dollar amount, scope and spending flexibility.”

DTE Energy has requested that the Commission approve a mechanism that would cover $2.8 billion in capital expenditures and require an additional $824 million in revenue after the test year. The Commission has approved a mechanism like this only twice, for much more limited amounts and only in limited circumstances.

That amount requested is roughly seven times greater than the covered capital expenditures approved in U-16999 and nearly ten times greater than the expenditures approved in case U-18124.

Slashing Economics of Home Solar

Net metering replacement: DTE would decrease the value of solar to Michigan families by 58% and increase the simple payback to approximately 50 years, according to the watch groups.

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The utility’s rate proposal would do this in two ways: first, by levying a new monthly fee on customers with home solar, based on the size of their system; second, by sharply reducing the rate at which a home solar system owner is compensated for electricity their panels produce for the grid. Here’s the argument from Ariana Gonzalez, Natural Resources Defense Council’s senior energy policy analyst:

“We argue that the Commission should disapprove DTE’s proposed program for distributed generation customers, which would charge them the retail rate for power they use from the utility (inflow) and compensate them for the power they put out to the grid (outflow) at monthly average locational marginal price (a lower amount than the full value)

“Additionally, we believe the Commission should reject the system access contribution SAC charge of $2.31 per kW per month of installed generation capacity for residential customers, and $2.28 per kW per month of installed capacity for small commercial customers.

“We argue the Commission should also decline to adopt Staff’s proposal to compensate outflows at the power supply component of the retail rate, less transmission. Neither proposal is consistent with the applicable law, which requires DTE to continue offering a program that offsets inflows with outflows during the monthly billing period, and only applies a monetary credit to the excess outflows during the month. Further, by statute the tariff is not meant to replace net metering in Michigan, but to apply simultaneously to collect previously uncollected and prudently incurred costs. However, the record evidence shows that there are no uncollected costs and, in fact, solar is providing value in excess of costs.

Adding up all the values provided by solar distributed generation on one side of the ledger and cost of providing utility service to solar customers on the other side of the ledger shows that solar customers cover more than their costs and are providing net positive solar benefits to other customers.”

Money for uneconomic coal plants

In DTE’s last two rate cases, the Commission disallowed inclusion in rate base of capital expenditures for the River Rouge plant because the Company had not updated its economic analysis of the plant to evaluate the viability of economics of Unit 3 operating alone. In this case, DTE provided an updated analysis of River Rouge. However, according to Gonzalez, the net present value analysis does not support the prudence of these expenditures because it contained a significant error and, with or without the error, the analysis shows the plant is not economic to operate in all but the most remote scenario.

DTE also argues that the Commission should authorize continued rate-basing of expenditures on River Rouge irrespective of economics – for reasons having to do with reliability and local tax revenues. However, these arguments are insufficient to foist upon customers the costs of an uneconomic plant.
Fixed Monthly Service Charge: For the fourth consecutive case now, DTE seeks to increase its fixed monthly service charge for residential customers. The Commission has rejected DTE’s methodology for setting the charge several times before.

— Solar Builder magazine

SepiSolar says California’s NEM policy revision paves the way for larger solar systems, quicker interconnection

NX Flow-SepiSolar White Paper

Contractors will need to design solar systems with DC-coupled storage and procure DC-coupled energy storage products that incorporate a new UL-verified inverter firmware solution

A new SepiSolar white paper reveals the financial benefits of a pending revision to California’s net energy metering (NEM) policy. When finalized, commercial DC-coupled solar-plus-storage installations will not only be able to benefit from NEM, but will also be able to increase solar system size, reduce installation and permitting costs, and quicken interconnection approval time.

“This policy does more than just reduce equipment costs,” said Josh Weiner, CEO of SepiSolar and author of the white paper. “Businesses can now store their excess solar power in a battery system and receive demand charge benefits as well as the financial benefits from NEM.”

Background

On Oct. 5, 2018, the California Public Utilities Commission (CPUC) issued a proposed decision to modify CPUC Decision 14-05-033, the NEM tariff policy for solar and energy storage. Once approved, the change will allow DC-coupled energy storage systems to become eligible for NEM without the need for thousands of dollars in extra hardware costs and burdensome verification required by California utilities and the IRS for AC-coupled energy storage systems.

To take advantage of this policy change, contractors will need to design solar systems with DC-coupled storage and procure DC-coupled energy storage products that incorporate a new UL-verified inverter firmware solution. NEXTracker’s NX Flow energy storage system piloted this firmware solution with UL, and is therefore expected to be the first DC-coupled energy storage product approved for the new regulation.

SepiSolar findings

Before the CPUC's Proposed Decision

SepiSolar’s white paper reviews and compares the historical challenges of designing AC-coupled and DC-coupled energy storage systems for NEM. It also describes how the new NEM DC-coupled policy and system design will eliminate the need to purchase the extra equipment required for non-export AC-coupled systems, such as reverse-power relays, an additional utility meter, switchgear and a second inverter.

After the CPUC's Proposed Decision

“Another benefit is that solar systems can now be ‘supersized’ to exceed the 1 MW behind-the-meter interconnection soft limit,” Weiner says. “With a DC-coupled design using products that have the UL-verified firmware, excess generation over 1 MW can now be stored in the battery and later exported into the grid at favorable or optimized NEM or NEM-aggregate tariff.”

As a simple example, Weiner says a 1 MW stand-alone solar system can be increased to 5 MW with a complementary DC-coupled 4 MW storage system and a 1 MW AC inverter that uses the new firmware.

Goodbye, infrastructure costs

The same DC-coupled system design may also eliminate the need for utility infrastructure upgrade costs. These costs are most often charged to the solar asset owner when the solar system’s export generation is over 1 MW. Typically, the owner either pays for the upgrades or decreases the system size. With the new DC-coupled configuration, solar-plus-storage systems can be designed to meet the location’s grid capacity, reducing the need for upgrades. Any excess solar can be stored and later exported at up to 1 MW intervals. In models developed by SepiSolar, adding DC-coupled energy storage under the pending NEM policy is usually much less expensive than the cost of grid infrastructure costs without storage.

The simpler DC-coupled design also will allow solar+storage systems to qualify for expedited interconnection, reducing difficult verification requirements for utility interconnection, expediting interconnection.

Finally, with the UL-verified firmware, tax equity investors and utilities receive independent verification that the storage system is only exporting solar generation and not charging batteries from the grid. This verification is important for qualifying energy storage systems to receive the 30% investment tax credit.

The proposed CPUC ruling for NEM for DC-coupled solar-plus-storage systems is expected to gain final approval by the end of 2018 or early in 2019.

— Solar Builder magazine

Arizona regulators reject new solar fixed charges requested by two utilities (but ends net metering)

rejected fixed charge

Out in Arizona, home of the demand charge, the Arizona Corporation Commission rejected a request by two utilities to subject new solar customers to large monthly fixed charges. As part of their recent rate cases, Tucson Electric Power Company (TEP) and UNS Electric sought a monthly Grid Access Charge and an inflated monthly Meter Fee. The Commission rejected the proposed Grid Access Charge after agreeing with Vote Solar, Earthjustice, and other solar advocates that the charge would over-recover costs from new solar customers. The Commission also rejected the utilities’ attempt to substantially increase the current Meter Fee and instead adopted Vote Solar’s recommendation for a modest Meter Fee increase.

In addition, the Commission eliminated net metering for new solar customers through the implementation of the Arizona Value of Solar decision that was issued in December 2016. As a result, new solar customers will no longer be compensated for the excess energy they export to the grid at retail rates.

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Instead, new solar customers will receive a reduced export compensation rate that is based on utility-scale solar prices.  Existing rooftop solar customers will be grandfathered on to net metering and their current rate design.

“Arizona’s families and businesses should be able to meet their own energy needs with the state’s plentiful sunshine if they so choose,” said Briana Kobor, regulatory director at Vote Solar. “Solar is an investment that supports local jobs, improves energy security and helps build a competitive new energy economy in the state. While today’s decision by the Commission is a missed opportunity for the state to lead, we commend the decision to avoid further penalizing solar customers with additional fees.”

“The utilities’ overly-aggressive proposals would have made rooftop solar uneconomic and halted its growth in southern Arizona,” Earthjustice attorney Michael Hiatt said. “Although today’s net metering decision will unnecessarily chill rooftop solar installations, the Commission’s rejection of excessive solar fixed charges is a win for Arizona families and small businesses who wish to generate their own clean energy.”

— Solar Builder magazine

Nevada rooftop solar industry booms again after 2017 policy change

Nevada solar power

The rooftop solar industry is shining once again in Nevada. NV Energy’s most recent annual plan noted a strong increase in applications for its SolarGenerations rooftop solar program following key state policy changes in 2017 that put the market back on track.

SolarGenerations applications went from 287 in 2016 to 3,308 in 2017, with most applications coming in the second half of the year, after AB 405 was signed into law. This represents an 11-fold year-over-year increase and early monthly data from 2018 indicates continued growth. Solar advocates and industry leaders say Nevada’s rooftop solar success story shows how quickly a stable policy foundation can deliver economic benefits to the state.

“It’s exciting to see this important solar policy delivering for Nevada, clearing the way for families and businesses to go solar once again and invest in the state’s clean energy economy,” said Jessica Scott, Interior West director for Vote Solar. “We are grateful to the 2017 bill sponsors and many other champions on both sides of the aisle who worked so hard on behalf of the people of Nevada to bring solar opportunity back to the state.”

RELATED: Solar workers rally in Connecticut to try to save net metering

Nevada’s renewed rooftop solar growth is a remarkable turnaround from 2016, when a devastating ruling by the Nevada Public Utilities Commission ended the state’s rooftop solar net metering program, which stalled rooftop solar investment and killed thousands of local jobs. During its 2017 session, the Nevada Legislature passed and Gov. Brian Sandoval signed Assembly Bill 405 to reestablish fair net metering credits and clear the way for consumers to go solar once more.

The passage of AB 405 has also prompted news of local workforce expansion from solar companies that are growing to meet rising consumer demand for rooftop solar.

“We are installing solar like crazy. The Robco Electric solar team has increased by 300 percent, and these are all Nevadans put back to work in the solar industry,” said Rob Kowalczik, president of Robco Electric, a Las Vegas-based company.

“Before the ink was dry on AB 405 – Nevada’s landmark Solar Bill of Rights – I started rehiring dozens of our workers who I was forced to lay off just 18 months earlier because of anti-solar net metering changes. We hope legislators across the country look to Nevada and see that there is incredible voter demand for solar choice. All states should take strong steps to protect access to clean, affordable local energy,” said Larry Cohen, branch manager for Sunrun, a national solar installation firm with offices in Las Vegas.

“We were thrilled to have the opportunity to relaunch our business operations in Nevada last year,” said Vivint Solar CEO David Bywater. “Nevadans have eagerly embraced the return of solar energy, which has allowed us to provide local jobs and contribute to the state’s economy.”

AB 405 was one of nine clean-energy bills signed into law last summer in Nevada. Voters will have the opportunity to further advance the state’s growing clean energy economy this November with a ballot initiative that would increase the amount of renewable sources – such as wind, solar and geothermal – powering the state to 50 percent by 2030.

— Solar Builder magazine

South Carolina legislators trying to raise solar net metering cap again

south carolina net metering

South Carolina lawmakers approved a measure that will raise the limit on the number of South Carolinians that can invest in solar and earn credit for their excess power. Amendment 9, which was approved as part of House Bill 4950, will raise the net metering cap from its current 2% to 4%.

“Last night’s vote is an important and welcome step forward for energy freedom in South Carolina,” said Thad Culley, Regional Director at Vote Solar. “Recent months revealed both the enormous support from residents, businesses, and organizations across the political spectrum for clean energy options, lower utility bills and 3,000 solar jobs in South Carolina, and the lengths that utility monopolies will go to undermine all three.

But this is just one step. From here, HB 4950 will head next to a budget conference committee where the bill will have to be reconciled with the State Senate’s version. The solar amendment could get cut there. Reminder that utilities stepped in at the last second and killed a bill that would have lifted the net metering cap altogether.

“We now look to lawmakers in the budget conference committee to take all solar measures across the finish line and ensure that solar can remain a bright spot in South Carolina’s economy,” Culley said.

Duke Energy Carolinas is likely to hit its net metering cap soon, and SCE&G is expected to hit its cap by the end of the year.

— Solar Builder magazine