Penn Siegel planned to go solar in a year or two at his house near Palm Springs. But now he’s in a hurry.
The former Wall Street analyst and CEO recently learned that a change in electric rates is coming for homeowners and businesses going solar July 1 or later in most of Orange, Riverside and San Bernardino counties as well as a large swath of Los Angeles County.
Earlier this month, he bought a solar system that will cost about $27,000 after federal tax credits but will save about $4,000 a year in electricity costs on the 3,000-square-foot ranch house and pool he uses six months a year.
Siegel hopes to have his new system installed by April. Because he’s beating the deadline, he’s is locking in bigger savings through 2037.
“I’m grandfathered in for 20 years,” said Siegel. “It’s the same costs, but the savings are greater.”
Siegel is one of a handful of new solar customers rushing to take advantage of the existing solar rates before a new, more expensive solar plan kicks in.
The industry jargon for the current rate structure is “net energy metering 1.0.” Under that plan, customers pay only the “net” difference between the electricity they consume and the power their rooftop panels generate.
“Net energy metering 2.0” takes effect July 1. Customers going solar after that date will pay new fees and get fewer energy credits for the excess power they generate.
“It’s a big moment. We’re changing away from the original net metering structure,” said Brad Heavner, policy director for the California Solar Energy Industries Association.
The bottom line doesn’t change that much. The cost for a typical solar customer under net metering 2.0 will be about $10 to $13 a month higher, or $4,000 more over the 25-year life of a typical system, industry officials said.
“Clearly the economics are better if you can install before July,” Heavner said. “But the effect isn’t so great if you install after then.”
Key changes
Net metering 2.0 has pros and cons for solar customers.
On one hand, it keeps net metering alive, allowing rooftop solar customers to sell energy they produce back to the grid. It also opens up the program to larger systems, including those operated by stores, factories and businesses.
On the other hand, it will cost more.
Under net metering 2.0, new solar users pay a one-time connection fee, $75 for most residential customers. Other fees also are tacked on.
In addition, credits and charges for new solar customers are based on what time of day they are generated or consumed. Under net metering 1.0, time of use didn’t matter.
Daniel Sullivan, president of Sullivan Solar Power, complained the plan puts the bulk of prime solar-generation hours into the off-peak category, with the bulk of consumption at peak night-time hours when people get home from work.
For example, a kilowatt hour generated from sunrise to 2 p.m. (roughly eight hours) gets a smaller credit than a kilowatt hour generated from 2 p.m. to sunset (roughly four hours).
“They value the energy you provide at less than the energy they provide,” Sullivan said.
California allows private utilities like Edison, Pacific Gas & Electric and San Diego Gas & Electric to switch to net metering 2.0 after one of two events occurs: Rooftop solar in its territory reaches 5 percent of each utility’s peak demand or July 1, 2017, whichever comes first.
SDG&E reached its 5 percent cap on June 29, triggering the new rates and fees in San Diego County and several south Orange County cities. PG&E reached that milestone Dec. 15.
As of Wednesday, solar connections in Edison’s service area equaled 3.9 percent of the utility’s peak demand, about 75,000 customers shy of the 5 percent cap. Hence, the switch will take place July 1.
“We are not forecast to hit the cap before the July 1 deadline,” said Anthony Hernandez, an Edison senior manager.
Solar surge?
Allan Cordera, 53, learned last year about the net metering deadline and decided to go solar as soon as he moved into a new two-story home in Murrieta in September.
“I’m really a green guy. I believe in trying to conserve as much as possible, whether it’s water or electricity,” said the retired Marine and former Camp Pendleton civilian employee. “No matter what, I planned to go solar, and wanted to take advantage of net metering. That’s kind of what pushed me to go pretty quickly.”
The big question is whether more people across Southern California will rush to go solar like Cordera and Siegel.
Because of the time it takes to get permits, install the panels, and get connected to Edison’s grid, Sullivan is urging consumers to order a new installation by April 15.
San Diego County and parts of south Orange County saw “a mad dash” to go solar before SDG&E switched to the new rules in June, said Sullivan, who operates out of San Diego, Irvine and Riverside. “We expect to see a similar uptick to go solar in (Edison) territory.”
Residential hookups increased 67 percent in SDG&E territory in the final six months of net metering 1.0, utility figures show. Since the switch, solar hookups plunged.
But numbers show a mixed reaction across California.
In PG&E’s service area, for example, residential hookups actually decreased slightly in the year leading up to the switch, state figures show. Edison figures also show a slight decrease in new solar customers from 2015 to 2016.
Home generators
Barbara McPhee looked up at the roof of her two-story Ladera Ranch home last month as Sullivan Solar crews hooked 21 three-by-five-foot panels to her new 6-kilowatt solar system.
“We’re going to generate electricity like no other,” the mother of three said. “That’s my goal. Reduce our dependence on current infrastructures.”
For months, McPhee and her husband, Jim, had been studying ways to cut costs for a home that supports two plug-in hybrids and summer air conditioning. Jim drew up spreadsheets and gave his wife detailed presentations.
Even though SDG&E is their electric company and they no longer qualify for net metering 1.0, the couple calculated their new system will reduce their $200- to $300-a-month electric bill to virtually nothing.
“Anything we can do to save that money in our budget is a good thing,” Barbara McPhee said.
Edison customer Rick Strauss was motivated to act after learning the existing rate plan is “nearing its sunset.” He installed 20 panels on his two-story North Tustin home three months ago both to save and to take advantage of the current plan.
“Some of the advantages disappear when the rules change,” he said.
Strauss got a couple of hefty electric bills, prompting him to look into solar about six months ago. The numbers made sense, and he estimated that he would break even in seven to nine years.
“I like the idea of being green and being an early adapter. You get the best deal,” Strauss said. “It might still be advantageous to go solar under 2.0. But I like to maximize the benefit.”
Contact the writer: 714-796-7734 or JeffCollins@scng.com
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