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California Will Dramatically Undercount Savings from Customer-Driven Clean Energy

Monday, Apr 27 2020

Rick Umoff and Susannah Churchill

The coronavirus pandemic has many of us thinking about the systems we depend on and how we can protect them during times of crisis. When California families and small businesses invest in rooftop solar and onsite batteries as well as other demand response technologies, they make the power grid safer, more affordable and more resilient for all of us. The California Public Utilities Commission (CPUC), which regulates the state’s investor-owned utilities, recently updated how they calculate the benefits of smaller energy projects. Unfortunately and despite advocacy from Vote Solar, SEIA and our allies, the updated calculator that the Commission approved last week will continue to undervalue the benefits of local clean energy in ways that could have a lasting impact on our clean energy future, and all Californians should be paying attention.

The CPUC maintains an Avoided Cost Calculator, which quantifies the costs and benefits of rooftop solar and other local clean energy resources. Those cost-benefit numbers drive clean energy policy for the Commission. For example, the Commission plans to consider later this year whether to make changes to net metering, which sets the rules for how much rooftop solar customers get compensated on their power bills for the excess clean energy they send back to the grid. As long as the calculator does not accurately value the benefits of clean energy, the Commission will not have what it needs to make truly well-informed decisions about policies impacting the future of customer-sited clean energy in California.

For years, the calculator has dramatically undercounted key benefits of clean energy resources, such as savings in high-voltage transmission costs, avoided climate pollution and the value of reliability and resilience. CPUC voted last week to update it, but the calculator continues to ignore most of these important benefits.

The clearest example is in transmission cost savings. Locally produced clean energy can defer or reduce the amount of capital that utilities spend on transmission and substation infrastructure. The California grid operator, CAISO, demonstrated that such savings exist when it stated in 2018 that customer investments in rooftop solar and energy efficiency had contributed to CAISO canceling $2.6 billion in planned new transmission spending. The CPUC calculator, however, used to assign $0 in transmission cost savings for both of Southern California’s large utilities and a mere fraction of what it should be for PG&E. The recent decision preserves the flawed counting method used by PG&E and requires the other two utilities to use it. While this is a small improvement, the new calculator will still greatly undercount transmission savings and thereby skew the state’s local clean energy policies, and the CPUC must do more to fix it.

As we inch closer to wildfire season, California regulators are also deferring consideration of the life-saving value of resilient energy systems. Rooftop solar combined with batteries is the best means to both meet clean energy goals and allow electric customers to maintain their essential electric service during wildfire season. Every action we take to reduce wildfire risk and its consequences is important for the future of California, including properly valuing resilient communities that use solar + storage to keep the lights on during planned or unplanned power outages.

If the CPUC’s official math on rooftop solar, storage and efficiency undervalues their benefits, we’ll see state policies that turn back the clock on their growth. During these turbulent times, we should be turbo-charging our efforts to help Californians save money and increase their climate resilience by investing in local clean energy resources. The Commissioners must improve the Avoided Cost Calculator so that it accurately values Californians’ investment in clean energy resources; the resilience of our communities is once again at stake.

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