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May 31, 2013

Californians Participating In Solar Generation and Reducing Climate Change Pollution

Solar panel installation lowEarlier this month, the concentration of carbon dioxide in the atmosphere passed 400 parts per million (ppm), far exceeding what the scientific community deems permissible to minimize the impacts of greenhouse gas emissions on the planet’s climate.

The month of May brought good news too: we welcomed California's 150,000th rooftop solar installation. Demand-side management, including conservation, energy efficiency, and rooftop solar are increasingly cost-effective and accessible to Californians. Roughly two-thirds of all rooftop solar installations in 2011 were put in place in middle-income zip codes, and growing numbers of Californians from all walks of life are looking for ways to manage their energy use as a way to control costs and protect the environment.

Promoting individual participation and enabling customer choice is critical to reducing climate change emissions. When given the option, Californians vastly prefer clean energy to dirty and are pushing to go above and beyond the state’s current minimum clean energy mandates by installing rooftop solar, while slashing energy use inside their homes. The more that public policy can do to enable Californians take their energy use into their own hands, the faster we will eliminate fossil fuels.

One key tool for allowing greater participation in clean energy is utility rate design. The economic signals built into how an electric bill is calculated go a long way towards encouraging or dissuading millions of Californians from going solar or cutting their energy use.

Earlier this week, Sierra Club and a number of other stakeholders, including environmental groups, consumer organizations, and the utilities themselves, submitted proposals recommending how these incentives in the rate structure should be laid out. A comment period now begins, and ultimately the California Public Utilities Commission will weigh the merits and propose a new rate structure that will influence the future of energy in California.

Sierra Club’s proposal puts forward two principles to guide rate design:

1. New rate structures should enhance economic incentives for customers to reduce energy consumption and install solar; and

2. It should also allocate costs to customers based on their impact on the grid, rather than assuming all that users have equal impact on peak generation capacity requirements and the costs of transmitting electricity long distances, since some customers use solar and energy efficiency on-site to ease their demand for electricity from their home or business.

Another big-picture improvement should be increasing the use of "time of use" pricing for electricity, which means pricing electricity according to the time of the day. At times when demand is low, like late at night or during the winter, prices will be lower, and at times when demand is high, like hot summer days when air conditioners are running full blast and fossil fuel plants have to come online to meet demand, prices are relatively higher.

Increasing "time of use" pricing will provide an economic incentive for developers of "smart" controls and energy efficient appliances, encourage the further use of solar panels meet demand on hot days, and generally create a more flexible and efficient energy grid that will offer lower prices and be more resilient to spikes in demand. Our proposal argues that "time of use" pricing can be combined with the current tiered system of charging high-demand customers more than those who use very little, resulting in a new rate structure that is both fair and flexible.

EcoShift Consulting, LLC, who assisted Sierra Club in developing its proposal, estimates that, as customers adjust to time of use pricing, we will see a 25 percent reduction in peak energy consumption and a reduction of greenhouse gas emissions of 288,000 metric tons per year. That's good for our economy and good for the planet.

When it comes to a customer's energy use, it’s quite often the case that the smartest move for their wallet is also the best move for the environment, and the expanding use of rooftop solar and energy efficiency opportunities are the perfect example. As California determines its new rate structure, it's critical that we provide the right incentives for solar and energy efficiency so that more and more Californians keep our economy moving towards clean energy.

By Evan Gillespie, Campaign Director for Sierra Club’s My Generation Campaign

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