It's been widely reported that California set a new precedent in energy policy this month when the California Energy Commission (CEC) voted to require rooftop solar power arrays on all new homes, starting in 2020. The measure has met intense criticism. But critics seem to be overlooking an important element of the new law.
"State officials and clean-energy advocates say the extra cost to home buyers will be more than made up in lower energy bills," reported The New York Times (see: "California Will Require Solar Power for New Homes," by Ivan Penn. "That prospect has won over even the construction industry, which has embraced solar capability as a selling point."
"And a new rate structure coming next year will charge California customers based on the time of day they use electricity," the Times reported. "So homeowners with energy-efficiency features — a battery in particular, allowing energy to be stored for when it is most efficiently used — will avoid higher costs."
Critics Pile On
Although solar panels on every new house will go a long way toward helping California realize the state's planned fossil-fuel-free future, some critics lambasted the move as an impractical overreach. "The new solar mandate: A leap forward or a step back?" asked the San Diego Union Tribune (story by Rob Nikolewski). From the Union Tribune report: “'All of my colleagues are saying, what the hell is going on in California?' said Severin Borenstein, professor of Business Administration and Public Policy at the Haas School of Business at UC Berkeley. And within days of the vote, UC Davis economics professor James Bushnell posted a blog at Cal’s Energy Institute calling the mandate a symptom of 'regulatory groupthink.' A columnist for the Chicago Tribune called the new rule 'boneheaded.'"
Criticism centers on an inconvenient truth: During peak solar production times on sunny days, California's grid already has more solar-generated power than it can readily use. On the other hand, during peak afternoon and early evening hours when electric demand is high, solar power production drops sharply, leaving utilities scrambling to make up the difference.
The Battery Incentive: A Critical Feature
But critics overlook one of the key features of California's new policy: the battery incentive. As JLC reported this month, coupling rooftop solar panels to a small home battery pack can change the equation dramatically. The setup lets homeowners harvest extra sunlight all day long, then use that power to run the house during high-use evening hours — or even push excess power out to neighbors. For utility, widely dispersed "solar-plus-storage" systems can be a cost-effective way to supply power without costly, large-scale investment in major infrastructure.
JLC took a close look at the solar-plus-storage option this month (see: "Grid-Optimized Solar-and-Battery Systems," by Ted Cushman), focusing on Prescott, Arizona builder Mandalay Homes. Working with German-based battery supplier Sonnen, Mandalay is rolling out PV-and-battery systems that allow houses to power themselves through peak demand periods without drawing from the utility—thus earning the homeowners a low, preferential electric rate. As the neighborhoods containing the dual systems are built out, they will start to be large enough power sources to potentially function as small power plants, able to serve the utility by shifting the demand curve and cutting the cost of power.
It's a new paradigm, says Mandalay Homes Chief Technology Officer Geoff Ferrell: "I think that as more utilities see the type of collaboration that we are able to achieve here, they are starting to see this as a new way of doing business. It's not a one-way transaction: the consumer is not just the customer: the consumer becomes an asset. The consumer can have a totally different relationship with their utility. They are now a sink for surplus power, and they are a grid-connected asset that the utility can call on to solve other problems. And there are very simple economic things that can be done to incentivize customers to be on those plans and to be part of that system — and all it does is benefit everybody. It's not to anybody's detriment. There is actually a way, via a flat load curve that a utility makes more money and is more profitable selling less electricity on a given day. And I think that's what utilities are starting to realize."