Another factor pushing me toward solar was net metering.
Net metering is a billing system that credits solar homes for the electricity they produce. If the solar system was properly designed the inflows and outflows will balance.
There is a misconception that people who install rooftop solar panels go “off the grid.” Unless you are willing to pay the extra expense for an array of massive batteries, that’s not true.
When the sun is up my solar panels generate electricity. They generate more power than I can use, and the excess is fed back in the electric grid.
At night, the situation is reversed. My solar panels generate no power. But I keep the lights on, cook dinner, watch TV, and so on. That power comes from the grid.
The catch is that, under California’s net metering law, solar homes are credited for excess power at the retail electricity rate. My average retail electricity rate in 2015, if you recall from the previous post, was 20 cents per kilowatt hour — among the most expensive in the United States.
The wholesale cost that my utility pays for power, according to the U.S. Energy Information Administration (side note: do we really need another government bureaucracy for this?), is around 4 cents per kilowatt hour.
That 16 cents per kilowatt hour difference covers San Diego Gas & Electric’s costs for generating electricity, transmitting it, distributing, and maintaining the grid. Some of it goes to SDG&E’s $500 million annual profit (in 2014).
This is a good deal for me. But it’s a bad deal for the utility’s non-solar customers. They are subsidizing my cost of maintaining the electric grid. SDG&E estimated that families without solar panels pay an extra $100 per year to cover the costs of solar homes.
California’s net metering law capped the number of solar homes at 5 percent of a utility’s aggregate peak demand. Here you can see how close we are to the cap in San Diego. The limit will probably be reached sometime this year.
What happens then? Right now it’s unclear. But my guess is that new rooftop solar customers will eventually have to buy solar at retail rates and sell it at wholesale rates. If you get in under cap you get a 1-to-1 credit for 20 years.
So there was another reason for going solar.