SDG&E NEM Cap

[thejq]

I have to admit the current NEM is just too good to be sustainable, especially if you factor in the various TOU plans. In a sense the normal rate payers are subsidizing the few solar users. Although the current NEM 1.0 customers will be grandfathered, I'd expect the TOU structure to be less favorable to solar in the near future (eg. peak hours shift and reducing rate differentials etc.).

[nightlfy]

Well if anything like the SDGE proposal is adopted it will kill solar adoption for most except high electric users.

* ~$40/month minimum billing for "cost of delivering services" and "programs".
* Shift peak period from 11am-6pm (prime solar generation times) to 2pm-9pm. (goes from 5 solar hrs to 2 hrs assuming most folks generate most their power from 11am to 4 pm). This will also increase costs overall as there would be 2-3 more peak hours during the time when most folks are home and using more power.
* Reduction of generation credit to $.04/kWH period, regardless of when or tier.

Their own projections say this would reduce solar adoption by ~66% and increase payoff time significantly. Nothing was said about all the additional profits they would reap!
I guess SDGE is going overboard on their "dream" proposal so that they can actually what they want which is something less so.

[Shaun]

When negotiating, anchoring the negotiation is always an important first step.

[J.P.M.]

Well if anything like the SDGE proposal is adopted it will kill solar adoption for most except high electric users.

* ~$40/month minimum billing for "cost of delivering services" and "programs".
* Shift peak period from 11am-6pm (prime solar generation times) to 2pm-9pm. (goes from 5 solar hrs to 2 hrs assuming most folks generate most their power from 11am to 4 pm). This will also increase costs overall as there would be 2-3 more peak hours during the time when most folks are home and using more power.
* Reduction of generation credit to $.04/kWH period, regardless of when or tier.

Their own projections say this would reduce solar adoption by ~66% and increase payoff time significantly. Nothing was said about all the additional profits they would reap!
I guess SDGE is going overboard on their "dream" proposal so that they can actually what they want which is something less so.

Perhaps, until the PUC promulgates a decision, it's best to be informed and understand what your POCO is proposing to do so as be better able to respond. ............................. I'd guess that the POCO's proposals are somewhat of a wish list, maybe even some overkill - knowing they'll never get everything they want. On the realistic side, I'd also guess that the handwriting is on the wall for the end of the current net metering sweetheart deal in the respect that the POCO's will probably get a fair amount of what they are asking for. ........................... If there is a bright side to this, it may make solar less cost effective without a decrease in prices................................... At the end of the day, we all do still have the most cost effective option to reduce a bill : Use less electricity.

[Willaby]

I have to admit the current NEM is just too good to be sustainable, especially if you factor in the various TOU plans. In a sense the normal rate payers are subsidizing the few solar users. Although the current NEM 1.0 customers will be grandfathered, I'd expect the TOU structure to be less favorable to solar in the near future (eg. peak hours shift and reducing rate differentials etc.).

Definitely. We on NEM 1.0 TOU are hoping they raise peak rates, hey, just double them! Not likely, but I would say redefining the peak to later will be a given. SCE peak is 2-8pm now. In any case, those considering solar should lean toward installing more kwh capacity now. Odds are the incremental additional cost will be well worth it.

[Shaun]

In any case, those considering solar should lean toward installing more kwh capacity now.

Can you expand on that a bit? Do you mean just to make up for performance degradation by the time NEM 1.0 runs out?

[sensij]

Can you expand on that a bit? Do you mean just to make up for performance degradation by the time NEM 1.0 runs out?

I think it is just thoughtless advice. A 1:1 kWh exchange for those with net metering 1.0 will be available in a volumetric tiered plan for the forseeable future, and TOU is generally more favorable than the tiered plan under NEM 1.0 even with a 2-9 pm peak period. Unfortunately, 4-8 pm peaks are also being tested in the NEM successor models, but hopefully it never comes to that. Right now, sizing to generate only 60% of what is consumed can fully offset the bill if enough of the load is not peak, but perhaps in the future it will be more like 80%.

Anyway, I think the smart money still sizes somewhat less than 100% of consumption (keeping in mind that a minimum bill will exist), and benefits from the more favorable TOU plans while they exist. Since the system capacity can be increased by 10% without losing NEM 1.0 status, I think it is still smarter to aim low, with the option to add on later (when equipment is more efficient / less expensive) *if* the TOU structures end up changing in a way that really hurts.

[Willaby]

Can you expand on that a bit? Do you mean just to make up for performance degradation by the time NEM 1.0 runs out?

Sure. By performance degradation, do you mean the panels over the course of 20 years? That's one I hadn't thought of, but good one too.

I am thinking of the TOU peak credit generation being reduced by 2 hours, so added capacity is more valuable, especially west facing. Same benefit if the peak charges are reduced from 48c as you will need more capacity to generate credits at the lower rate, whatever it will be. There are many other reasons to lean toward buying more capacity now than trying to just zero out your current bill under today's terms. I could, and might, do a thread about just that (and no, I'm not in the solar business ).

[Willaby]

I think it is still smarter to aim low, with the option to add on later (when equipment is more efficient / less expensive) *if* the TOU structures end up changing in a way that really hurts.

Couldn't disagree more ("thoughtless advise"?). Aim a little high while the getting is good, not aim low and hope for better. There are so many reasons. Anyone thinking they will add more later will face costs closer to the equivalent cost of a new install. Panel and equipment costs have flattened and are only half the install cost. Labor, permits, etc costs are not dropping. In my case the quote for adding two panels + optimizers (570w STC) was exactly $1000 pretax. That is $1.75/w incremental and the installer still made ~$300 added profit. Tell me how bad this decision was (sensij?) Alright, I'll do a thread about this topic.

[sensij]

The future is uncertain, no one can say for sure what the best decision will be. I personally think it is foolish to spend money oversizing a system today and hope that rates change in a way that makes it worthwhile. Sure, it is possible that it works out, but why gamble with this? Buy the sure return, and put the gambling money to work in assets with enough upside to reward you for the risk you are taking.

Money has time value... by the time the extra capacity you spent $1000 to get will actually help (assuming it is all excess right now), the true cost of it will have been much higher. Most installers do not offer incremental pricing, either... if they propose $3.75 / W for a 4 kW system, changes are good they will be looking for something around $3.75 / W for a 5 kW system too.

[Willaby]

The future is uncertain, no one can say for sure what the best decision will be. I personally think it is foolish to spend money oversizing a system today and hope that rates change in a way that makes it worthwhile. Sure, it is possible that it works out, but why gamble with this? Buy the sure return, and put the gambling money to work in assets with enough upside to reward you for the risk you are taking.

Ok, so your telling me my additional $1.75/w was a bad gamble? That was pre-tax. So it came to $1.23/w post. Still bad? btw, my total was $3.45/w on a Spanish S-tile roof. Not sure but I think it was the same installer you used, fwiw.

[sensij]

Ok, so your telling me my additional $1.75/w was a bad gamble? That was pre-tax. So it came to $1.23/w post. Still bad? btw, my total was $3.45/w on a Spanish S-tile roof. Not sure but I think it was the same installer you used, fwiw.

I don't have enough information to evaluate your specific decision. As a general rule, oversizing is a waste of money.

You have what, 16 * 285 W panels, for which you paid $3.45 * 4560 = $15732? Are you saying that if you had installed only 14 panels, you would have paid $14732 / 3990 W = $3.69 / W? So your installer overcharges on the smaller system to convince you to buy the bigger system by dangling a "cheap" upgrade. OK... I doubt we used the same installer.

What is your annual consumption, and do you have plans for it to increase?

[Willaby]

I don't have enough information to evaluate your specific decision. As a general rule, oversizing is a waste of money.

You have what, 16 * 285 W panels, for which you paid $3.45 * 4560 = $15732? Are you saying that if you had installed only 14 panels, you would have paid $14732 / 3990 W = $3.69 / W? So your installer overcharges on the smaller system to convince you to buy the bigger system by dangling a "cheap" upgrade. OK... I doubt we used the same installer.

What is your annual consumption, and do you have plans for it to increase?

Nope, this is the way it works: Be it 14 panels or 16 panels (LG280w), the inverter is the same, the wiring is the same and most important, the number of Quickmounts and associated extra labor is the same. So it is just the cost of the panels, the optimizers and a few feet of racking. The roof penetrations cost the money as they are Spanish tile. Each penetration is ~45 min roofer labor, so two additional mounts would have been >$200 but these were not required. Makes my installer seem a little bit more up front on his costs, no? He sold me on 14 panels and we figured out what it took for the 16 ($1014 extra). If you can have this conversation with your installer you can find out where the costs step up or not and this is my point. Hope this helps you, but you seem to have strong opinions, so maybe not.

I use ~7200 kwh trailing 12 months. I am using my AC more because of solar. I don't worry about my kwh usage, not even during the peak.

[sensij]

By that logic, would the correct price if you had reduced the array by two panels (assuming same number of penetrations) be $1000 less, or $13732 ( $4.02/ W )? Once I really understood how the pricing works, I got quotes on my 3.1 kW array down to around $3.30 / W, so basing the analysis around your 14 panel anchor price leads to some incorrect conclusions about how the cost model can work.

If your installer is JPS, I actually got a copy of the price workup spreadsheet last year (by mistake), and with that, got some very good insight into how they approach their sales. There have probably been some changes, but increasing the array past 100% consumption is still an upsell, and not likely to be the most cost-effective choice.

Stepping back, I'm not really attacking your decision. People are free to make their own guesses about the future and spent their money accordingly. The price you paid is still less than most others in our area, and is likely to be less expensive (in a reasonable amount of time) than paying SDG&E for the same energy. I just won't let the suggestion to increase array capacity to 100% or more based on nebulous guesses about what rates will do in the future go uncontested. I've worked the numbers for some of SDG&E's proposed TOU peak shifts, and although the result is not as favorable as it is now, sizing at 100% (or more) of consumption is still not the most cost-effective option for most people.

[J.P.M.]

If I didn't have an array at this time, I'd probably first reduce my usage as much as my lifestyle permitted.


After that, I'd get informed about what the POCO is proposing for future rates, and what the PUC eventually declares as far as the rate/tariff future is concerned. Then, while doing all that, I'd get my best quotes for a system that offset about 80% of my usage (in kWh/yr. - NOT $$'s), get my roof serviced as needed, and go with the most cost effective system using a 12 year lifecycle. I'd do all that before this year ends, but if possible AFTER the PUC renders. That way, I'll have a better read on the price future and most likely get in under the 5% cap for the current sweet net metering for 20 years, and also get 2 tax years to spread the 30% tax credit out.

Also, my gut is telling me prices may be near a bottom for now, but maybe not.

For the time being, I'd stay/get on tiered rates while keeping an eye on how and in what ways rate reform is affecting T.O.U. rates and times, with the idea of watching how/if/when the rate tariff changes may make it advantageous to switch over to T.O.U. to keep my bill as low as possible - sort of using any possible T.O.U. pricing advantages for bill lowering to compensate for what seems likely to be future additional fixed charges, while making sure changing over does not kill my NEM 1.0 status.

As far as south or west facing panels (or any available orientations for that matter), I'd run PVWatts for both/any orientations, take the hourly output option, plug in scenario T.O.U rates on the downloaded spreadsheet and go with the orientation that produces the highest annual revenue, knowing that things will always change as will peak times/rates/tariffs.

The long term idea to all this is that T.O.U. rates are probably going to become standard at some point in the future. In the meantime, I'd be in "something" of a catbird seat on NEM 1.0 with a few options, while probably not have oversized a system to a grossly cost ineffective degree.

In the end it's all still a crap shoot., so take your best shot.

Added some text here. Twice. Three times. Four times.

Try this: "EDIT", "EDIT POST", make changes as needed, "PREVIEW CHANGES", "SAVE CHANGES".

This Just worked for me.