Until recently, when homes and businesses with solar panels produced more electricity than they used, the surplus went back into the grid, with no compensation to the building’s owner. Home and business owners were essentially donating free power to the utility company – not the fairest situation.
Almost two years ago, the California legislature passed a bill, the California Solar Surplus Act (AB 920), that required the utilities to pay homeowners for any excess electricity generation or to credit the account for excess generation, just like cell phone “roll over” minutes. While the bill does not allow solar owners to become power plants for their neighborhoods, does allow them to reap all of the benefits from their investment. Even though the bill passed, the dollar amount that the utilities were required to pay had not been determined. This effectively put the program on hold.
Finally, that has changed. Last week, California electricity regulators decided upon a price of approximately 4 cents/kWh generated. That price may rise to 5.8 cents/kWh depending on the value of renewable energy credits and the establishment of a tracking mechanism for those credits. Now, families and businesses with solar have a financial incentive to be more efficient and use less electricity so they can get paid for excess generation. For the Duncan family, that means they would have received $22 for the extra 555 kWh they generated last year instead of receiving nothing at all.
A win for the clean energy movement
Homes and businesses can now contribute renewable energy into the grid and get credit for it. While the price is significantly lower than the retail cost of electricity, it represents an important milestone in California’s efforts to get 33% of our electricity from renewable resources.