California load-aggregation law will encourage distributed renewable generation

With support from the California Climate and Agriculture Network (CalCAN), [1] a coalition of sustainable agriculture organizations, Governor Brown signed Senate Bill 594 [2] into law on September 27, removing an important obstacle for individual customers investing in distributed renewable energy.  Specifically, SB 594 allows customers to aggregate loads (i.e., electricity demand) if they have multiple electric meters on one property, thus enabling them to invest in larger-scale, and therefore more cost-effective, renewable energy installations.  This advance makes distributed renewable energy generation more economical for certain customers and will encourage this type of energy production throughout California.

Load aggregation is beneficial to customers due to the availability of net metering. Specially programmed “net meters,” installed at homes and businesses, measure both purchased electricity and electricity exported to the grid, reducing the customer’s electricity bill by the value of exported electricity. SB 594 improves an existing net metering program, California’s Net Energy Metering (NEM [3]), which is designed for customers who install solar, wind, biogas and fuel cell generation facilities that generate 1 MW or less of electricity. The vast majority of customers who have installed solar facilities on their properties choose to participate in the NEM program, to which the California Public Utilities Commission (PUC) has now enrolled over 40,000 customers.

Prior to SB 594, a customer could only use electricity generated on-site to offset electricity consumed at a single meter, rather than offset the electricity consumed at all locations where a customer has a meter. This was a problem for customers with large properties that have multiple electric service locations, such as farmers, ranchers and schools. If these types of customers were to install a renewable generation facility, they would not receive credit for energy generation exceeding demand at one single meter. This meant that, rather than installing one large solar array to offset the entire property’s electricity consumption, customers would likely only fully benefit from net metering if they installed individual arrays at each meter to offset consumption.  Through SB 594, however, a customer’s electricity consumption at each meter may be aggregated (through combined readings and billing from all meters within a property), thus allowing for a greater offset and creating more incentive for customers to invest in larger renewable generation facilities. 

SB 594 follows last year’s Renewable Energy Equity Act (SB 489), [4] which opens the NEM program to all forms of renewable energy, including anaerobic digesters and other small renewable energy projects. The previous legislation only applied to wind and solar generation.   Together, these laws incentivize installation of small-scale distributed renewable energy projects in California, reduce the need for power plants and transmission infrastructure, and help the state meet its goal of 12,000 megawatts of local renewable energy capacity by 2020 [5].  California seeks to reduce the state’s greenhouse gas emissions to 1990 levels by 2020, with over a quarter of those reductions to come from the energy sector. The state has also adopted a 33% Renewable Portfolio Standard [6] goal. According to the PUC, the majority of customer-generators choose to participate in the NEM program to save money and offset their energy use.

For more information

Solar Power in C2ES Climate Techbook [7]

C2ES Map of Net-Metering Programs [8]

Press Release on SB 594 by Senator Lois Wolk  [9]

California Senate Bill No. 594 [10]

C2ES California Global Warming Solutions Act [11]