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Home > Feature Articles > Alternative Energy Solutions > Solar Energy

California Solar Net Metering Raised to 5%

Net metering allows homes and businesses to earn credit for any excess solar power they generate, and that new metering level has been doubled with AB 510.

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The utility company's cap on "net metering," has been 2.5% of their peak demand power levels.

Governor Arnold Schwarzenegger signed AB 510 on 02/26/2010, doubling California's net metering cap to 5 percent

AB 510 Net Metering Legislation

“California is showing the rest of the nation and the world that you can protect the environment and the economy at the same time,” said Governor Schwarzenegger. “AB 510 will help us achieve our aggressive environmental and renewable energy goals by growing investment in solar and wind power throughout the state and reducing greenhouse gas emissions while creating green jobs at the same time.”

Distributed Power Generation Surplus Power Earnings

Net metering allows home and business owners who install solar generators on their property to be paid by their electric utility for the surplus power they produce. The current net metering requirement is 2.5 percent, but with solar installations rapidly growing in California and more than 50,000 homes and businesses generating their own solar power, many utilities have reached or are close to meeting this. AB 510 raises the requirement on net metering to 5 percent.

Currently, utilities give net metered customers a credit on their monthly bill if they generate more solar power than they use. The credit can be used to offset higher energy consumption at other times of the year, like the darker winter months. At the end of the year, any leftover credits are zeroed out.

In California, over 50,000 customers, including homeowners, businesses, schools, and cities, participate in net metering, collectively generating over 500 megawatts of power. One megawatt of electricity is enough to power 750 to 1,000 homes. The bulk of the state's net metered customers are within PG&E's territory in northern California.

State law had required California's three largest utilities, including PG&E, to credit customers for renewable power they send to the grid, but limited the program to 2.5 percent of a utility's peak demand. That meant that as soon as a utility got 2.5 percent of its electricity from solar customers, they would no longer be required to sign new contracts.

Gov. Schwarzenegger's move is widely supported by the solar industry and statewide environmental groups.

"It really sends a long-term signal to solar companies that California is open for business tomorrow and for years to come," said Sara Birmingham, director of Western policy for the Solar Alliance, the chief sponsor of the legislation.

Indeed, many solar industry executives say the raising of the cap takes away much of the uncertainty that was hampering the market.

SunWize, a solar installer in San Jose that is so busy it has a dozen job openings. "Now I can hire people without having to worry about what's going to happen when we hit 2.5 percent. It helps us create jobs."

Last year, California also implemented legislation to expand development opportunities for solar power and other renewable sources of energy in California. AB 920 expanding net-metering programs to include solar or wind power and SB 32 increases limits for California’s feed-in tariff program including the size of eligible generation facilities from 1.5 megawatts to 3 megawatts.

According to Silicon Valley's Mercury News, PG&E ultimately sponsored the legislation but has expressed concerns that net metering effectively subsidizes solar customers, who tend to be more affluent, at the expense of other ratepayers.

Edited by Carolyn Allen, owner/editor of California Green Solutions
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