New Programs Boost Resilience for Ava Solar Customers

A recent ruling has dramatically changed the economics of customer-owned solar power. New Ava programs will help retain some of that value, and encourage solar customers to get batteries.

Ava will be rolling out a new program to boost the value of new rooftop solar systems, and is designing another program that will provide incentives for the installation of batteries for up to 8,000 homes and 87 public facilities to increase resilience and promote clean energy.

At their April 17 meeting, the Ava Board approved a new policy for compensation of rooftop solar customers, in response to changes in state rules. It also heard a staff report on a proposed new solar + battery program.

Last year, regulators revamped rules for how solar customers are compensated for energy they export to the grid.

Under the old “net metering” system, all energy generated by a rooftop solar system was credited at the retail rate for electricity, whether it was consumed by the customer or exported to the grid as surplus power. Now, under “net billing,” any surplus energy is valued at a much lower rate that varies by season and time of day, reflecting the real-time market price of energy. The transition cuts the savings from installing solar by about $215 per year for the average solar customer.

The new net billing rules apply only to new installations. Existing solar customers continue to get the net metering deal until 20 years after their installation date. One way customers can continue to capture the retail value of the energy is to consume it all themselves. Adding batteries can soak up the extra daytime power, and deliver it at night.

To ease the transition from net metering to net billing, state regulators included a temporary bonus payment for energy exported to the grid. Solar customers will get an additional credit for nine years, starting at 2.2¢ per kWh and declining to 0.4¢ over the next five years. Low-income customers on the CARE or FERA discount plans will get 9¢ falling to 1.8¢ extra. These temporary bonuses make up only part of the value of net metering.

Ava will supplement those bonus credits, adding 1¢ per kWh for low-income solar customers and 2.5¢ for energy exported during the Ava peak hours of 3-8 p.m. The new payments will be in place for five years, allowing Ava to see how it affects customer installations and behaviors and to deploy a battery storage strategy. Ava’s contribution will boost the bonus credits by about $45 per year for CARE/FERA households and $20 for non-low-income customers.

Figure: The value of solar power exports under NEM and Solar Billing Plan (SBP) tariffs, plus Ava adders

The total cost of the incentives could be about $8 million over five years. Now that the board has approved the policy, the Ava adders will go into effect this summer.

While bonus payments for solar may be helpful, customers could see a bigger benefit from participating in Ava’s proposed battery storage program.

The battery program is intended to deliver multiple benefits, and is driven by multiple factors, says J.P. Ross, Ava’s Vice President for Local Development, Electrification and Innovation.

“From the customer perspective, there has been a huge amount of interest in backup power since PG&E started shutting off power to prevent wildfires,” he says. “Plus the move to net billing has increased the value of batteries. Ava’s new program will get more batteries onto the grid while ensuring those batteries put clean, renewable energy into the grid during afternoon peaks when electricity generation is expensive.”

PG&E’s public safety power shutoff (PSPS) program was initiated in 2018 after high winds caused sparks from power lines to set off a spate of wildfires in dry forests. Batteries, especially when combined with solar, can be a good way for customers to get through power outages.

Batteries can also help customers cut their demand for grid power during the high-priced peak hours of 4 to 9 p.m., saving them money. That also cuts peak demand for Ava as a whole, reducing the capacity Ava has to buy, known as resource adequacy obligations.

In addition, batteries can be remotely controlled to act as part of a “virtual power plant.” By controlling thousands of batteries, an operator can sell services to the grid, respond to emergencies, and cut power prices. Some of these savings flow back to the battery owner, who may not even be aware the battery is doing double-duty.

Batteries can address all of these needs simultaneously, but only if they are sited on the customer’s side of the meter and are monitored and controlled through a “demand management” program, such as the Program Ava will be implementing.

To capture these multiple values, the new Ava battery program will offer an up-front incentive for batteries installed with solar, and an ongoing payment for batteries that discharge energy during evening hours and during peak events. The focus will be on residential customers, low-income households, and “resilience hubs,” facilities open to the public that provide community services.

The proposed budget will split the upfront incentives 50/50, with approximately $10 million for low-income households and resilience hubs, and $10 million for residential customers. The final budget will be confirmed this fall.

Depending on the response from customers, over 300 customers on the CARE and FERA discount plan could receive a $10,000 battery rebate plus about $24 per month to participate in Ava’s ongoing demand management activities. This would cover almost the full cost of adding a battery to a new solar installation.

About 9,000 non-low-income residential customers could get a rebate of $1,250 per battery plus demand management payments.

Resilience Hubs would receive an upfront payment of $400 per kWh of capacity, plus demand management payments. While Resilience Hubs will have larger systems, the program may limit the size of systems to avoid a few projects consuming the majority of funding. An average of 200 kWh per battery installation would allow for 87 Resilience Hubs to receive incentives from the program.

Ava staff calculates that a typical low-income customer could see a total value over five years of about $11,440, with $2,690 for market rate residential customers and $104,000 for Resilience Hubs, depending on the size of the facility.

Installations may also be eligible for federal incentives from the Inflation Reduction Act, such as a 30% tax credit for solar and batteries.

To provide the demand management services, Ava will need to finalize a contract with a distributed energy resource management system (DERMS) provider. A provider should be selected this summer with a launch date in late 2024. The final size of the program will depend on the size of the budget surplus at the end of the fiscal year this fall.

“These incentives could make the difference between customers installing solar and not installing solar,” Ava CEO Nick Chaset told the board.

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