Peer-to-peer energy breakthrough could allow solar and wind energy sources to be shared


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Microgrid solar outage algorithms optimize renewable energy during blackouts using grid-forming inverters, islanding control, demand forecasting, and energy storage from batteries and EVs, improving reliability by up to 35% for resilient power sharing.

 

Key Points

Algorithms that island homes, forecast demand, and prioritize critical loads using storage and grid-forming inverters.

✅ Disconnects inverters to form resilient neighborhood microgrids

✅ Forecasts solar, wind, and demand; allocates energy fairly

✅ Uses EVs and batteries; boosts reliability by up to 35%

 

Some people who have solar panels on their roof are under the impression that they can use them to power their home in the case of an outage, but that simply is not the case. Homes do remain connected to the grid during outages, as U.S. power outage risks grow, but the devices tasked with managing solar panels are normally turned off due to safety concerns. This permanent grid connection essentially prevents homeowners from drawing on the power that their own renewable energy resources generate.

This could be about to change, however, thanks to the efforts of a team of University of California San Diego engineers who have come up with algorithms that would enable homes to share and use their power in outages by disconnecting solar inverters from the grid. Their algorithms work with the existing technology and would have the added benefit of boosting the system’s reliability by as much as 35 percent.

The genius of their work lies in the ability of the algorithm to prioritize the distribution of power from the renewable resources in outages. Their equation considers forecasts for wind and solar power generation to address clean energy intermittency challenges and the available energy storage, including batteries and electric vehicles. It combines this information with the projected energy usage of residents and the amount of energy the homes are able to produce. It can be programmed to prioritize in several different ways, the most vital of which is by favoring those who need power urgently, such as those using life support equipment. It could also prioritize those who are willing to pay extra or reward those who typically generate an energy surplus during normal operations.

 

Learning lessons from past outages

Lead author Abdulelah H. Habib said the engineers were inspired to find a way to use the renewable power in outages by the events of Hurricane Sandy. This storm affected more than eight million people on the nation’s East Coast, some of whom were left without power for as long as two weeks.

According to the researchers, most customers prefer sharing community-scale storage systems over having systems in each home because of the lower costs. One of the paper’s senior authors, Raymond de Callafon, said that homes that are connected together are not only more resilient in power outages but they also happen to be more resilient to price fluctuations.

Each home needs to be equipped with special circuit breakers that can be remotely controlled, while utilities would need to install some communications methods so the power systems within a particular residential cluster can communicate amongst themselves. They also need a “grid forming inverter” to help them connect to one another and manage excess solar on networks safely.

One stumbling block that will have to be overcome is the current regulations. Most states do not allow individual homeowners to sell power to other homeowners, so there would have to be some adjustments to make this a reality.

 

Solar power growing in popularity

Solar power’s popularity is currently on the rise, and reductions in cost as the technology improves are only expected to drive this growth even further. REC CEO Steve O’Neil told CNBC that the installation rates of solar double every two years, a trend that informs residential solar economics for homeowners even though just two percent of the planet’s electricity comes from converting sunlight to energy. This means there is plenty of room for expansion. The world’s current solar capacity is 305 gigawatts, compared to just 50 gigawatts in 2010.

In addition, he pointed out that the price of solar energy has dropped by 70 percent since the year 2010 and continues to fall; it costs around eight cents per kilowatt hour at the moment. Another factor that could boost adoption is storage improvements, driven by affordable solar batteries that expand capacity, which will allow solar energy to be used even on overcast days.

 

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"World?s Most Powerful? Tidal Turbine Starts Pumping Green Electricity To Onshore Grid

O2 Tidal Turbine delivers tidal energy in Orkney, Scotland, supplying grid-connected renewable power via EMEC and enabling green hydrogen production, providing clean electricity with predictable generation from strong coastal currents.

 

Key Points

A 2 MW, grid-connected tidal device in Orkney that delivers clean power and enables EMEC green hydrogen production.

✅ 2 MW capacity; powers ~2,000 UK homes via EMEC grid

✅ Predictable renewable output from strong coastal currents

✅ Enables onshore electrolyzer to produce green hydrogen

 

“The world’s most powerful” tidal turbine has been hooked up to the onshore electricity grid in Orkney, a northerly archipelago in Scotland, and is ready to provide homes with clean, green electricity, even as a major UK offshore windfarm begins supplying power this week.

The tidal turbine, known as the O2, was developed by Scottish engineering firm Orbital Marine Power. On July 28, they announced O2 “commenced grid connected power generation” at the European Marine Energy Centre (EMEC) in Orkney, meaning it's all set up and providing energy to the local power grid, similar to another Scottish tidal project that recently powered nearly 4,000 homes.

The 74-meter-long (242-foot) turbine is said to be “the world’s most powerful” tidal turbine. It will lay in the waters off Orkney for the next 15 years with the capacity to meet the annual electricity demand of around 2,000 UK homes. The 2MW turbine is also set to power the EMEC’s land-based electrolyzer that will generate green hydrogen (hydrogen made without fossil fuels) that can also be used as a clean energy source, in a UK energy system that recently set a wind generation record for output.

“Our vision is that this project is the trigger to the harnessing of tidal stream resources around the world and, alongside investment in UK offshore wind, to play a role in tackling climate change whilst creating a new, low-carbon industrial sector,” Orbital CEO, Andrew Scott, said in a press release.

Tidal energy is harnessed by converting energy from the natural rise and fall of ocean tides and currents. The O2 turbine consists of two submerged blades with a 20-meter (65-foot) diameter attached to a turbine that will move with the shifting currents of Orkney’s coast to generate electricity. Electricity is then transferred from the turbine along the seabed via cables towards the local onshore electricity network, a setup also being used by a Nova Scotia tidal project to supply the grid today.


This method of harnessing energy is not just desirable because it doesn't release carbon emissions, but it’s more predictable than other renewable energy sources, such as solar or Scotland's wind farms that can be influenced by weather conditions. Tidal energy production is still in its infancy and there are relatively few large-scale tidal power plants in the world, but many argue that some parts of the world could potentially draw huge benefits from this innovative form of hydropower, especially coastal regions with strong currents such as the northern stretches of the UK and the Bay of Fundy in Atlantic Canada.

The largest tidal power operation in the world is the Sihwa Lake project on the west coast of South Korea, which harnesses enough power to support the domestic needs of a city with a population of 500,000 people. However, once fully operational, the MeyGen tidal power project in northern Scotland hopes to snatch its title.

 

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What to know about DOE's hydrogen hubs

U.S. Clean Hydrogen Hubs aim to scale production, storage, transport, and use as DOE and the Biden administration fund regional projects under the infrastructure law, blending green and blue hydrogen, carbon capture, renewables, and pipelines.

 

Key Points

Federally funded regional projects to make, move, and use low-carbon hydrogen via green, blue, and pink routes.

✅ $7B DOE funding via infrastructure law

✅ Mix of green, blue, pink hydrogen pathways

✅ Targets 10M metric tons annually by 2030

 

New details are emerging about the Biden administration’s landmark plans to build out a U.S. clean hydrogen industry.

On Friday, the Department of Energy named the seven winners of $7 billion in federal funds to establish regional hydrogen hubs. The hubs — funded through the infrastructure law — are part of the administration’s efforts to jump-start an industry it sees as key to achieving climate goals like the goal of 100 percent clean electricity by 2035 set by the administration. The aim is to demonstrate everything from the production and storage of hydrogen to its transport and consumption.

“All across the country, from coast to coast, in the heartland, we’re building a clean energy future here in America, not somewhere else,” President Joe Biden said while announcing the hubs in Philadelphia.

From 79 initial proposals, DOE chose the following: the Mid-Atlantic Hydrogen Hub, Appalachian Hydrogen Hub, California Hydrogen Hub, Gulf Coast Hydrogen Hub, Heartland Hydrogen Hub, Midwest Hydrogen Hub and Pacific Northwest Hydrogen Hub.

Many of the winning proposals are backed by state government leaders and industry partners, and by Southeast cities that have ramped up clean energy purchases in recent years as well. The Midwest hub, for example, is a coalition of Illinois, Indiana and Michigan — supported by politicians like Illinois Gov. J.B. Pritzker (D), as well as such companies as Air Liquide, Ameren Illinois and Atlas Agro. The mid-Atlantic hub is supported by Democratic members of Congress representing the region, including Delaware Sens. Chris Coons and Tom Carper and Rep. Lisa Blunt Rochester.

The administration hopes the hubs will produce 10 million metric tons of “clean” hydrogen annually by 2030. But much about the projects remains unknown — including how trends like cheap batteries for solar could affect clean power supply — and dependent on negotiations with DOE.


A win for ‘blue’ hydrogen?
Nearly all hydrogen created in the U.S. today is extracted from natural gas through steam methane reformation. The emissions-intensive process produces what is known as “grey” hydrogen — or “blue” hydrogen when combined with carbon capture and storage.

Four recipients — the Appalachian, Gulf Coast, Heartland and Midwest hydrogen hubs — include blue hydrogen in their plans, though the infrastructure law only mandated one.

That has drawn the ire of environmentalists, who argue blue hydrogen is not emissions-free, partly because of the potential for methane leaks during the production process.

“This is worse than expected,” Clean Energy Group President Seth Mullendore said after the recipients were announced Friday. “The fact that more than half the hubs will be using fossil gas is outrageous.”

Critics have also pointed out that many of the industry partners backing the hub projects include oil and gas companies. The coalitions are a mix of private-sector groups — often including renewable energy developers — and government stakeholders. Proposals have also looped in universities, utilities, environmental groups, community organizations, labor unions and tribal nations, among others.

“The massive build out of hydrogen infrastructure is little more than an industry ploy to rebrand fracked gas,” said Food & Water Watch Policy Director Jim Walsh in a statement Friday. “In a moment when every political decision that we make must reject fossil expansion, the Biden administration is going in the opposite direction.”

The White House has emphasized that roughly two-thirds of the $7 billion pot is “associated” with the production of “green” hydrogen, which uses electricity from renewable sources. Two of the chosen proposals — in California and the Pacific Northwest — are making green hydrogen their focus, reflecting advances such as offshore green hydrogen being pursued by industry leaders, while three other hubs plan to include green hydrogen alongside hydrogen made with natural gas (blue) or nuclear energy (pink).

Many hubs plan to use several methods for hydrogen production, and globally, projects like Brazil's green hydrogen plant highlight the scale of investment, but the exact mix may change depending on which projects make it through the DOE negotiations process. The Midwest hub, for example, told E&E News it’s pursuing an “all-of-the-above” strategy and has projects for green, blue and “pink” hydrogen. The mid-Atlantic hub in southeastern Pennsylvania, Delaware and New Jersey will also generate hydrogen with nuclear reactors.

Energy Secretary Jennifer Granholm has described clean hydrogen as a fresh business opportunity, especially for the natural gas industry, which has supported the concept of sending hydrogen to market through its pipeline network. Lawmakers like Sen. Joe Manchin (D-W.Va.) — who said the Appalachian hub will make West Virginia the “new epicenter of hydrogen” — have pushed for continuing to use natural gas to make hydrogen in his state.

“Natural gas utilities are committed to exploring all options for emissions reduction as demonstrated by the 39 hydrogen pilot projects already underway and are eager to participate in a number of the hubs,” said American Gas Association President and CEO Karen Harbert in a statement Friday.

Green hydrogen also has faced criticism. Some groups argue that the renewable resources needed to produce green hydrogen are limited, even with sources such as wind, solar and hydropower technology, so funding should be reserved for applications that cannot be easily electrified, mostly industrial processes. There also is uncertainty about how the Treasury Department will handle hydrogen made from grid electricity — which can include power from fossil fuel plants — in its upcoming guidance on the first-ever tax credit for clean hydrogen production.

“Even the cleanest forms of hydrogen present serious problems,” Walsh said. “As groundwater sources are drying up across the country, there is no reason to waste precious drinking water resources on hydrogen when there are cheaper, cleaner energy sources that can facilitate a real transition off fossil fuels.”

But Angelina Galiteva, CEO of the hub in drought-prone California, said hydrogen will enable the state “to increase renewable penetration to reach all corners of the economy,” noting parallel initiatives such as Dubai's solar hydrogen plans that illustrate the potential.

“Transitioning to renewable clean hydrogen will pose significantly less stress on water resources than remaining on the current fossil path,” she said.

 

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Volvo Trucks to launch complete range of electric trucks in Europe in 2021

Volvo Electric Heavy-Duty Trucks lead Europe’s e-mobility shift, meeting strict emissions rules with battery-electric drivelines, hydrogen fuel cell roadmaps, fast charging infrastructure, and autonomous freight solutions for regional haulage and urban construction.

 

Key Points

A battery-electric heavy truck range for haulage and urban construction, targeting zero emissions and compliance.

✅ Up to 44t GCW, ranges up to 300 km per charge

✅ Battery-electric now; hydrogen fuel cells targeted next

✅ Production from 2022; suited to haulage and construction

 

According to the report published by Allied Market Research, the global electric truck market generated $422.5M (approx €355.1M) in 2019 and is estimated to reach $1.89B (approx €1.58B) by 2027, registering a CAGR of 25.8% from 2020 to 2027, reflecting broader expectations that EV adoption within a decade will accelerate worldwide. 

The surge in government initiatives to promote e-mobility and stringent emission norms on vehicles using fossil fuels (petrol and diesel) is driving the growth of the global electric truck market, while shifts in the EV aftermarket are expected to reinforce this trend. 


Launching a range of electric trucks in 2021
Volvo is among the several companies, including early moves like Tesla's truck reveal efforts, trying to cash in on this popular and lucrative market. Recently, the company announced that it’s going to launch a complete heavy-duty range of trucks with electric drivelines starting in Europe in 2021. Next year, hauliers in Europe will be able to order all-electric versions of Volvo’s heavy-duty trucks. The sales will begin next year and volume production will start in 2022. 

“To reduce the impact of transport on the climate, we need to make a swift transition from fossil fuels to alternatives such as electricity. But the conditions for making this shift, and consequently the pace of the transition, vary dramatically across different hauliers and markets, depending on many variables such as financial incentives, access to charging infrastructure and type of transport operations,” explains Roger Alm, President Volvo Trucks.


Used for regional transport and urban construction operations
According to the company, it is now testing electric heavy-duty models – Volvo FH, FM, and FMX trucks, which will be used for regional transport and urban construction operations in Europe, and in the U.S., 70 Volvo VNR Electric trucks are being deployed in California initiatives as well. These Volvo trucks will offer a complete heavy-duty range with electric drivelines. These trucks will have a gross combination weight of up to 44 tonnes.

“Our chassis is designed to be independent of the driveline used. Our customers can choose to buy several Volvo trucks of the same model, with the only difference being that some are electric and others are powered by gas or diesel. As regards product characteristics, such as the driver’s environment, reliability, and safety, all our vehicles meet the same high standards. Drivers should feel familiar with their vehicles and be able to operate them safely and efficiently regardless of the fuel used,” says Alm.


Fossil free by 2040
Depending on the battery configuration the range could be up to 300 km, claims the company. Back in 2019, Volvo started manufacturing the Volvo FL Electric and FE Electric for city distribution and refuse operations, primarily in Europe, while in the van segment, Ford's all-electric Transit targets similar urban use cases. Volvo Trucks aims to start selling electric trucks powered by hydrogen fuel cells in the second half of this decade. Volvo Trucks’ objective is for its entire product range to be fossil-free by 2040.

Back in 2019, Swedish autonomous and electric freight mobility leader provider Einride’s Pod became the world’s first autonomous, all-electric truck to operate a commercial flow for DB Schenker with a permit on the public road. Last month, the company launched its next-generation Pod in the hopes to have it on the road starting from 2021, while major fleet commitments such as UPS's Tesla Semi pre-orders signal broader demand.

 

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Arvato commissions first solar power plant

Arvato Ontario Solar Power Plant advances sustainability with rooftop photovoltaic panels, PPA financing, and green electricity, generating 800,000 kWh annually to cut logistics emissions, reduce energy costs, and support carbon-neutral supply chain operations.

 

Key Points

A rooftop PV system under a PPA, supplying low-cost green power to Arvato's Ontario, CA distribution center.

✅ 1,160 panels produce 800,000 kWh of renewable power yearly

✅ PPA model avoids upfront costs and lowers electricity rates

✅ Cuts center emissions by 72%; 45% roof coverage

 

Arvato continues to invest consistently in the sustainability of its distribution centers. To this end, the first solar power plant in the focus market has now been commissioned on the roof of the distribution center in Ontario, California. The solar power plant has 1,160 solar panels and generates more than 800,000 kilowatt hours (kWh) of green electricity annually. This reduces electricity costs and, with advances in battery storage, further cuts the logistics center's greenhouse gas emissions. Previously, the international supply chain and e-commerce service provider had converted five other distribution centers in the USA to green electricity.

The project started as early as November 2019 with an intensive site investigation. An extensive catalogue of measures and criteria had to be worked through to install and commission the solar power plant on the roof system. After a rigorous process involving numerous stakeholders, the new solar modules were installed in August 2022, similar to utility-scale deployments like the largest solar array in Washington seen recently. However, further approvals and permits were required before the solar system could be officially commissioned, a common step for solar power plants worldwide. Once official permission for the operation was granted, the switch could be flipped in February 2023, and production of environmentally friendly solar electricity could begin.

The photovoltaic system is operated under a Purchase Power Agreement (PPA), a model widely used in corporate renewable energy projects today. This unique financing mechanism is available in twenty-six U.S. states, including California. While a third-party developer installs, owns and operates the solar panels, Arvato purchases the electricity generated. This allows companies in the U.S. to support clean energy projects while buying low-cost electricity without having to finance upfront costs. "The PPA and the resulting benefits were quite critical to the success of this project," says Christina Greenwell, Microsoft AOC F&L Client Services Manager at Arvato, who managed the project from start to finish. "It allows us to reduce our electricity costs while supporting Bertelsmann's ambitious goal of becoming carbon neutral by 2030."

The 1,160 solar panels were added to an existing system of 920 panels owned by the logistics center's landlord. In total, the panels now cover 45 percent of the roof space at the Ontario distribution center. The emissions generated by the distribution center are now reduced by 72 percent with the new solar panels and clean power generation. As Bertelsmann plans to switch all its sites worldwide to 100 percent green electricity, renewable energy certificates will, as seen when Bimbo Canada signed agreements to offset 100 percent of its electricity for its operations, offset the remaining emissions.

"The new solar power plant is a significant step on our path to carbon neutrality and demonstrates our commitment to finding innovative solutions that reduce our carbon footprint," said Mitat Aydindag, President of North America at Arvato. "All employees at the site are pleased that our Ontario distribution center is now a pioneer and is providing effective support in achieving our ambitious climate goal in 2030."

Similar facility-level efforts include the Bright Feeds Berlin solar project underscoring momentum across industrial operations.

 

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New Kind of 'Solar' Cell Shows We Can Generate Electricity Even at Night

Thermoradiative Diode Power leverages infrared radiation and night-sky cooling to harvest waste heat. Using MCT (mercury cadmium telluride) detectors with photovoltaics, it extends renewable energy generation after sunset, exploiting radiative cooling and low-power density.

 

Key Points

Technology using MCT infrared diodes to turn radiative Earth-to-space heat loss into electricity, aiding solar at night.

✅ MCT diodes radiate to cold sky, generating tiny current at 20 C

✅ Complements photovoltaics by harvesting post-sunset infrared flux

✅ Potential up to one-tenth solar output with further efficiency gains

 

Conventional solar technology soaks up rays of incoming sunlight to bump out a voltage. Strange as it seems, some materials are capable of running in reverse, producing power as they radiate heat back into the cold night sky environment.

A team of engineers in Australia has now demonstrated the theory in action, using the kind of technology commonly found in night-vision goggles to generate power, while other research explores electricity from thin air concepts under ambient humidity.

So far, the prototype only generates a small amount of power, and is probably unlikely to become a competitive source of renewable power on its own – but coupled with existing photovoltaics technology and thermal energy into electricity approaches, it could harness the small amount of energy provided by solar cells cooling after a long, hot day's work.

"Photovoltaics, the direct conversion of sunlight into electricity, is an artificial process that humans have developed in order to convert the solar energy into power," says Phoebe Pearce, a physicist from the University of New South Wales.

"In that sense, the thermoradiative process is similar; we are diverting energy flowing in the infrared from a warm Earth into the cold Universe."

By setting atoms in any material jiggling with heat, you're forcing their electrons to generate low-energy ripples of electromagnetic radiation in the form of infrared light, a principle also explored with carbon nanotube energy harvesters in ambient conditions.

As lackluster as this electron-shimmy might be, it still has the potential to kick off a slow current of electricity. All that's needed is a one-way electron traffic signal called a diode.

Made of the right combination of elements, a diode can shuffle electrons down the street as it slowly loses its heat to a cooler environment.

In this case, the diode is made of mercury cadmium telluride (MCT). Already used in devices that detect infrared light, MCT's ability to absorb mid-and long-range infrared light and turn it into a current is well understood.

What hasn't been entirely clear is how this particular trick might be used efficiently as an actual power source.

Warmed to around 20 degrees Celsius (nearly 70 degrees Fahrenheit), one of the tested MCT photovoltaic detectors generated a power density of 2.26 milliwatts per square meter.

Granted, it's not exactly enough to boil a jug of water for your morning coffee. You'd probably need enough MCT panels to cover a few city blocks for that small task.

But that's not really the point, either, given it's still very early days in the field, and there's potential for the technology to develop significantly further in the future.

"Right now, the demonstration we have with the thermoradiative diode is relatively very low power. One of the challenges was actually detecting it," says the study's lead researcher, Ned Ekins-Daukes.

"But the theory says it is possible for this technology to ultimately produce about 1/10th of the power of a solar cell."

At those kinds of efficiencies, it might be worth the effort weaving MCT diodes into more typical photovoltaic networks alongside thin-film waste heat solutions so that they continue to top up batteries long after the Sun sets.

To be clear, the idea of using the planet's cooling as a source of low-energy radiation is one engineers have been entertaining for a while now. Different methods have seen different results, all with their own costs and benefits, with low-cost heat-to-electricity materials also advancing in parallel.

Yet by testing the limits of each and fine-tuning their abilities to soak up more of the infrared bandwidth, we can come up with a suite of technologies and thermoelectric materials capable of wringing every drop of power out of just about any kind of waste heat.

"Down the line, this technology could potentially harvest that energy and remove the need for batteries in certain devices – or help to recharge them," says Ekins-Daukes.

"That isn't something where conventional solar power would necessarily be a viable option."

 

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California introduces new net metering regime

California NEM-3 Tariff ushers a successor Net Energy Metering framework, revising export compensation, TOU rates, and non-bypassable charges to balance ratepayer impacts, rooftop solar growth, and energy storage adoption across diverse communities.

 

Key Points

The CPUC's successor NEM policy redefining export credits and rates to sustain customer-sited solar and storage.

✅ Sets export compensation methodology beyond NEM 2.0

✅ Aligns TOU rates and non-bypassable charges with costs

✅ Encourages solar-plus-storage adoption and equity access

 

The California Public Utilities Commission (CPUC) has officially commenced its “NEM-3” proceeding, which will establish the successor Net Energy Metering (NEM) tariff to the “NEM 2.0” program in California. This is a highly anticipated, high-stakes proceeding that will effectively modify the rules for the NEM tariff in California, amid ongoing electricity pricing changes that affect residential rooftop solar – arguably the single most important policy mechanism for customer-sited solar over the last decade.

The CPUC’s recent order instituting rule-making (OIR) filing stated that “the major focus of this proceeding will be on the development of a successor to existing NEM 2.0 tariffs. This successor will be a mechanism for providing customer-generators with credit or compensation for electricity generated by their renewable facilities that a) balances the costs and benefits of the renewable electrical generation facility and b) allows customer-sited renewable generation to grow sustainably among different types of customers and throughout California’s diverse communities.”

This successor tariff proceeding was initiated by Assembly Bill 327, which was signed into law in October of 2013. AB 327 is best known as the legislation that directed the CPUC to create the “NEM 2.0” successor tariff, which was adopted by the CPUC in January of 2016.

The original Net Energy Metering program in California (“NEM 1.0”) effectively enabled full-retail value net metering “allowing NEM customers to be compensated for the electricity generated by an eligible customer-sited renewable resource and fed back to the utility over an entire billing period.” Under the NEM 2.0 tariff, customers were required to pay charges that aligned them more closely with non-NEM customer costs than under the original structure. The main changes adopted when the NEM 2.0 was implemented were that NEM 2.0 customer-generators must: (i) pay a one-time interconnection fee; (ii) pay non-bypassable charges on each kilowatt-hour of electricity they consume from the grid; and (iii) customers were required to transfer to a time-of-use (TOU) rate, with potential changes to electric bills for many customers.

NEM 2.0

The commencement of the NEM-3 OIR was preceded by the publishing of a 318-page Net Energy Metering 2.0 Lookback Study, which was published by Itron, Verdant Associates, and Energy and Environmental Economics. The CPUC-commissioned study had been widely anticipated and was expected to act as the starting reference point for the successor tariff proceeding. Verdant also hosted a webinar, which summarized the study’s inputs, assumptions, draft findings and results.

The study utilized several different tests to study the impact of NEM 2.0. The cost effectiveness analysis tests, which estimate costs and benefits attributed to NEM 2.0 include: (i) total resource cost test, (ii) participant cost test, (iii) ratepayer impact measure test, and (iv) program administrator test. The evaluation also included a cost of service analysis, which estimates the marginal cost borne by the utility to serve a NEM 2.0 customer.

The opening paragraph of the report’s executive summary stated that “overall, we found that NEM 2.0 participants benefit from the structure, while ratepayers see increased rates.” In every test that the author’s conducted the results generally supported this conclusion for residential customers. There were some exceptions in their findings. For example, in the cost of service analysis the report stated that “residential customers that install customer-sited renewable resources on average pay lower bills than the utility’s cost to serve them. On the other hand, nonresidential customers pay bills that are slightly higher than their cost of service after installing customer-sited renewable resources. This is largely due to nonresidential customer rates having demand charges (and other fixed fees), and the lower ratio of PV system size to customer load when compared to residential customers.”

Similar debates over solar rate design, including Massachusetts solar demand charges, highlight how demand charges and TOU decisions can affect customer economics.

NEM-3 timeline

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The preliminary schedule that the CPUC laid out in its OIR estimates that the proceeding will take roughly 15 months in total, starting with a November 2020 pre-hearing conference.

The real meat of the proceeding, where parties will present their proposals for what they believe the successor tariff should be, as the state considers revamping electricity rates to clean the grid, and really show their hand will not begin until the Spring of 2021. So we’re still a little ways away from seeing the proposals that the key parties to this proceeding, like the Investor Owned Utilities (PG&E, SCE, SDG&E), solar and storage advocates such as SEIA, CALSSA, Vote Solar, and ratepayer advocates like TURN) will submit.

While the outcome for the new successor NEM tariff is anyone’s guess at this point, some industry policy folks are starting to speculate. We think it is safe to assume that the value of exported energy will get reduced, with debates over income-based utility charges also influencing rate design. How much and the mechanism for how exports get valued remains to be seen. Based on the findings from the lookback study, it seems like the reduction in export value will be more severe than what happened when NEM 2.0 got implemented. In NEM 2.0, non-bypassable charges, which are volumetric charges that must be paid on all imported energy and cannot be netted-out by exports, only equated to roughly $0.02 to $0.03/kWh.

Given that the value of exports will almost certainly get reduced, we expect that to be bullish for energy storage as America goes electric and load shapes evolve. Energy storage attachment rates with solar are already steadily rising in California. By the time NEM-3 starts getting implemented, likely in 2022, we think storage attachment rates will likely escalate further.

We would not be surprised to see future storage attachment rates in California look like the Hawaiian market today, which are upwards of 80% for certain types of customers and applications. Two big questions on our mind are: (i) will the NEM 3.0 rules be different for different customer class: residential, CARE (e.g., low-income or disadvantaged communities), and commercial & industrial; (ii) will the CPUC introduce some sort of glidepath or phased in implementation approach?

The outcome of this proceeding will have far reaching implications on the future of customer-sited solar and energy storage in California. The NEM-3 outcome in California may likely serve as precedent for other states, as California exports its energy policies across the West, and utility territories that are expected to redesign their Net Energy Metering tariffs in the coming years.

 

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