What to Watch in San Diego Solar: DER Development
If you’re a residential solar panel owner in San Diego, or you’re thinking about becoming one, here’s a name to know: Distributed Energy Resources, or DER.
The term represents a promising new wave along a paradigm shift occurring in energy generation and consumption. You might ride that wave to a secure, more cost-effective energy future.
San Diego solar energy consumer — a little background first:
Big Change for Power Utilities is cimming. We don’t need to go as far back in history as the Edison age, but the business model of the energy industry actually does. For more than a century, utility companies have operated on a one-way street. Basically, traditional electric power flows from generation at a power plant to electrical load — a catch-all term describing electrical components, such as circuits that use electricity to power your appliances or the lights in your home.
It’s been a straightforward business concept, made possible by predictable consumer demand. Utilities have pretty much figured out how much electricity their consumers use. They deliver the amount needed by their customers, and those customers pay for it.
Today, technological advances are taking utility companies through a 180-degree turn. With residential solar panels in San Diego, and other smart technology, consumers can make more informed decisions about the amount of energy they use and when they use it. They can become their own producers of electricity. That capability shifts residential solar panel customers from mere consumers to energy “prosumers” — proactive power users who also produce electricity that they can sell back to the electrical grid.
With solar power, San Diego energy prosumers open the usual one-way street to a two-way flow of energy.
The Give-and-Take of Residential Solar Power
The two-way concept begins with power created by a home solar system. Electricity generated by residential solar panels in San Diego is connected to the power grid and credited by a local utility company, such as San Diego Gas & Electric, to home solar panel users in real time. When excess power is generated by solar panels, the surplus is fed back to the grid and distributed by the utility.
As a home’s solar energy production offsets its electricity use, the utility credits the home for the surplus electricity generated, allowing the home’s meter to essentially run in reverse. The amount credited equals the retail price paid when electricity is used solely from the grid.
Incidentally, for the last decade, the billing process used by California utility companies to reconcile the electricity consumed by a solar-equipped household and the power that that home distributes through the grid has been called Net Energy Metering. The Net Energy Metering mechanism has amounted to an annual true-up between the homeowner and the utility that sorts out how much is due to the utility if the home uses more electricity than it produces in solar power (after credit for back-to-grid contributions). For San Diego solar panel users, changes to Net Energy Metering will go into effect as early as July. While existing San Diego Gas & Electric customers with solar-powered homes will benefit from grandfathering, new residential solar power users face additional fees. Read more about changes to Net Energy Metering rules here.
San Diego solar homes, and businesses that are reducing their dependence on the grid by generating their own power with renewable solar energy are changing the game for the utility industry.
Imagine the give-and-take of a single home’s solar energy production — giving surplus energy to the grid while supplementing solar power with grid-supplied electricity — on a broader scale. Officials at the California Independent System Operator, or ISO, that run the state’s electric grid, see the vision and are turning imagination into reality with a plan for decentralized energy production throughout the state.
This is where DER comes in. DER is a term used to describe small energy suppliers and power sources that are located close to places where electricity is used. The DER concept differs from large, centralized utilities not only in location, but also in cost-effectiveness and flexibility. DERs that use renewable energy sources like solar power in San Diego don’t incur the major expense of power plant construction or transmission line maintenance. Because they distribute power among resources, the technologies that support them, offer real-time response to electricity needs. DERs avoid the problems of outages caused by downed power lines or blown transformers, and they can respond to power surges that cause brownouts far faster than a utility could ever expect to achieve — potentially within minutes.
DERs are poised to meet growing energy demands by supplying vast power resources to the grid, cleanly and efficiently. They’re among the fastest-growing energy sources across the country. According to Navigant Research, a consulting group that analyzes global clean technology markets, solar power represents the most prevalent energy source among emerging DERs.
Companies can serve as DER providers (called DERPs), but so can a rooftop solar panel system on a home or business, a small-scale wind turbine, an electricity storage system, or even an electric car. In California, development of the smallest of DERPs, such as individual homes, has been sidelined by requirements set by the state’s wholesale energy market. To participate in the wholesale market, DERPs must contribute a megawatt minimum (0.5 MW) to the grid, a tough-to-meet threshold for many individual DERPs.
You Might Become a Power Plant
California, a recognized leader in clean energy technology, has set out to change the DERP equation. In June 2016, the state’s ISO gained approval from the Federal Energy Regulatory Commission to develop a structured plan for pushing the DER concept into the grid. Reportedly the first of its kind in the U.S., the ISO’s plan includes tariff changes that would allow the aggregation of multiple DERPs to meet the megawatt minimum for wholesale market participation. In other words, the ISO’s framework will allow small, grouped-together DERPs, including residential solar panel users, to operate like power plants and sell their excess energy directly to the wholesale energy market. Plus, aggregated DERPs could be eligible for incentives and discounts on power use.
While elements of the plan could be in place by 2017, participation won’t be as easy to plug in. All DERPs, even combined ones, will be required to apply for ISO certification and will be subject to ISO metering, monitoring, and other rules. The ISO plan’s progress is subject to federal review within the next six months and annual performance reviews for three years.
No matter the as-yet-to-be-determined specifics of the program, it’s clear that the power grid for solar power in San Diego and throughout California will undergo a redesign; and, given the rapid growth of solar panel installations in the state, much of that revamp will be driven by prosumers of solar energy. There’ll be much to learn about DER as it progresses, and we at Baker Electric Solar will keep you up to speed on the latest developments.