In California, a Campaign to Take Transmission Charges Out of Distributed Energy
One of the benefits of distributed energy resources like rooftop solar is that they generate power where it’s consumed, and don’t need to use high-voltage transmission lines to transmit power. So why are distributed energy resources (DERs) in California paying for access to a transmission grid they don’t use?
According to the Clean Coalition, it’s because of the state’s outmoded transmission access charge (TAC) regime. TAC adds a charge of about 3 cents per kilowatt-hour to the 20-year levelized cost of energy in the state, or nearly one-third of its typical wholesale power costs, to pay for transmission projects.
But the state’s big investor-owned utilities base their TAC charges on the total amount of power consumed at their customers’ meters — which means they’re not measuring how much distributed energy is reducing the need for new transmission investments.
This week, the San Francisco-based nonprofit is asking state grid operator CAISO to consider a new approach: simply meter electricity at the point where utilities connect to the transmission grid, instead of each customer, to calculate their TAC costs.
That quick fix, Clean Coalition executive director Craig Lewis said, could help eliminate a “market distortion” that disadvantages distribution-grid-connected solar and other DERs. That’s a big deal for distributed energy projects competing against transmission-connected power for power-purchase agreements and other long-term contracts, he said.
It could also serve as an important counterweight to the changes coming to the state’s net metering regime, Lewis said in a Monday interview. Right now, California’s investor-owned utilities are asking regulators to reduce how much money net-metered customers get for their solar power, from the current retail rate to much lower rates based on how much energy they export to the grid.
But none of them are proposing to credit net-metered solar for their effects on reducing transmission costs, he said. In that context, “3 cents is something between a 50 percent and 30 percent adder to what utilities are saying local renewables are worth to them. That’s huge.”