In October, San Diego Gas & Electric (SDG&E) requested that the California Public Utilities Commission (CPUC) approve a plan under which net-metered PV customers would be required to pay a “network use charge” designed to divide operational costs among solar-owning and non-solar-owning customers more equitably.  The proposal has raised howls of protests from PV solar installers in Southern California, who fear that the new charge will undermine the economics of distributed solar generation.  This unfolding dispute should be of interest to the energy storage community because the operational costs at issue likely include the costs of distributed energy storage necessary to regulate power on parts of SDG&E’s distribution system impacted by high levels of distributed solar penetration.

NAATBatt takes no side in the dispute between SDG&E and the solar installers, as the dispute turns primarily on questions of California law.  However, the controversy highlights a tension that will certainly be revisited in jurisdictions around the country as distributed solar generation systems and distributed energy storage systems are deployed.

The tension, of course, is between the longstanding principle in utility economics of “user pays” and the equally longstanding principle that, in order to provide a certain agreed-upon level of utility service to the general population, certain costs of providing that service must be socialized rather than borne by individually identified users.

Both distributed solar energy and distributed energy storage have attributes that make their deployment desirable to society as a whole in addition to the customers who benefit from them most directly.  A strong argument can be made, therefore, that in setting things such as “network use charges”, utilities and utility regulators should not impose the full costs of such systems on the customers who benefit from the systems most directly, but should instead be socializing the costs of those systems (or at least a portion of the costs) among all electricity consumers.

One of the challenges that the solar industry and the energy storage industry share in common is the necessity of their advocating for socializing a significant portion of their system costs.  Absent an ability to socialize a significant portion of their respective system costs, it is unlikely that distributed solar generation systems or distributed energy storage systems will ever be sufficiently cost-effective to individual users to result in their widespread deployment.  Too often, however, advocating for the socialization of costs pits our industries against utilities and consumer groups in a battle over subjective principles decided less by objective merit than by relative political leverage.

As we enter 2012, we need to develop a better approach to dealing with this inevitable tension between private and public benefit in the deployment of distributed solar and distributed energy storage systems. The solar industry and the energy storage industry need to develop a coherent theory for socializing a certain percentage of their system costs, which can be used in the jurisdictions around the country that will soon join the CPUC in having to address this issue.

Photo by NREL.