Progress on On-Farm Renewable Energy Policy

Posted on Tuesday, April 8th, 2014 by

Russ and shellsCalifornia has an international reputation as a leader in renewable energy policy. Thanks to effective policy decisions and incentives, the state more than doubled its distributed renewable energy production in 2013.

CalCAN is proud to have played an important role in helping safeguard California’s renewable energy leadership in recent months, representing the interests of farmers and ranchers in removing barriers to on-farm clean energy production.

Making Meter Aggregation Rules Work for Farmers

CalCAN’s work on these issues kicked off back in 2011, when we successfully sponsored Senate Bill 489: The Renewable Energy Equity Act. This bill simplified access to the electrical grid for agricultural bioenergy projects, including an innovative project at Dixon Ridge Farms.

In 2012, CalCAN worked with a coalition of agriculture and renewable energy advocates to usher Senate Bill 594 into law. SB 594 allowed renewable energy generators to use excess energy produced on one electrical meter to lower bills on other meters and properties. Authorizing ‘meter aggregation’ was to have a very practical effect for farmers who produce lots of clean energy on one parcel, but consume most of their electricity on other parcels or meters.

Getting SB 594 passed was only the beginning, however. Meter aggregation then went to a rulemaking process at the California Public Utilities Commission (CPUC), which regulates investor-owned utilities in the state.

CalCAN joined with our ag allies to deflect multiple attempts by the utilities to weaken or delay meter aggregation. Finally, in February of this year, the CPUC approved meter aggregation rules for PG&E customers. Our voices and coordination ended attempts to diminish the usefulness of on-farm clean energy and exclude deserving systems from the benefits of SB 594. We will continue to watchdog the process as farmers begin to take advantage of the new rules.

AB 327 and the Net Metering Debate

CalCAN made important contributions to another crucial CPUC ruling, issued on March 27th. That decision is being touted as a significant victory for distributed renewable energy generation in California.

Some context: Last fall, the California Legislature passed Assembly Bill 327, which addresses the Net Energy Metering (NEM) program that the vast majority of renewable energy customer-generators use to feed electricity back into the grid.

NEM is used in 43 states to credit customer-generators for the energy they produce by allowing them to ‘trade’ the electricity they produce when the sun is shining (for solar PV systems) or the wind is blowing (for wind turbines) for the overall electricity they consume. This arrangement is considered extremely successful at incentivizing the installation of smaller-scale, ‘distributed’ renewable energy systems that work to offset the power usage of a particular business or household.

However, some argue that the NEM program shifts costs to other electrical customers. AB 327 seeks to address this concern while also solidifying the need for a NEM-like arrangement to support distributed renewables long into the future.

During last-minute closed-door meetings before the bill’s passage last fall, new language was entered into the bill amidst protests from renewable energy advocates and agriculture allies, including CalCAN. This included an order for the CPUC to establish the length of a ‘transition period’ after which customer-generators will be switched from NEM to a new, yet-to-be-designed successor program. To address the supposed cost shift, the new program will provide lower long-term savings for those feeding energy into the grid.

When this language became law, it was a shock to many owners of renewable energy systems. They believed their original NEM arrangements would hold for their full system lifetime, and counted on that to assure a return on their investment.

Ag Interests Well-Represented

In November 2013, CalCAN began to weigh in at the CPUC after talking with farmer advisors who produce renewable energy. We worked to foster collaboration and coordination between CalCAN and several other groups representing agricultural interests at the CPUC, including the California Farm Bureau Federation, the Agricultural Energy Consumers’ Association, and the Wine Institute.

Together we argued that, due to the size, complexity and costs of their systems, it often takes agricultural customer-generators much longer to recoup their investment and realize savings. They also build systems in tandem with other management practices, including irrigation and processing schedules that vary widely month-by-month. Changing the rules of the game too quickly could therefore jeopardize a balanced approach to on-farm energy production and consumption.

Five rounds of detailed comments were submitted to the CPUC, in which ag and solar advocates argued for a transition period of at least 25-30 years, while the investor-owned utilities (IOUs) argued for a much shorter 6-10 year period.

CPUC President Michael Peevey wrote the final decision [pdf], which mentions the expectations of commercial customer-generators, including farmers, in justifying a 20-year transition period. We are pleased to have achieved such a strong compromise against powerful utility interests.

More Work to Be Done

Much is at stake as the CPUC now embarks on designing a successor to the current NEM program. Decisions issued in the next year will significantly impact the cost-effectiveness and practicality of distributed renewable energy generation, with broad implications from electricity costs to greenhouse gas emissions.

CalCAN will continue to represent agricultural voices throughout the process. California’s farmers and ranchers lead the nation in on-farm clean energy installations—and with wise policy decisions we intend to keep it that way.

If you would like to be involved with CalCAN’s efforts on these issues, please email Adam Kotin, CalCAN Policy Associate.

CalCAN’s comments on the NEM transition can be found at the links below:

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