How Much Does SDG&E Pay for Solar Power? (2019)

In San Diego, most homeowners are now on a utility rate structure with local utility, SDGE, that is called “Time-of-Use”. With this rate structure, SDGE charges different rates for power use depending on the time of day, hence the name “Time-of-Use”. They also buy back excess solar power being produced by home solar systems based on those rates, so solar power is worth more or less depending on the time of day it is being produced. There are multiple Time-of-Use rate structures homeowners can choose from, all with different rates, so homeowners do have a choice they can make based on their electricity usage.  So when asking the question of how much SDG&E pays for solar power, the broad answer to this question is that the value of electricity -- whether you're buying or selling -- changes depending on the time of day. High electricity prices are only bad if you're buying; when you're selling, high electricity prices are good. So in order to understand how we got to this point - let’s look at the history of SDG&E paying for solar, how it has evolved, and the current rate structures used to determine payment. The History of SDG&E and Solar Power When it comes to how homeowners with solar installed are billed by the utility, Net Metering was the original arrangement. Originally established in 1996, Net Metering was created to reimburse solar homeowners for the extra power their solar generated and sent back to the grid. There have been several iterations of Net Energy Metering since then, but the core idea of selling extra power created by the solar during the day for credits to zero out the electricity usage at night has remained at the core of the current iterations. Note that in these early versions, all electricity prices were based on the "tiered rate structure" which means that the cost of electricity was based on the total amount (volume) you used for the entire month. For example, 0-350 kWh was priced at 12 cents/kWh and the next 150 kWh was priced at 18 cents/kWh and so on. But with solar --- as long as you produced the same amount as you used, your NET usage was low or zero and so your actual charge was little or nothing. When SDG&E starting charging for WHEN the power was used (instead of HOW MUCH per MONTH was being used), the solar net metering rules were changed to mirror SDG&E's charges throughout the day. Net Metering 1.0 (1996 - 2016) The original version of Net Metering, Net Metering 1.0, established the system by which homeowners could sell their excess solar energy back to the utility for credit. During the day, when the Sun is high and hitting a home’s solar panels, the solar panels create more power than the home is using. With Net Metering, that excess energy goes through the home’s electric meter to the energy grid, which runs the meter backwards, crediting that excess energy to the homeowner’s account at retail price. Later, when the Sun goes down and the solar is no longer producing, those credits accrued earlier in the day are used to purchase power back from the utility.  So this balance of creating extra energy and earning credits during the day, and then utilizing those to buy energy back later at night is what creates the “offset” which allows homeowners with solar to zero out their electric bills. Homeowners cannot make money from oversizing their system and receiving extra credits, it only allows for zeroing out charges. Under California’s State Net Metering policy, Net Metering 1.0 in SDG&E territory had a cap of 5% of total peak electricity demand. That cap was hit in 2016, after which the California Public Utilities Commission created Net Metering 2.0 to ensure that the solar industry would be able to maintain its momentum. So at the time, all homeowners who went solar in SDG&E territory went on Net Metering 2.0, of which, at the time, there was no cap.  Net Metering 2.0 (2016 - Present) Net Metering 2.0 was essentially the same as Net Metering 1.0 except for a few changes. The core of it, receiving retail rate bill credits, as in, per kWh bill credits, from the excess solar power equal to the rate of a kWh of electricity, remained the same. What was changed were three things: Time-of-Use rates, interconnection fees, and non-bypassable charges. While these changes were not estimated to make a significant impact on bills, (approximately $10 a month increase) it did have a temporary impact on the local demand for solar.  Interconnection Fees Under Net Metering 2.0, every customer who goes solar has to have a representative from the city come out to do an inspection on the installation and sign off on its activation. The fee for this is $132 in SDG&E territory, and is required for all residential and commercial installations. While a small fee, it is one of the main differences between Net Metering 1.0 and 2.0 Non-bypassable Charges Also included under Net Metering 2.0 are what are known as non-bypassable charges, which are per kWh charges that are built into rates. These are mostly insignificant, 2 - 3 cents per kWh, and they go to low-income, customer assistance, and energy efficiency programs. These don’t add a huge amount to the bill, but are still there and should therefore be considered. Time-of-Use Explained With Time-of-Use, electricity costs different amounts depending on the time of day it is being used. This is due to the demand for power being different at different times of the day, and therefore SDG&E has to charge more for when there is a higher demand. These prices also apply to excess solar energy being sold back to SDG&E for credit, as in, when the excess energy is being created affects the amount per kWh SDG&E will pay for it.  You can compare Time-of-Use Rate structures to buying a ticket from an airline -- the ticket prices are variable. When they have a lot of inventory, they cut the price. When there's a Super Bowl in Atlanta and everyone wants to fly there, ticket prices go up. At least with SDG&E, they tell you ahead of time when the prices are highest: from 4pm to 9pm in the summer months, M-F. And also when they are the cheapest: from midnight to 6am. And this is true whether you go solar or not. You always have the opportunity to use less power from 4pm - 9pm and use more power overnight, if you can adjust your habits accordingly.  If you have solar, you will almost always be making more power from 9am - 4pm on most days; which means you'll be buying less from SDGE and maybe be selling more back. In order to offset the power you use from 4pm-9m, you have to make (sell) twice as much during the middle of the day, because the value (price) of the electricity doubles after 4pm (or, conversely, is worth half as much from 6am-4pm, M-F. There are multiple Time-of-Use rate structures to choose from, but the common thread amongst all of them is that there are three price periods in a day:  On-peak, when the demand for electricity is highest and prices are highest - typically in the late afternoon / evening.  Off-peak, which is when the demand is less high and prices are in the mid range - typically during the day. Super Off-peak, when demand is low and prices are low - typically at night. Prices for all these categories also differ between Summer and Winter months. So every TOU structure has different prices based on time of day and what time of year it is. They also have different terms that go along with them. Which structure you choose is based on a number of factors, including whether you have an electric vehicle or not.Time-of-Use in SDGE 2019 While Time-of-Use in SDG&E has been around for over a decade, as of March 2019, SDG&E has been switching thousands of their customers over to this new rate structure in hopes of switching all their customers over eventually. There are different types and tiers of Time-of-Use rate structures, and depending on when you installed your solar, you are subject to different options as to which one you want to transition to: Homeowners in SDGE territory whose solar was activated before June 29, 2016 can stay on the Net Metering 1.0 Plan until the 20 year anniversary of their solar Homeowners in SDGE territory who received their solar PTO before March 30, 2018 can delay the change to TOU until either five years from the date of their solar installation or in June 21. SDGE Customers who received PTO after March 30, 2018 are already on a Time-of-Use Plan Using Solar + Storage to Offset Peak Time Installing solar and accompanying it with battery storage is a great way to make the most out of your solar system and get around SDG&E’s on-peak charges. While the Sun is high and the solar is producing excess power during the day, the battery is charged with the extra power. So instead of selling that extra power back to SDG&E at the off-peak prices, it is being produced and then saved for later to be used when pulling from the grid is at on-peak prices.  That makes the value of the excess solar power worth more, and therefore, you will ultimately have to pull less power at on-peak prices and will save more money. 2019 SDG&E Rate Structures and Prices So when asking: how much does SDGE Pay for Solar Power? The answer is dependent on what Time-Of-Use plan you are on, what month it is, and what time of day it is.  Listed in the graph below are the prices for power by kWh, and therefore excess solar power, under the different plans. Remember, the Summer Period is between June 1 - October 31, and Winter is between November 1 - May 31. All of these rates are effective June 1, 2019.You should know that with TOU-DR, there is a baseline adjustment credit, which brings the rates down. Our energy consultants at SunPower by Stellar Solar recommend it for this reason.Note that we're explaining all this so you know how the rates are calculated but the bottom line is that you can work with your solar specialist from SunPower by Stellar Solar and they will advise you about how much solar you need to minimize your SDGE bill. So there you have it, the current rates for what SDG&E charges for power, and also credits for excess power generation from solar. You can see from these charts that rates vary widely based on rate structure, time of year and time of day, and they are likely to change again soon. If you’re looking to learn about what rate structure works best for you, feel free to contact us to speak to one of our energy consultants today.

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