Rather than trying to adjust net metering by adding fees or a new way to calculate solar's value, CPS wants to overhaul solar support structures completely. And it’s looking to the wholesale market for inspiration.

Under a pilot plan proposed earlier this month, CPS would create a competitive bidding process for residential and small commercial power-purchase agreements (PPAs). The systems would be hosted on customer rooftops but connected to the grid on the utility side of the meter. CPS says the plan will drive down pricing, help it account for fixed grid costs and also provide an opportunity to deploy smart inverters for grid support.

“Why does the wholesale market work? Because it’s so predictable,” said Raiford Smith, the vice president of corporate development at CPS. “Power-purchase agreements lock in a utility to buy a certain amount of energy and the developer gets a steady pipeline of work. That's what we modeled it after.”

Net metering also provides that needed consistency, say solar installers. However, CPS and many other utilities argue that net metering payments, which are based on retail rates, do not reflect the cost of maintaining the grid.

CPS Energy’s PPA program would set up an independent body to create a bidding platform and provide customer acquisition support for local installers. Those installers would compete to enter into long-term energy supply contracts with CPS, just as an operator of a large power plant would. Installers would own and maintain the systems, and the customer hosting the system would get a credit on their monthly bill. Installers could also bundle various projects through the third party managing the procurement.

Read more