As Franklin D Rosevelt once said, Today is “A date that will live in infamy.” Well that’s at least what many solar companies feel about the released decision.
Net Energy Metering is the agreement between the utility, and solar system owners/leasers that dictates the credits given for energy exported to the grid. Right now we are on the second version, called NEM (Net Energy Metering) 2.0. With NEM 2.0, customers receive essentially bill credits at the same rate in which they are charged. In other words, as SDGE raises their prices, so too does the value of their exports. Every solar client in California is used to these very generous credits that make solar systems “pencil” in almost any situation where their electric bill is north of $100 dollars. In fact, most people with bills $200 or more can purchase or lease (also known as a PPA or Power Purchase agreement) for 40-70% less than their current electric bill….many times with zero out of pocket.
And there lies the problem! Solar has gotten so attractive that the model is becoming unsustainable to the utility companies. Last December, when the first version from the CPUC was released, they put out a statement that Net Energy Metering would be changed to make sure that the new solar tarrifs would “balance the needs of the electric grid, the environment and consumers.”
In a letter from San Diego Gas and Electric (SDGE) to existing solar customers in March of 2021, SDGE wrote about the shift towards NEM 3.0 the following, which was sent to more than 200k people:
“Currently in California, electricity customers without rooftop solar pay an additional $2.8 billion more annually on their bills to support the NEM program. If the CPUC decides not to make any changes, this cost shift amount would grow to 4.7 billion per year, statewide in 10 years.”
Call me an optimist, but at least this version of NEM 3.0 is not as bad as the one that was released almost a year ago on December 13 2022. That proposal essentially wanted to tax solar exports so severely, that the payback for an investment in a solar system woudn’t “pencil” for 14+ years, up from an average of 4-5 years for most systems sold in California. They aimed to add $8 per kWh as a monthly charge (larger systems would have much higher minimum fees), and to limit the value of exports to around 5c-10c at a maximum. That version was a solar industry killer, as you can see in the links below:
After “Save our solar jobs” rallies in San Francisco, Sacramento, and Los Angeles, and immense pressure from organizations like California Solar + Storage Association (CALSSA). https://www.calcsea.org/, the governor stepped in to save the day. In early 2022 after the massive action of tens of thousands in California, Governor Gavin Newsome stepped in between the CPUC and the Solar Organizations and citizens and said, “changes need to be made” to the NEM proposal. He also said, “we have work to do” and “Do I think that changes need to be made” Yes I do.”
More marches ensued after those statements and eventually the CPUC themselves decided that they would indefinitely suspend alterations to NEM 3.0 and regroup. On February 4th 2022, Solar Power World magazine wrote, “The California Public Utilities Commission (CPUC) decided to indefinitely delay its decision on net-metering changes, according to SEIA.” SEIA is a prominent pro-solar organization in California.
Fast forward to today. The decision to revisit NEM 3.0 came as a shock to some very distinguished solar leaders.
Jason Castelhano is a General Contractor and owns Heliogold Solar, a prominent solar installer/dealer based in San Diego. “The most damaging part of NEM 3.0, is how confusing it will be to homeowners considering future solar clients” He continues, “The whole thing is a train wreck for the solar industry. How do you explain to a homeowner that you get very limited bill credits for exporting power, which decreases with time as energy rates rise? Frankly, I hope the governor steps in again and comes up with something reasonable, which this proposal is not.”
Jake Hess is the owner of the Solar Academy & founder of SolarCon, he is a very prominent figure in the solar world. In talking to Jake today about the big news on NEM 3.0 he said, “I find it fascinating that Californa passes laws aimed at reducing emissions, while not doing everything they can to support rooftop solar.” He goes on with his own hypothesis on what NEM changes should take place if needed, “to supplement the utilities as we move as a country toward renewable energy, I could understand higher non-bypassable fees for grid connection.” He continues, “However, taxing exported solar energy credits, or assigning less value to them than utilities want to collect is not fair.” As usual, we tend to agree with Jake!
Our first take on the proposal released today is that the CPUC learned its lesson from the first time that they released a proposal. This one seems much more ambiguous and sounds much more like a sales pitch than the first one. They show that you will get 18c credit for exported energy, but don’t mention for how long, or if that credit goes up with time like the price for power imported to a home from the grid will! Here is their new proposal in their words:
Here is the proposal in clearer terms from solar power world online:
This proposal is scheduled to be voted on at the next CPUC meeting on Dec. 15th 2022. If approved, homeowners would have until April 15th 2023 to have their solar systems interconnected, and grandfathered into NEM 2.0 for 20 years. If you are already in a solar contract (without a main panel upgrade) you likely wont have any issues. If you are considering solar, you would get much better value moving forward now, before the value of solar exports decrease when NEM 3.0 is implemented.