Rooftop solar is considered an important part of the evolution of the electricity grid. It requires less transmission buildout than traditional, centralized power generation, is more resilient in events that disrupt the grid, and saves land.
Yet, in December 2022, the California Public Utilities Commission (CPUC) decided to pass NEM 3.0, cutting payments for exported solar energy by about 75%, adopting a utility-developed avoided cost calculator to set rates. The decision was justified based on an analysis that suggested non-rooftop solar customers were subsidizing their neighbors that decided to invest in the clean energy transition.
The provision was unpopular with solar homeowners and prospective rooftop solar shoppers, as it is expected to worsen the return on investment for rooftop solar. ROTH Capital Partners projected that demand for residential solar in California would fall by 30% following implementation of NEM 3.0.
The decision came following passionate public testimony in opposition to the rulemaking change, and well over a year of protests and pleas to block or delay the change.
While the CPUC has not addressed NEM 3.0 since the December vote, public advocates and California citizens are still actively opposing it. The latest phase of opposition is led by a coalition of more than 100 groups, which requested the CPUC delay NEM implementation in an appeal this January. The coalition included the Center for Biological Diversity, Protect Our Communities Foundation and the Environmental Working Group.
California Public Utilities Code § 1708 deems “The commission may at any time . . . rescind, alter, or amend any order or decision made by it.”
“There’s still time to fix this without going to court,” said Roger Lin, an attorney at the Center for Biological Diversity. “Failing to consider rooftop solar’s benefits to environmental justice communities makes it harder for these families to afford it, and that’s illegal.”
The coalition argued that the commission’s decision will harm the ability of environmental justice communities to benefit from solar energy, and requested the CPUC delay implementation until this concern was addressed.
“Under this plan, the gap will widen between those who can afford solar and those who can’t,” said Lin.
Read more about the benefits of rooftop solar, and why utilities may be motivated to quash it in a report from the Center for Biological Diversity.
While some argue the rulemaking decision kneecaps the rooftop solar industry, others suggest that it is a necessary part of the evolution of the grid with distributed energy storage as a feature component.
“A solar-plus-storage market is already a norm in places like San Diego, and developers should be ready for that trend to continue across the state,” said Pari Kasotia, senior director and head of policy at DSD Renewables. DSD Renewables develops community, commercial, and industrial distributed solar projects nationwide, including in California.
Motivated by this opportunity to appeal, California citizens took to the phones for several hours on a March 16 call that did not have NEM on the agenda. The callers said that NEM 3.0 opposes state mandates to keep rooftop solar growing, underestimated the environmental benefits of rooftop solar, and keeps the technology out of reach for low-income customers.
“NEM 3 condemns California to one step forward, two steps back future,” said one caller in the public comment hearing.
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Solar plus storage is definitely the endgame, and that needs to be considered in net metering programs, but that’s not what people here in CA are upset about. What people are objecting to is that the CPUC and Newsom only considered the IOU’s arguments and data in determining the speed of the transition and the value of rooftop solar in the avoided cost calculation, despite extensive independent research indicating that a phased approach and an ACC that more accurately reflects the value of distributed solar to the grid would achieve that endgame while not pricing lower income users out of the solar market by almost instantly increasing the break-even period by 50% or more
in 2007, I stared installing an off-grid system on my home powering lights first, then appliances working my way up to 50% of my home off-grid with grid back up in the winter. My bills dropped by 70% when I pulled my power draw from tiers 5 and 4 that were 48 cents and 36 cents per kilo watt hour respectively. The high tier prices were a sham and uncalled for based on energy costs and have been eliminated now, but everybody now pays 30 cents per kilo watt hour off peak time and up to 49 cents per kilo watt hour peak time. Not connecting to the grid and using just deep cycle lead acid batteries. The money I saved from not paying tier 4 and tier 5 prices helped pay for more panels and batteries and now the system is paid off. Connecting to the grid is unnecessary to self-generate and run your home. Buying only what you need and don’t produce yourself will save money because I proved it. The only addition cost is buying replacement batteries at the end of life and for 80 deep cycle 100-amp hour batteries it is about $100.00 per month. Bringing $300.00 electric bills down to $100.00 per month plus battery replacement of $100.00 per month is still a savings of $100.00 per month from the $300.00 a month I was paying. NEM 3.0 will push everybody either away from solar or to self-generate and go off-grid.
The poor won’t get a break because the poor won’t be able to go off grid if they take the government handouts of free panels and will get the value cut by 75% so the utilities are going to cash in and take it all in the end. The tiered system was proposed by TURN, giving small households, that use under 300 kilo watt per month, a deep discount plus they could also apply for the CARE discounts. The middle class was hammered by TURN and that is why so many middle- and upper-class homes went with grid tied solar under NEM 1.0 and NEM 2.0. NEM 3.0 takes aim at the middle class again but now going off-grid is and option and the only ones left paying the bill for the infrastructure will be the poor and apartment dwellers that cannot install off grid solar.
Although I agree California needs to move from NEM 2.0 to NEM 3.0 simple for the reason that California energy providers and consumers need to install more storage solutions to capture solar energy during the day to use in off peak periods. The solar energy I “bank” at noon may be clean, but the energy I use at 6pm comes from mostly fossil-fuel plants.
What frustrates me is the fact that the State of California allows PG&E to continue to make BILLIONS in profit annually. Look it up! PG&E alone reported a net profit of $1.8 billion in 2022. The profits of these utilities need to be capped or the utilities should be required to install battery storage solutions to handle the power problems they complain are caused by “rich” households who can afford to install solar.