Solar Industry Responses to the Revised NEM 3.0 Decision Proposal in California.
The California Public Utilities Commission (CPUC) has released its proposed Net Energy Metering (NEM) ruling, which implements a net metering mechanism and cuts payments by 75% for excess solar energy fed into the grid. Based on an initial analysis, the new proposed decision would reduce California’s average export rate from $0.30 per kW to $0.08 per kW, with the cuts taking effect in April 2023.
NEM was a key policy in launching the California rooftop solar market, which has grown to a robust 1.3 million panel-covered homes, accounting for about 50% of the US housing market. It was also instrumental in launching the state’s commercial and industrial solar market.
Under the new net metering structure, payments to the grid for excess solar production will be reduced to the utility’s “avoided costs”, a tiny fraction of the retail price customers pay for electricity delivered from the grid. CPUC said the new proposed decision will result in an average payback of nine years for residential solar rooftops, based on an assumption of $3.30 cost per watt. Read the full proposed decision here.
There is still a chance to change the proposed NEM 3.0 decision after the final decision. Philip Shen, ROTH Capital Partners’ managing director and senior research analyst, said his firm expects the final decision to be made on December 15, 2022. If implemented, the “Sunset Date” or last date by which projects can submit interconnection to receive preference for NEM 2.0 tariffs would end up on 04/15/2022.
“The CPUC’s new proposed decision would really hurt. It needs more work or it will replace the solar tax with a sharp solar drop. An immediate 75 percent reduction in net energy metering credits does not support a growing solar market in California. If passed, the CPUC proposal would protect utility monopolies and increase their profits while making solar less affordable and delaying the goal of 100 percent clean energy. California needs more solar power and more solar-charged batteries, not less,” said Bernadette Del Chiaro, executive director of the California Solar and Storage Association.
“Maintaining a strong decentralized solar and storage market is critical to California’s clean energy future. The CPUC has rightly rejected proposals to impose unprecedented grid access fees on new solar and storage customers. However, additional efforts are needed to ensure a more gradual transition to net billing so that all Californians, including schools, farms and low-income residents, can take advantage of solar power and storage,” said Abigail Ross Hopper, President and CEO of the Solar Energy Industry Association.
“This is a temporary, strategic retreat from the unsustainable solar tax that CPUC and utilities have been caught trying to impose on rooftop solar owners. However, by cutting the payments that rooftop solar systems can generate by selling clean, unused energy back to the grid, this proposal will significantly hurt California’s biggest clean energy success story. A look at the changes the CPUC is proposing shows that they are on an anti-Sun trajectory.” said environmental working group President and resident of California ken cook.
“At a time when California needs rooftop solar to thrive, cutting a key stimulus without a viable alternative is risky. California decision makers need to make rooftop solar as affordable and accessible as possible so that every household with solar potential can realistically choose solar. While the revised proposal eliminates the solar tax and protects current solar customers, it will make it more expensive to switch to solar. If we are to protect the environment, our climate, and our health, we must sustain rooftop solar farming and continue to incentivize the growth of clean, renewable energy throughout California,” said Laura Deehan, Surroundings California Director of State.
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