The California Net Energy Metering (NEM) 3.0 proposal is set to be decided upon on January 27th, and many are calling the policy a potential death blow to the California solar industry, with one grid expert even dubbing it a “proposed dystopia.”
The proposal calls for a slashing of payments to homeowners for their excess solar generation, reducing the payment from a retail rate ($0.22-$0.36/kWh) to an avoided-cost rate ($0.04-$0.05/kWh). The reason behind this change is to fix a growing problem of a cost shift that solar customers (particularly ones without energy storage) dump onto non-solar customers. Payments to solar customers for excess generation at the retail rate creates an increased cost for utilities, which is then spread among all customers in the form of rising rates.
While this is damaging to the value of non-battery solar, existing customers on NEM 1.0 and 2.0 are grandfathered in to their old rates for an additional 15 years. New solar customers face a rate structure where it doesn’t make much financial sense to buy a system without a battery. Batteries represent a significant increased cost, and while they offer savings from smart import/export rates, are supported by the SGIP rebate, and offer backup power, the picture has worsened for prospective solar shoppers overall under the new rates, said informational site SolarReviews.
Image: SolarReviews
Andy Sendy of SolarReviews joined pv magazine to discuss the findings of a recent survey of 4,000 actively shopping solar customers in California, and the results were damning. It found that under the proposed net metering payment changes, 68.4% of people actively considering going solar said they would no longer be interested.
However, the rate change was not the worst element of the proposed decision in Sendy’s view, and SolarReviews website reflected that sentiment. The proposal also calls for an $8 per kW grid participation charge, or as Sendy calls it “a tax on solar customers.” This means each month a solar customer with a typical 8 kW system would pay $64 every month just to be connected to the grid.
The survey’s results spell doom for the California residential solar industry: 95.4% of respondents said they would no longer buy solar under a decision that lowers payments and adds a grid access charge.
Sendy said that this solar industry-killing proposal is built off false assumptions, and the California Public Utilities Commission (CPUC) use of a 2013 grid study to justify the plans is outdated and misguided. He said that if the grid access charge is meant to pay for the cost-shift created by NEM 1.0 and 2.0 customers, it will struggle to generate revenue if nobody wants to buy solar anymore.
For solar shoppers interested in understanding how the NEM 3.0 would affect the economics of buying solar, SolarReviews has integrated the assumptions from the proposed decision into its Solar Calculator.
Batteries
Another area of concern for Sendy is that the proposed decision is agnostic to new customers whether they have a battery attached or not. He believes battery-attached systems should be treated differently, as they minimally affect the cost-shift problem that standalone solar causes through import-export rates.
Image: SolarEdge
Image: SolarEdge
Batteries even help reduce costs for the grid, and thereby Californians at large, said Sendy. As electrification of appliances and vehicles commences, and more generation sources enter the grid, a need for upgraded transmission and substations is created. A substation comes with multi-million-dollar upgrade cost, which would then be shifted down to Californians in the form of rate raises.
Sendy said, rather than upgrade the grid and penalize prospective solar owners, why not incentivize batteries? Batteries lessen the need for localized transmission, making the grid more flexible, and reducing the need for substation rebuilds.
Sendy said he’d like to see the $8/kW charge reduced or removed, or only placed on new solar customers who decide they do not want battery energy storage. “For solar to become the dominant energy source, we need to accept that storage is an essential piece,” said Sendy. He suggested the SGIP rebate, which lessens the cost of a battery, to be increased to $350/kW to encourage more storage.
In a state facing increasing extreme weather, wildfires, and blackouts, due to rapidly growing energy demand, an investment in batteries would improve resilience for Californians.
New construction solar mandate?
Another chilling possibility Sendy sees as a result of the proposed decision is its negative impact on the California mandate that requires solar on all new buildings. He said because of the very poor cost picture, builders would likely integrate a very small, maybe 2 kW, “token” system that keeps the building in compliance with law. These small systems would represent a lost opportunity for a state pursuing steep decarbonization goals.
In a recent statement, Governor Gavin Newsom said that there is still “work to do” on the proposed decision, indicating that there is a possibility the proposal is changed in some way.
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I originally built an Off-Grid battery system for my home back in 2007 and kept adding to it up until it was 8,000 watts of solar and 40 KWhr of real lead acid battery storage. Based on a modern RV battery based electrical system, I added a 12-volt wiring system to my home and placed inverters at every point I wished to up-convert to 120-volt AC power. Today, it powers 1/2 of my home’s electrical needs from air conditioning in the summer to electric heat in the winter plus lights, refrigerators, microwave and toaster ovens. off-grid. I did this because my home was in Tier-5 of the old PG&E tariff system that charged 48 cents per kilo watt hour for all usage above 900 kilo watt hours per month. I cut my bill by 70% when I reduced my monthly utility use from 1200 Kilo watt hours to 600 KWhr. No connection charge, no fees, no trying to send them power…Just Savings. If you do not plan on sending the utility any of your power, do not sign the NEM-3 agreement and only buy what you need from them in the winter. You can get even greater savings by using your off-grid battery power from 4:00 PM to 9:00PM then switch back to the grid using Uninterruptable power supplies plugged into timers on your wall 120-volt utility fed receptacles.
I agree with the survey results as a solar wannabe. There is no incentive for me to go ahead if there’s a fixed rate grid connection charge, particularly because I want to heat the house using a heat pump which would require maximizing the array size (and the resulting fixed connection charge under current proposals) for peak winter use. Use of heat pumps also reduces the burning of gas, surely also an aim for California, which current NEM 3.0 doesn’t seem to do anything about?
So how to solve the over-generation during daylight and need for energy in the late afternoon demand ramp peak hours?
First – Don’t touch the grandfathered systems. Those customers took the risk, paid the the high system costs etc. Fix with actions for new potential customers such as myself with a revised NEM 3.0 along the lines of my following proposal. As new solar customers we shouldn’t expect to get paid for delivering unwanted energy.
Second – Don’t pay for solar energy put on the grid by new solar customers during off-peak daylight hours for NEM 3.0 onwards, not even at wholesale rates. Instead pay full retail rate for 4pm-9pm energy delivery from consumers’ behind the meter batteries – incentivizing what we want rather than punishing what we don’t. Full retail is appropriate because its when the grid needs the energy and the demand is created predominantly by consumers not industry, so energy supply occurs broadly where the demand is. No need for massive infrastructure increases to move energy.
Rationale – California is pushing for TOU for energy consumption, so it seems logical to also remunerate customers based on time-of-delivery (TOD) energy supply. It doesn’t seem like it should be a problem to record time and amount of energy delivery from customers?
Also incentivize more car charging during daylight off-peak hours, when solar is at its maximum output, to reduce the existing duck curve problems. If the latter becomes so successful that more energy is required in some long distant future, as the consumer and commercial fleets become dominated by electric vehicles, then revised NEM 3.0 onwards customers can be paid for energy delivery during off-peak times.
Long-suffering rate payers are tired of these absurd solar subsidies. Hope NEM 3 passes and covers all residential solar
With a user name of MisterMr. you are obviously a troll.
The whole subsidy rhetoric is such a joke. The main utility company in UT tries to use that argument and it’s so easy for us to poke holes in it.
First of all, based on the utility’s own language and numbers used in their argument, any homeowner using fossil-fuel grid energy that is a low-energy user (less than 4,000kwh/year) is being subsidized because they don’t pay enough into grid maintenance fees (which is not being spent properly by the utility companies).
Second, based on the rate structure here in UT, the connection fee for those who live in the city vs the country is The Same. This means that those who live in the city are subsidizing the delivery fee to those who live in the country.
Third, for UT, which is experiencing a large home building boom, every home that goes solar allows a new home to be built without putting an additional burden on the grid.
Then there are the economic and environmental benefits that distributed generation brings to the state’s economy as opposed to a monopoly-owned, conventional power-producing company.
Then there are the self-reliance and resiliency benefits that Distributed Generation brings to a local area. The inclement weather that disrupts the grid is just getting started.
I could go on and on but I find most trolls ignore facts!
A good example of what this country has become. We all believe in fighting climate change but not even in California are we willing to pay the price. This is consistent with our attitude toward our infrastructure, better falling bridges than new taxes to fix them. Our system which is not a democracy and never was intended to be one is a total failure. If even Gavin Newsom goes along with this scheme what hope is there for the country?
Only a fool would install grid tie, today. Or maybe the ignorant. Even places that had favorable or net metering are changing the deal. There are better options. A hybrid system or a Zero Export Grid Tie with battery would be the practical way to go. The power company doesn’t even need to know you have it, so there are no special fees or extra metering. Essential circuits of my house, plus a/c, are powered by a conventional off grid system. Other loads are partially covered by a battery ZEGT system. The power company should not be able to charge you for not using their electricity.
That is what I built from 2007 to 2018 because I felt that generating to the grid with my “Green Energy” then buying back “Dirty Fossil Fuel Energy” defeated my goal to be totally green. I was not until “East Bay Community Energy ” took over as the energy supplier and claimed they use hydroelectric contracts to supply customers at night and solar during the day that I added my “Tesla Solar Glass Roof” and exported my unused energy to the grid. ” East Bay Community Energy” also offered 10 cents per kilo watt hour true up compensation at first but the PUC made them cut it back to just 3 cents in April 2021. Now they are giving away all the profits from the 3-cent true up to non-profits organizations and offering discounts to the poor with my excess power. They are also providing “battery backup” to those with medical needs all from the true up profits the PUC said they could not give their solar customers. At least it is not lining the executive pockets at PG&E.
If you grid tie at all, even with supposed zero-export, the utility needs to know for the safety of it’s line crews.
If you have solar in denser populated areas, the permit inspector needs to make sure it was done right and no corners cut. People do some pretty sketchy stuff (see drug grows). Neighbors don’t deserve to get their homes burnt down.
But, I agree, there should be a legal and safe (inspected) option to install no-grid solar (battery backup, etc.) without paying the utility if one isn’t connected to them at all. But once you connect, you need to pay the full infrastructure fee, even if you use little or even no power.
Home back up power has been done with gasoline, LP gas or even natural Gas for years. What is required is a zero back feed transfer switch and that is what all Islanding systems automatically do, when properly installed. No back feed, no credit, no NEM-3 agreement or you can just have your meter pulled and the meter socket capped, remove the meter breaker and run totally off-grid. The other thing you can do is re-wire your house with a 12-volts or 24 volts set of fused circuits and run all you DC Solar through DC batteries and run DC fed inverters, like uninterruptable power supplies that can be switched back to the grid that are UL approved not to back feed during a power failure. Pure sine wave inverters will also work off your 12-volt DC system. This is the same system as RV motor homes use and they even make DC refrigerators, microwave ovens and DC lamps.
They won’t have to buy it until they buy their next new home. All new homes require PV and will bear the brunt of NEM 3
Or replace a roof and new permits have to be issued for the re-install of your system if you add any new output to cover the limitation of natural Gas or buy and electric car. At that time, one could consider completely off grid system as well. There is no law that says you have to buy electricity from a particular vender. Just be your own vender instead and save.
Arizona has already done this and I won’t waste my money on solar because of it. The utility companies are worried about their bottom dollar but the thing they don’t mention is even though they don’t get as much money from one customer with solar they don’t have to burn as much fuel (gas or coal) and this is just a case of greed. If you have solar and are producing power you’re making money they want. That is the only reason they want to change to NEM 3.0. If the utility companies install more solar they will do the same on their own by producing electricity for very little money but do you think your electric bill will go down when they stop burning fuel eventually? There should still be a charge for electricity but the cost for them will go away down but like I said it won’t be reflected in your bill. When companies are allowed to do this it’s because lobbyist have stepped in and we all know lobbyist don’t have our interests in mind.
Was this ever decided upon on January 27th? If so, what was the decision? If not, is there a new date?