The California Public Utilities Commission (CPUC) has released its proposed decision for Net Energy Metering (NEM), implementing a net billing mechanism and slashing payments for excess solar production sent to the grid by 75%. Based on an initial analysis, the new proposed decision would cut the average export rate in California from $0.30 per kWh to $0.08 per kWh, making the cuts effective in April 2023.
Bernadette Del Chiaro, executive director of the California Solar & Storage Association (CALSSA) said, “The CPUC’s new proposed decision would really hurt. It needs more work or it will replace the solar tax with a steep solar decline. An immediate 75 percent reduction of net energy metering credits does not support a growing solar market in California.”
NEM has been a critical policy in launching the California rooftop solar market, which has grown to a robust 1.3 million homes covered in panels, representing about 50% of the US residential market. It has also been instrumental in launching the state’s commercial and industrial solar market.
Under the new net metering structure, payments for excess solar production to the grid will be cut to the “avoided cost” to the utility, a minute fraction of the retail rate paid by customers for electricity supplied by the grid. CPUC said the new proposed decision will lead to an average payback of nine years for residential rooftop solar, based on an assumption of a $3.30 cost per Watt. Read the complete proposed decision here.
The net metered payments will be based on hourly Avoided Cost Calculator rates, averaged over days in a month with separate rates for weekends and holidays. An avoided cost “ACC Plus” adder will be applied to boost net metering payment rates as a constant for nine years and varies by utility. Low-income customers are offered a higher adder rate. SDG&E customers are not eligible to receive an adder.
The proposed decision comes after a year of rulemaking battles waged between investor-owned utilities and rooftop solar advocates, including environmentalists, employment and labor groups, small businesses, and concerned citizens. A year ago the proposed NEM 3.0 was introduced as CPUC determined rooftop solar customers cross-subsidize customers who source their energy from the traditional centralized power grid.
CPUC determined that the NEM 2.0 structure “negatively impacts non-participating ratepayers; disproportionately harms low-income ratepayers; and is not cost-effective.” These assumptions, which were determined by CPUC in a “Lookback Study” have been challenged by the rooftop solar industry. CALSSA said a number of the study’s assumptions are flawed, and the source code necessary to investigate or replicate the study’s main conclusions is not provided. It said the CPUC also failed to make the Lookback Study analysts available for discovery or cross-examination.
Protect Our Communities (PCF) said the Lookback Study underestimates the benefits of behind-the-meter generation because the calculator does not adequately quantify avoided transmission costs or the resiliency benefits of net energy metering solar, or account for the air quality and climate benefits.
CPUC’s NEM 3.0 decision said the new structure should, “should promote equity, inclusion, electrification, and the adoption of solar paired with storage systems, and provide a glide path so that the industry can sustainably transition from the current tariff to the successor tariff and from a predominantly stand-alone solar system tariff to one that promotes the adoption of solar systems paired with storage.”
“If passed as is, the CPUC’s proposal would protect utility monopolies and boost 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 Del Chiaro.
Rooftop solar is vital to reaching California’s clean energy goals. With the promise of battery storage for grid reliability, and new federal incentives for going solar, a wide coalition of solar supporters are calling on the CPUC to keep solar growing and affordable for all Californians. More than 160,000 people submitted comments to the CPUC and Governor Newsom calling for a strong NEM-3 decision, the highest count in CPUC history.
“We urge Governor Newsom and the CPUC to make further adjustments to help more middle- and working-class consumers as well as schools and farms access affordable, reliable, clean energy,” said Del Chiaro.
Oral arguments, limited to three minutes, will be held by CPUC on November 16 10 a.m. to 12 p.m. PST. Register to view the proceedings here.
This is a developing story. More pv magazine analysis, industry reaction and updates to the rulemaking procedures will follow.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
Taking away a subsidy is one thing. The solar tax was another, and I’m glad that’s gone. Generally I’m fine with the lower net metering payment as long as the “avoided cost” rate means avoided cost assuming fully renewable energy. The avoided cost assuming, say burning oil or coal plants wouldn’t make sense given the ultimate goal is supporting cost effective but net zero carbon electrification.
That would keep rooftop solar in the game, particularly with home storage added. And it keeps the utility’s feet to the fire as far as switching to renewables.
John, I looked at this back in 2007 and started building my own off-grid solar panel system with deep cycle lead acid batteries and the battery replacement costs add up to $100.00 per month when prorated over their lifetime. The solar panel system today costs $16,800.00 for an 8,000-watt system after the 30% Federal Tax Credit, and you do not need to grid connect to get that 30% and now that includes the batteries as well. Today’s lithium Ferus phosphate batteries will last 12 years rather than just 6 years for the lead acid batteries and the 30% tax credit make them worth the investment in going “off-grid”. The Solar panel system pro rates at $56.00 per month over 25 years plus the $100.00 per month for batteries with regular battery replacements is an equivalent electrical bill per month of $156.00. For a home that uses 600 kilo watt hours per month and the utility charges 39 cents per kilo watt hour like PG&E averaging the time-of-day rates plus tier rates of $234.00 per month, $156.00 per month and power even when the grid has failed, priceless. Not supporting coal, oil or natural gas and paying less per month is a WIN-WIN.
Nicely put.
When Nevada did this, all the solar lease companies pulled out of Nevada and Nevada had to back-track and re-instate NEM payments at full value. Off grid systems, with batteries, that use up the daily allotment of sunlight will still thrive, but the loss of the customer base will continue to cost shift onto the remaining, dwindling customer base.
Net zero is nuts. Fossil fuel and nukes are the only reliable sources 24/7/365 when the sun doesn’t shine at night or especially after days of stormy weather when expen$ive batterie$ are drained dead.
Investors whose monies built out the power plants, poles and wires to connect customers deserve returns on profits from their investments…just like any other corporation investor.
Orherwise the grid will be taken over by governments to be billed in your sales, property and income taxes.
Ready for that? Didn’t think so…
And, if you don’t own a suitable roof for solar, lower your electric bill by buying US Treasury Series-I savings bonds paying 9.6%/yr and tax free at state level…or utility stocks paying 4% dividends.
Tony Seba and the 100% SWB presentation disagrees with you. It is not entirely obvious to everyone who don’t understand the technologies and cost curves, but an entirely renewable grid is more than possible, and is actually inevitable if you look at interconnection queues throughout the country (90% solar + storage). The investments have been made and the race is already over
Commercial Solar and wind systems must be pared with storage for energy after the sun sets and even at the fabulous rates of installations, at even that rate of construction, it will be 2070 before we get to 70% renewable. Going with a rooftop off grid solar system, I was there in 2018 buying only 30% annually from the dirty utilities.
When it comes down to it, it is all about the money. if under NEM 3.0 the payback is in 9 years and off-grid with solar panels and batteries payback is 7 years for the first set of batteries and three additional years for the second batch of batteries after 12 years, the bottom line is how much does a utility charge for their regular electricity? In California, where electrical rates are in excess of 36 cents per kilo watt hour with plans to be over 40 cents in three years, payback under NEM 2.0 was 5.5 years and under NEM 3.0 is 9 years, adding batteries but going “off-grid” will have a faster payback over 25 years than staying connected and getting slammed on every kilo watt hour one puts onto the grid under NEM 3.0 as written. Convicted of murder, PG&E is able to charge ratepayers for any settlements their victim’s get from the courts and that is why the rates in California are so high. Why do we boycott and sanction Russia for murder in Ukraine yet condone and pay bonuses to PG&E for Murdering Californians. Go “off-grid” and stop paying the killers for their killings.
“Net zero is nuts. Fossil fuel and nukes are the only reliable sources 24/7/365 when the sun doesn’t shine at night”
Right! If only there was a way to store energy, right?
I have a dream… some day society will invent pumped hydro, flow batteries, lithium batteries, compressed air, flywheels, electrolysis to produce and stockpile hydrogren, converting captured hydrogen to biofuels..
Oh wait… these technologies all already exist.
“Investors whose monies built out the power plants, poles and wires to connect customers deserve returns on profits from their investments…just like any other corporation investor.”
Since when are investors guaranteed a rate of return, or profits on their investments? Oh my goodness, what an uninformed opinion about finance. (It kind of makes sense that you recommend treasury bonds, as these are not investments but rather debt, and do offer guaranteed returns.) You put your money at risk when you invest in equity, there are no guarantees.
If that were even remotely true, then sign me up for a guaranteed profitable return on my investment in my rooftop solar array. My utility made a deal with me, and they are trying to back out.
NEM in Liberal Politics states like Cali is starting to mean “Not Enough Money” to make a difference by going rooftop solar.
30% more efficient and reliable utility scale solar and wind farms are managing carbon reduction just fine where it makes good economic sense to their investors and customers…and not just to eco-maniacs and their touchy feely politicians.
Consider GREEN-Back $olar alternative$:
1. Put $20,000 into municipal bonds paying 4% Tax Free returns to lower ALL your bills $800/year.
2. Or $10,000 in I-bonds per individual/yr for $960 in annual compounded I-bond interest.
Nothing to install or maintain! AND your investment doesn’t decay over time like solar panels, inverters and batteries. Plus it goes with you if you move and to heirs when you get beamed up.
Otherwise move to Florida where Gov DeSantis vetoed NEM-cutting bills to make Duke, TECO & FPL keep paying solar customers kWhr per “Excess Solar kWhr” INCLUDING 18% utility taxes and fees…for 10kW rooftop arrays like mine.
For many saving $ is not the point. It can be argued that one should not look at ROI for solar + battery; rather, view it as a choice of how to spend. Say I will spend $40,000 on a car (energy). Do I want to spend it on a Ford (IOU) or a Mazda (solar + battery)? Depending on my values and preferences a choice can be made. ROI does not need to be the deciding factor.
Nice to see such quick representation by the energy company reps in the comments.
Some of us know your plan will dictate $.08/kwh put into the grid, but then assess the give/take hourly, ensuring you’re able to bill customers some of each hour, while raising the consumer price of electricity by $.15/kwh over the next 3 years (if you continue raising rates at the same frequency as you have the last 3 years).
Bait and switch, next thing you know in 5 years I’m paying more to the utility with a $40k 15kw system than I am today with 0 solar, while ensuring rooftop/batteries is completely unaffordable to low/middle income families.
That is why going off-grid with a self-contained system with a transfer switch to go back to the grid only to charge batteries on dark days and long nights is the way to go. The only sure way to break the chains to Coal, Oil or Natural Gas is going off-grid. NEM 3.0 is the boot in the b… that will make that happen.
Cali just coughed up funds to refuel Diablo Canyon nukes for 20+ years while their Governor Given Nonsense was telling citizens not to charge their Teslas. Hmmm.
And Illinois (50%+ nuclear powered since the 50s) coughed up $700-million to have Byron and Marseilles nukes refueled for another 40 years…match that batteries!
Solar makes less $en$e the farther north you go. When states subsidize it, your electric bills may be lower, but your tax bills much higher.
It’s called log rolling like the state run lotteries that were to go to education, while the underlying education funds got diverted to other pet projects and waste.
Ah…but…log rolling is a renewable. Especially when you chip n burn em dirtier than coal…ha ha… Go Maine…
“while their Governor Given Nonsense was telling citizens not to charge their Teslas.”
That is absolutely not what happened.
The problem with an overloaded grid was due to a heat wave, and electric vehicles were actually part of the solution. The government non-mandatory request was to move usage of all elective use to off-peak hours. Nothing about “don’t charge your Teslas.” That was the Fox News hot take, completely false. In fact, electric vehicles are one of the few devices you can directly schedule the time they charge to charge outside of the short peak hour window.
So EVs were part of the solution to a problem they did not create.
“It’s called log rolling”
That’s not what log rolling means. Log rolling in the political world is when you tack one bill onto another to get enough support for both to pass when only one or neither would have enough support to pass by themselves.
Dave seems like a Fox News consumer. Lots of talking points signifying nothing. Solar makes sense when policy encourages progressive measures that eliminate emissions long term. That’s it. Illinois is still at net 100% as should the compensation be in every state. The regressive policy will result in exactly the opposite outcome that they are posturing about. Those who can afford it (upper middle class) will install battery systems, and there will be a cost shift to lower income who can’t afford to do that, because the utility will need to make up the shortfall. I know! Let’s give CPUC control over battery pricing too and charge $10,000 to disconnect from the grid.
Duke’s $750-million in 10 new 75MW solar farms underway in Florida makes good sense for their customers…98% of whom can’t or won’t afford or don’t OWN suitable roofs for solar. All will benefit from future Nat Gas savings.
However, in North Carolina, Duke is investigating small modular nukes like France developed and deployed throughout many european countries decades ago. Smart move IMHO.
There have been years, seasons and shorter periods without plentiful sun in past history for various reasons.
https://www.usatoday.com/story/weather/2016/05/26/year-without-a-summer-1816-mount-tambora/84855694/
Becoming overly dependent on one thing can lead to a disaster.
On the other hand, too much fragmentation and excess of components in a system can lower reliability…aka: micro-uitilities with internet hacking vulnerability from our enemies…or techy-braggards…who hacked pacemakers years ago.
Be careful what you wish for and regulate or mandate into operation before it’s well (6-SIGMA) proven.
FYI: I’m a retired optics engineer who’s worked on 2-axis tracking concentrated solar with 40%+ efficient triple-junction InP-GaAs on Germanium PV cells at 500 suns for earth and space applications…fifteen years ago! Cost and launch weight were drivers at the time. 500 suns concentrations would destroy Silicon PV.
What does this have to do with NEM 3.0?
If the federal subsidy offers serious money, yet still makes home rooftop photo voltaic just barely worth it, and the utilities basically capture all of the rentability of that capital investment, then what we are effectively seeing is a transfer of federal money into the utilities margins.
The avoided cost argument is specious. I produce energy on my rooftop, not wasting any land, and produce it near where it consumed. They want to compensate me per kilowatt hour at a rate that they could buy it from an industrial scale plant located somewhere two hundred miles away from the consumers.
A kilowatt hour out there is not as valuable as a kilowatt hour in here. For all the talk of how a distributed grid would be more resilient, it seems the cpuc is more concerned with maintaining the toll booth for a gatekeeper industry.
The export price has 3 components:
1. Generation charge
2. Distribution charge
3. Taxes and non-bypassable charges.
Yes, goverment is entitled to rob its citizens in the form of taxes and non-bypassable charges – understandable.
Yes, utility company is entitled to charge whatever the want for delivery – they are monopoly after all.
However, the retail customer, for the energy they generate ans sell to utility company, must be compensated at retail rate. Not ACC, not whole sale price thst utility pays to generation facility like nuclear plant. It should be the same rate they are charges to other retail customers. We must prevent the monopoly buyer of energy (utility) from msking profit on retail generators who are also thier customers.