The California Public Utilities Commission (CPUC) unanimously voted to approve Net Energy Metering 3.0 (NEM), slashing payments for excess solar production sent to the grid by 75%.
CPUC voted to cut the average export rate in California from $0.30 per kWh to $0.08 per kWh, making the cuts effective on April 15, 2023. Customers who have new systems installed and approved for grid interconnection before the effective date in April will be grandfathered in to NEM 2.0 rates.
Currently, average net metering rates range from $0.23 per kWh to $0.35 per kWh, and the new proposed decision cuts those rates to an average of $0.05 per kWh to $0.08 per kWh. This is set to be the largest cut of export rates in U.S. history, in a market that represents roughly 50% of the nation’s residential solar market.
An industry reacts
“What the CPUC did today is a disgrace and a disservice not only to Californians, but to the nation. The commission’s decision will hammer the residential solar market in California and undercut Gov. Newsom’s pledge to be the nation’s leader in building a 100% clean energy grid.” Ken Cook, president, Environmental Working Group.
“California regulators just rammed through a plan to make rooftop solar more expensive as the climate crisis spirals out of control. The commission has taken a step backward by widening the divide between those who can afford solar and those who can’t. It’s an affront to low-income communities who are hit by the climate crisis first and worst, and we’ll do everything we can to convince the commission to fix the deep flaws in its proposal.” Roger Lin, attorney, energy justice, Center for Biological Diversity.
“The California solar market took a hit last week with the reduction in solar net metering benefits (NEM3.0), hurting payback for new customers starting April 2023. It’s however a huge opportunity for the California battery storage OEMs and installers – we need more supply, lower prices, faster sales and easier plug-and-play integration. Germany went through similar NEM policy changes in 2013, driving a shift to self consumption of solar: today, storage is now paired with 90% of new German residential solar sales. And then Hawaii went through the same when NEM was killed in 2015 and there too, storage is now paired 90% of new residential solar sales. California will be no different and a US$ Trillion opportunity for Solar Installers to adopt storage quickly – only 10% of new CA solar buyers get storage today.” Deep Chakraborty, co-founder and chief executive, Enact Systems.
“The update to the new rooftop solar program is a win for all parties. Encouraging solar systems paired with batteries will provide reliability, affordability and climate benefits. We need solar. It has helped turn California into a clean energy world leader. But we need to do more. Clean energy use during the day must be extended into the evening. Solar with batteries does exactly that. It’s the next step toward a clean energy future that will improve the air we breathe, the communities we live in, and our overall quality of life.” Matt Baker, director, Public Advocates Office.
“More than a hundred thousand citizens of California protested the PD. The PD included two absolutely barbaric features: a grid access charge and a plan to impose the harsh new conditions retroactively. It also had a third barbaric feature: slash and burn export compensation. The authors of the PD caved in and removed the first two barbaric features. But they left the third, continuing to push the disingenuous “poor-to-rich” cost shift argument. They continued to use DSM cost-benefit tests to evaluate rooftop solar. Those tests are irrelevant since the utilities are not providing any financial incentives to install rooftop solar panels, unlike DSM, where the incentives total $1.5 billion annually. A few strident voices are pushing a tiresome argument that NEM is about the survival of the solar industry. That is not the issue in customer minds. Customers want to lower their energy bills, which are shooting through the roof.” Dr. Ahmad Faruqui, economist-at-large and rate design expert.
“Solar advocates are proud we were able to fight back against the most egregious attacks on rooftop solar the CPUC included in earlier proposed changes to net metering. We stopped a discriminatory solar tax and protected current solar users from a broken deal. Still, the changes to net metering approved by the CPUC are a step backwards when we really need to be moving forward with solar and battery storage. It is a dark day in California when the utility regulators try to block out the sun. The solar movement will continue looking for ways to keep rooftop solar growing and affordable in California despite this setback,” said Bernadette Del Chiaro, executive director, California Solar and Storage Association.
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