California’s net energy metering (NEM) policy has been a key driver of the state’s solar deployment, incentivizing adoption by allowing utility customers to sell excess power generated from rooftop solar back to the grid for a profit. With approximately 1.5 million homes and businesses participating, policies like this have made California a clean energy leader in the United States, and even the world. However, the California Public Utilities Commission recently changed the solar-friendly policy.
The approved new framework (known as NEM 3.0) is expected to slash the rate paid for solar energy sold back to the grid by 75%. This revision significantly lengthens the five- to seven-year average payoff period for installing solar and puts the growth of solar power at risk. Californians must embrace an additional clean energy technology in order to shorten payoff periods and continue the momentum behind solar: batteries.
Under the new NEM 3.0 rate structure, the value of excess solar generated during the day is diminished. But, there is a strategically designed loophole – homeowners and businesses can maintain the value of solar power generated by incorporating a battery into their system. The battery can store excess energy for later use, including hours of the day when energy demand and prices are at their highest.
This new structure will benefit the California power grid by reducing dependence on fossil fuels during peak demand periods. As a state that commonly experiences electricity supply shortages and rolling blackouts, California has the opportunity to mitigate these issues by leveraging batteries and renewables as distributed energy resources. Further, battery systems will enable California businesses to accelerate their paths to decarbonization, which regulation will mandate in the coming years.
As demand for solar-plus-storage grows, lithium-ion battery manufacturers are racing to keep pace. However, despite the urgent need for storage as electricity prices skyrocket and grid reliability nosedives, many home and business owners remain hesitant. Lithium-ion batteries have their own risks, including rising costs and fire hazards.
In 2022, the average lithium-ion battery pack price reversed its downward trend and rose 7% to $151/kWh. As of 2021, first costs (including cost of all hardware and cost of full installation) for a 10 kWh to 14 kWh residential battery system were in the range of $10,000 to $15,000 before state-specific incentives, which is cost prohibitive for the average homeowner. Lithium is also an inherently flammable material that can make batteries a liability rather than an asset.
Lithium battery fires burn hot and fast, and are difficult and dangerous to extinguish. Burning batteries also release a range of toxic gasses harmful to humans and the environment. While it’s true California needs battery storage, it will require innovation beyond lithium for mass adoption to meet the scale needed.
The next wave of clean technology adoption must take advantage of batteries that are inherently safe and affordable. Non-lithium energy storage alternatives exist, and many more are currently being developed. These new battery technologies can help California ensure that NEM 3.0 has no adverse effects on the clean energy transition, and instead kick it into high gear.
Once deployed at scale, these new battery chemistries will serve as invaluable assets to help shape the clean and resilient power grid of the future. Much like solar panels once were under previous NEM policy, batteries will respond to and be rewarded for giving energy back to the grid when it’s most needed.
Image: Alsym Energy, Inc.
Mukesh Chatter is the president, CEO and co-founder of Alsym Energy, a battery technology company developing high-performance, low-cost batteries to enable a zero-carbon electrified future for all. He is a successful serial entrepreneur with a track record of developing advanced technology products and leading startups from launch to success. Mukesh co-founded Nexabit Networks, a terabit switch/router company, and led the company as CEO until its acquisition by Lucent Technologies. After the acquisition, Mukesh served as the vice president and general manager of IP Products at Lucent. Mukesh also co-managed NeoNet Capital LLC, an investment firm focused on funding out-of-the-box, innovative ideas.
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
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.
I wholly agree and we as a company (Crown Power, Inc, and Crown HESS, Inc.) are pushing the edges of Heterogeneous Energy Storage solutions at many GwH pace in California (and many other States), by incorporating many kinds of mechanisms and then using Ai, ML, IoT and emerging software technologies to manage disparate devices – all at the speed of light. Much robotics is at play. Come see our work in Santa Clara and San Jose!!
I use deep cycle RV/Marine lead acid batteries and have done so for the past 15 years with no problems except they need to be replaced every 6 years. Only the first install gets the 30% Federal tax credit, and all subsequent installs are on the owners tab. “: In 2022, the average lithium-ion battery pack price reversed its downward trend and rose 7% to $151/kWh.” is stated but when you divide the $7,000.00 cost of a power wall by the usable 11.5 kilo watt hours it will provide, it is more like $608.00 per kilo watt hour minus the $182.00 federal tax credit is $426.00 cost per kilo watt hour for the first install only not including labor.
“…allowing utility customers to sell excess power generated from rooftop solar back to the grid for a profit”.
This is flat-out not true. Home solar systems are paid for by the homeowners who install them — not by any utility. The amount of money that these investor/owners get from from the export of excess electricity has been priced at exactly the same price as what the utilities charge.
That payment goes to recoup the investor/owner for the capital expenditure that they had made. Note the word “they”. Just like the payments that utilities get when they charge their customers.
This article seems to be a publicly-owned utility spin.
The author and his company make money from the sale of batteries. His view is biased.
Mr. Chatter gave good information on the ramifications of the California Net Metering changes.
He labels all lithium batteries with the same label which is unfortunate. Lithium batteries (like the Tesla Power Wall amongst others) are nickel, manganese,cobalt batteries. The cobalt in particular is the element that leads to “runaway thermal events” i.e. fires. The lithium iron phosphate batteries on the other hand have no such risk of fire, are less expensive to manufacture and have longer service lives than nickel, manganese, cobalt batteries. They are heavier, but this shouldn’t be a problem in a residential installation.
It would be interesting considering the actions of the California PUC ruling to hear further information about the rise of “VPPs”, virtual power plants. Multiple companies are now coordinating residential and other sites into these VPPs and selling power back to the utilities at times of high usage, typically 6-9 PM. Even the utilities are impressed at the amount of power that can be gathered together via these VPPs.
Lithium Ion Phosphate is much safer than Lithium Ion Cobalt and they have twice the charging cycles.
This article is 100% spot-on. One of the new modular stationary battery chemistry alternatives is aqueous zinc, currently being manufactured in Pennsylvania by EOS Energy. The company is run by people with a lot of electric utility engineering experience. Their target market appears to be commercial, industrial & micro grid applications. But their basic battery design could probably be adapted to smaller residential use.
Solar parking lot canopies with integrated stationary storage batteries & Vehicle-to-Grid chargers are now incentivized & required on all existing large parking lots in France. And State Senator Josh Becker has proposed similar legislation in California. This would certainly accelerate the production of alternatives to lithium stationary storage batteries for micro grids.
The decrease in rooftop solar payments will stall adoption. The battery addition is no solution for many households.
A 75% reduction in payments is too much, at least for now. They should phase it in over 5 years and offer incentives for battery units to residential. There is more at stake than reducing/increasing payoff time. We need 24/7 renewable power. Until we have intelligent networks that can balance wind/solar/other we need to get the most we can from what we have. There is safer battery storage on the horizon and IMO, they should wait until it is here, not just almost here, before reducing payments.