California solar benefits to be slashed by new CPUC regulation

Posted at 11:34 AM, Feb 08, 2023

If you don’t have solar, you better get it soon: That’s the mindset shared by several in the solar industry with changes to solar regulation looming.

Net energy metering (NEM) is the selling of energy produced from solar power systems to the power grid, owned by utilities like PG&E, at a set rate provided by the California Public Utilities Commission (CPUC), a five-member organization appointed by the governor. There have been two versions of NEM, NEM 1.0 and NEM 2.0. NEM 2.0 is the current structure that went into law in January of 2016. Now, the CPUC has approved the Net Billing Tariff (NBT), and it’s set to go into effect on April 14th, 2023.

Under NEM 2.0, if you create excess energy with your residential or commercial solar power system, the tradeoff with utilities is quite beneficial. With the new structure, solar providers say the time it will take new solar customers to pay off their new system will nearly triple. Those working in solar say these changes are very one-sided, only benefiting the utilities, but they are doing their best to evolve with the industry’s everchanging climate.

“It's no good putting headwinds on the solar market because we are challenged already to meet our long-term goals for clean energy development,” said Brad Heavner, CALSSA policy director.

Solar power is environmentally friendly and sustainable, but recent change in regulation to the industry is making it less enticing for new consumers. The new Net Billing Tariff will bring its appeal to a new low, says Mark Miller, founder and partner of AM Sun Solar in Paso Robles.

“They were allowing you to put it onto the grid and get credit for it, so you could be drawing off it at night and using that credit,” said Miller. “Now, during the day, you're putting it on, and you're getting 25% the credit of what you're going to be paying at night, so that's a great gain for them. Solar will be the generators and distributors, and PGE will be the money collectors.”

“The current is pretty close to a one-to-one trade with NEM 2.0. The future is much grimmer, right? What they're putting into effect is charging you retail, and then turning around and giving you credit at wholesale; wholesale is about 10% of the cost,” said David Raichart, co-owner of Photon Brothers, a solar company based in San Luis Obispo.

With the policy change, the solar industry continues to shift.

After April 14th, solar providers say in order to make solar financially worthwhile, battery storage will be essential. Other types of solar innovation are in the pipeline as well.

“Smart electric panels, they can be working with the grid and your home,” said Miller. “You'll be able to turn things on and off more remotely and add logic to your power usage. If you have a surplus of solar, maybe your pool pump comes on.”

The Net Billing Tariff is a California-specific policy, but Raichart says this will reverberate across the country.

“This is definitely a win for the utilities,” said Raichart. “It's going to be a win that is echoing around the country because now, if California can tax solar, what's going to stop Texas and Wyoming and Colorado?”

“It's the solar coaster, and we'll just we'll just keep riding it,” said Miller.

KSBY reached out for an interview with the CPUC and was sent their press release in response. Here’s part of their response, backing a Net-Energy Metering 2.0 Lookback Study by Verdant Associates based out of Berkeley:

“Joint Utilities claim that, by looking at all customers who have adopted NEM 2.0 through 2020, NEM 2.0 installations will increase bills paid by non-participant customers by $13 billion over 20 years. Residential net energy metering customers’ bills are lower than the utility’s cost to serve them while nonparticipant ratepayers see increased rates.”

Solar providers say that part of the utilities’ argument for implementing the Net Billing Tariff is that wealthy households are the ones benefiting from solar installation, while that cost is being passed down to those that can’t afford solar. A study released by Berkeley Lab, a U.S. Department of Energy lab managed by the University of California, shows that nearly 65% of California solar installations in 2021 were households making less than $150,000.

Your solar rates are grandfathered in for 20 years under the Net Energy Metering that was in place at the time of installation. Once that 20-year period is up, you will be placed into the current NEM or NBT structure. Miller says if your system is close to 20 years old, it might be financially beneficial to upgrade to new solar technology, some of which is two times more efficient, prior to the policy going into effect.