The State of California Solar Policy

The California solar market is facing one of its biggest periods of upheaval ever and the next few months will set the fate of the industry for the next decade as the state decides the future of “net metering”. The stakes could not be higher for this 75,000 worker, $4 billion industry so let’s take a deeper dive into the forces bombarding the industry, the trials ahead, and how the industry can defend itself to make it through this challenging time.

What is Net Metering 3?

Net metering is the bedrock of the California solar market and the markets in many other states. It is the foundational concept that when a solar user sends power to the utility they get credited at a fair rate and that when they import power from the utility, they draw from that credit and lower their electric bills. That simple agreement of give and take has enabled over 1.3 million Californians to get solar, save money on their electric bill, strengthen the local grid, make the grid more resilient, reduce emissions, and create jobs. PG&E, Edison, and SDG&E have put out a proposal to the California Public Utilities Commission (CPUC) that would blow that up and collapse the industry.

The utilities have submitted their anti-solar proposal to the CPUC, and the California Solar & Storage Association has submitted a counter proposal to protect Californians ability to save money with solar. Other groups have submitted their own proposals including an anti-solar proposal from the environmental group NRDC. The CPUC is in the process of evaluating all these proposals. On December 10th, they will make their preliminary decision on what the new Net Metering rules should be and in January “NEM 3” will be finalized and the solar rules will be set in place for years to come. The utilities have relentlessly pushed the CPUC for years on this and the CPUC is likely to mainly side with utilities unless solar advocates like you speak out and sign the petition to the CPUC & Governor telling them to protect net metering.

What’s so bad about it?

Among other things, their proposal would add fees of $950 to $3,400 per year on residential and commercial solar customers including non-profits like schools and houses of worship. That alone would make a huge swath of the market uneconomic and block tens of thousands of Californians from getting solar. And to make matters worse, the utilities want to slash the credit consumers receive for surplus solar electricity sent back to the grid by 77 percent. This means that when a solar user shares electricity with their neighbor, the utility would charge the neighbor 25 cents for that electron while only crediting the solar producer 6 cents, even though the utility did nothing to make that energy.

When is this happening?

While the CPUC will make their final decision in January 2022, NEM 3 will not be implemented until Q2 or Q3 of 2022. The full details on the implementation dates and the NEM 2 grandfather will be announced in January. 

What does this mean outside of California?

Utilities and regulators from across the country are watching the NEM 3 proceeding with a close eye, so if PG&E, Edison and SDG&E win, other utilities will copy their playbook and try to get rid of net metering in their state too.

But what about California’s clean energy goals?

While California has a goal to get 100 percent of its energy from clean sources by 2045, they only count the power the utilities get from the wholesale market– it totally ignores that 1.3 million solar arrays on homes, businesses, farms, schools, churches, and civic buildings across the state. So as long as the utilities make enough big solar and wind farms they can kill your ability to get solar and still hit their state clean energy requirements. It is a massive loophole in the clean energy goals and the utilities are trying to exploit it so they can control all the power in California whether it’s dirty or clean.

How can California mandate solar on new homes and new commercial buildings but get rid of net metering?

The mandates for solar on new homes and new commercial construction come from the California Energy Commission and are based on the idea that solar saves users money and lowers their demand from the grid. But if the CPUC accepts the utilities’ proposal to slash net metering, then solar would not help users save money and the California Energy Commission would very likely revoke the solar mandate. The two commissions are independent of each other and have different missions so they are able to come to some pretty wildly different decisions about the future of solar. 

How do we win?

While things are stormy, we can win this. The utilities are leaning heavily on the CPUC and the Governor and trying to make it look like their radical anti-solar proposal is somehow good for everyone. They are obscuring the facts and trying to make it so the CPUC and Governor can’t see the simple truth: it benefits everyone when people put solar on their homes and in the community. We will win by saying that simple truth so loud and clear that it cuts through the smog and is unignorable. The best way to help make that happen is to sign the petition to save California solar and to help spread the news about this issue. With COVID, the Recall and everything else going on in the news, most people have not heard that the California solar market is on the cusp of being destroyed and you can help get them educated and engaged by sharing this post!