The California Public Utilities Commission (CPUC) approved further cutbacks to the state’s net billing incentives for distributed solar and storage systems — eroding economic value of new systems beyond what California’s solar installers (and customers) anticipated.
The move is its third iteration of its Net Metering policy, referred to as NEM 3, a reversal of prior years’ policies that led the nation in solar incentives and resulted in the first million solar rooftops in sunny California, an achievement that led the nation.
This dramatic shift in policy is likely to cause a 40% decline in the California solar market in 2024, reckons the Solar Energy Industries Association (SEIA), led by Abigail Ross Hopper, CEO of the Washington, DC-based national solar organization.
Closer to the political trenches of Sacramento, the lobbying of the CPUC to come back to its senses has been led by the California Solar & Storage Association (CALSSA), led by Executive Director Bernadette Del Chiaro.
The CPUC has “caused the nation’s largest ever loss of clean energy jobs, pushing once-thriving businesses out of the state or into bankruptcy, and derailing California’s fastest and most accessible path to a clean energy future,” Del Chiaro stated in a November 30 webinar.
“Just over six months ago the Governor Newsom-appointed California Public Utilities Commission made drastic reductions to Net Energy Metering — the program responsible for reducing the costs of going solar and making California a solar leader — by slashing the value of solar energy shared back to the grid by solar homes and businesses by 70-80% overnight,” Del Chiaro observed.
This comes on the heels of changes to the state’s Virtual Net Energy Metering (VNEMA) program, which actually ends the self-consumption of shared solar PV systems at sites such as schools, farms and other facilities with multiple meters. Instead, these sites with solar systems will only earn the lowest export rate for every kWh of solar produced.
CALSSA hosted a webinar to relay the impacts on the industry.
California solar jobs in decline
With a meager NEM incentive, new solar sales are so far down that employee layoffs are rife.
“Data…shows that [solar] sales now are down anywhere from 70% to 80%, year over year,” Del Chiaro charged. “We are shedding jobs at a level that is reminiscent of the Great Depression. Because of the NEM 3 decision, we estimate around 17,000 people just lost their job in the solar industry,” she calculated.
Several solar installation companies participating in the webinar indicated that layoffs have cut roughly half of their employee head counts, since payrolls have dropped about 50%. This situation affects over 2,000 contractors active in building California’s “once thriving” rooftop solar and distributed solar and storage market, CALSSA noted.
The effect of NEM 3 for solar installers in California is akin to going from feast to famine, some said. “This is going to crush us, this is going to cut us off at the knees, and this is going to destroy our industry,” lamented Ross Williams, the CEO of Home Energy Systems (HES), based in San Diego, a webinar participant. “It’s impossible to deal with,” he charged.
Since the return on investment for California solar adoption has been decimated, some installers are leaving California, like Construct Sun. “We have had solar operations in California but we’ve recently pulled out because it doesn’t make sense for us. We have continuing operations in Nevada, Ohio, North Carolina, South Carolina and Florida, and now have plans to continue to expand on the East Coast and into the Midwest,” said Thomas Devine, the Executive VP of Operations for the Reno-based company.
Insult to injury
SEIA too, sees the CPUC as misled, at best.
“This [NEM 3] change extends the payback period for solar and storage customers far beyond what the CPUC used to justify the new net billing structure, and it weakens the grid by disincentivizing energy storage additions,” Hopper warned in a December 1 statement.
“A series of decisions by the California Public Utilities Commission are devastating the state’s rooftop solar industry. Following a December 2022 decision to transition from net metering to a new net billing structure, the CPUC has approved additional rules that make it harder than expected for solar businesses to operate and for Californians to choose solar,” reckoned Hopper.
“The CPUC has added insult to industry with a series of damaging decisions that completely change the environment for rooftop solar in California,” Hopper declared. “Earlier this month, the Commission approved rules that do not allow schools, farms, and small businesses to fully benefit from their onsite solar generation, and just this week, it disallowed solar and storage customers from using the excess energy they generate to offset utility delivery charges,” she said.
“The result of these decisions is that California’s residential solar market is expected to decline by 40% next year, and the state’s commercial rooftop sector is expected to decline by 25% from 2024 to 2025. In human terms, this drop off means thousands of jobs will be lost and California will take a massive step back in its fight against climate change, which is already impacting communities across the state,” Hopper concluded.
National impact of NEM pullbacks
On a national scale, many utilities are pursuing policies like the CPUC to slow the growth of solar, said Laura Deehan, the State Director of Environment California, who also participated in the webinar.
“We looked at the impacts of slashing rooftop solar incentives and we we found, in case after case, from Nevada to Hawaii, to local districts in Arizona, and in California, that when [utilities] slashed the bedrock rooftop solar incentive, like net energy metering, there’s a corresponding drop in rooftop solar adoption,” said Deehan.
Del Chiaro summarized the CPUC NEM 3 policy decision impact, similar to other state commission decisions in which net metering incentives have been gutted: “We really can’t handle any more harm. No more impacts to this industry — we can’t stand it,” she said.
Charles W Thurston is a freelance contributor to Solar Builder.
— Solar Builder magazine
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