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rooftop solar reform is coming
The California Public Utilities Company on Dec. 13 released its proposed decision to reform the state’s net energy metering program. Courtesy photo
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State utilities commission proposes changes to rooftop solar program

REGION — One of the most pressing issues in the state’s energy policy is how to address its rooftop solar program.

The California Public Utilities Commission, or CPUC, released its proposed decision, authored by Martha Guzman Aceves, on Dec. 13, which calls for slashing payments for solar energy, pushing for more battery storage and creating a public fund to help low-income residents adopt solar.

The state utility commission will make a final ruling on Jan. 27, 2022.

At issue is a payment program for solar customers, known as net energy metering, or NEM, which was created 26 years ago to promote solar panel adoption. The program requires investor-owned utilities to pay solar customers for extra energy produced by their systems and delivered to the power grid.

In 2013, Assembly Bill 327 required the utility commission to reform the NEM program. The plan’s first round of reforms, known as NEM 2.0, came in 2016.

Now, NEM 3.0 is on its way.

Proponents of NEM, such as homeowners and solar companies, have claimed reform efforts will kill the industry, hurt businesses and add costs to homeowners.

Scott Sarem, vice president of Multifamily at Sunrun, the nation’s largest rooftop solar installer, has worked with low to moderate multifamily housing for more than a decade. Through his lens, the decision embraces the utilities by “sort of” adopting what they proposed.

In 2015, Sarem helped pass Assembly Bill 693, known as the Multifamily Affordable Housing Solar Roofs Program.

“The decision guts that,” Sarem said of AB 693. “It makes the value proposition of solar go away based on the net metering rates that folks receive. They’ve made the value of solar go down roughly 80% to 90%. They’ve made it incredibly inaccessible and not economical for low to moderate-income Californians.”

Alex Williams, a founding partner with Solar Energy Partners, said the push for batteries doesn’t make sense since the supply for batteries is thin. He said there is a minimum six-month backlog and if any significant portion of the 1.3 million rooftop solar customers join the waiting list, it will only grow longer and potentially leave them out of any incentives through the new program.

Williams said a delay would be necessary to mitigate battery supply issues, noting the market is not ready for a mass rush of customers adding battery storage.

“There is going to have to be an implementation period to let it catch up,” Williams said. “The state of California has mandated that everyone go solar (with new construction), but at the same time they want the utilities to be able to penalize you on a monthly basis for the solar that you have to install.”

However, critics and reformists, cite the unfair cost shift onto homeowners or renters without solar panels — who are paying $3 billion more per year than those with solar panels — and utility companies who want everyone to pay their fair share to maintain the grid.

Kathy Fairbanks, a spokeswoman for Affordable Clean Energy for All, a coalition of 115 groups representing low-income customers, seniors, businesses, and others, said the proposed decision is a step in the right direction.

“The solar industry will tell you the ‘sky is falling,’ but what they won’t say is that the cost of rooftop solar has dropped 70% while the subsidies have continued to increase over the past 25 years,” Fairbanks said. “Currently, Californians who don’t have solar panels are paying about $245 more each year in electric bills to cover the costs for those who do have rooftop solar. If NEM isn’t fixed, that $245 per year cost shift will grow to $555 per year by 2030.”

SDG&E, for example, pays $0.31 per kilowatt per hour to buy back excess electricity, according to a previous interview with SDG&E spokeswoman Helen Gao. The market rate is $0.05 and the excess cost is shifted to non-solar customers, which is used for upgrading power lines, wildfire mitigation and other programs, according to Gao.

Due to those shifts, the University of California, Berkeley-Next 10 report showed SDG&E customers pay an average of $230 more per year, while California Alternative Rates for Energy (for low-income customers) pay an extra $124.

As far as the latest decision, SDG&E said it is reviewing the latest NEM 3.0 proposal.

“SDG&E will reserve comment until our experts have an opportunity to review the 204-page proposed decision and evaluate its impact on our customers,” SDG&E wrote in a statement.

The CPUC’s ruling said change is coming and the current NEM 2.0 program is not meeting the needs of every customer.

“Our review of the current net energy metering tariff, referred to as NEM 2.0, found that the tariff negatively impacts non-participating customers; is not cost-effective; and disproportionately harms low-income ratepayers,” the CPUC said in its decision. “This decision determines that to address the requirements of the guiding principles and the findings related to the NEM 2.0 tariff, the successor tariff should promote equity, inclusion, electrification, and paired storage and provide a glide path so that the industry can sustainably transition from the current tariff to the successor.”

The CPUC will create a net billing tariff to balance the needs of the grid, environment and customers. The agency said the updated NEM program must be modernized to incentivize paired storage and rooftop solar but must adopt more accurate pricing.

The reform calls for a monthly residential grid participation charge of $8 per kilowatt of installed solar, which is a way for those customers to pay their fair share of costs to maintain the grid, safety projects and fund public programs, according to CPUC.

Additionally, the commission is proposing reducing solar incentives to $0.05 per kilowatt-hour from $0.31 in San Diego Gas & Electric’s territory.

The proposal includes a bill credit for net billing customers to ensure they can pay for solar and storage systems in 10 years or less through those savings. However, the credit is designed to phase out.

The plan also calls for an equity fund of up to $600 million to improve access for low-income customers distributed to clean energy programs with “strong consumer protections.”

Additionally, the new program would allow Net Billing customers to “oversize” their systems by 150% of their historical load to allow for future vehicle and appliance electrification, according to the CPUC.

“The proposal issued today … determines that NEM must be modernized to incentivize customers to install storage paired with rooftop solar to help California meet its net peak shortfall and ensure grid reliability,” the CPUC said in a press release. “The Proposed Decision (sic) adopts more accurate price signals that will promote greater adoption of customer-sited storage, which will help California decrease its dependency on fossil fuels during the early evening hours when the sun is down, and energy demand is high.”

The public can comment until Jan. 27 through the CPUC.