In just a few short weeks, California will decide the new rates utilities will pay homeowners and businesses for the solar power customers generate. This policy change is known as Net Energy Metering 3.0 (NEM 3.0). In previous revisions, utilities have significantly reduced the amount paid to customers, greatly reducing the benefits of solar for property owners and slowing California’s transition to clean energy. Currently, the utilities are proposing new monthly fees of $1000-$3600 per month for a 250 kW system. For residential customers, the new proposed fees are approximately $75 per month. Multiple parties have proposed to reduce the value of NEM credits by 55%-80%. While MYNT has deep experience designing solar systems that preserve and even maximize value for owners and developers, millions of Californians will be negatively impacted. Readers concerned with climate change, clean energy, and energy democracy are encouraged to submit an opinion during the public comment period open now.
What is Net Metering?
Net metering allows customers to earn credit from their utility for the electricity they generate and export to the grid. When a property's solar system produces more energy than the building is using, owners can supply electricity back onto the power grid to be consumed by neighboring customers. The utility gives a credit to the generating customer for that energy which is applied to their monthly energy bill for a savings. In most cases the energy costs and credits are reconciled at the end of each year so customers that have a correctly sized system have little to no energy costs at the end of that year.
Why would the utilities try to block California’s path to 100% clean energy?
Introduced in 2013, Net Energy Metering 1.0 (NEM 1.0) provided one-for-one credit to customers for solar power. In other words, every kWh exported was deducted from the kWh consumed from the grid. NEM 1.0 was introduced to both encourage greater adoption of solar as well as support the heavy strain that is put onto the electric grid during the hottest times of day in the summer when air conditioning use is high. Alleviating that strain was advantageous to the utilities as the other alternative to meeting that mid-day demand was to import energy at high costs cutting into their profit margins. Once enough solar was installed to levelize that demand, the utilities no longer benefited from the installation of solar. In fact, rooftop solar reduces the need to maintain the power lines because it keeps electricity in the community where it’s produced, which is the utility's biggest source of profit. There is a guaranteed rate of return to the utilities of 8%-10% for building and maintaining those power lines. In 2021 Californians will pay $9B in construction and maintenance of long-distance power lines and wildfire mitigation.
The NEM 1.0 tariff included a provision that when 5% of each utility's grid was powered by solar, no more customers could go solar. Through intense lobbying efforts by solar advocates, the cap was removed and replaced by the NEM 2.0 tariff which went into effect in 2017. Under NEM 2.0, customers are assessed “non-bypassable charges” on exported energy. These charges pay for low-income bill assistance, energy efficiency programs, and certain wildfire mitigation efforts. In effect, customers sell power to the utility for approximately 2 ¢/kWh less than the price they pay for power from the utility. In some cases, this results in a 20% reduction in customer benefit. Other charges and time of use requirements further eroded the benefits. The CPUC is currently developing NEM 3.0. Additional changes to net metering will likely result in a further devaluation of export credits and could result in new monthly fees for solar customers.
Where are we today?
Currently, 70% of voters want California to do more to encourage the use of solar power. If so, why are the utilities trying to reduce the financial incentive for property owners to install solar? For their bottom line, of course. Once enough solar was installed to satisfy the net load of the mid-day summer demand, customer solar no longer satisfied the utilities biggest issue, which is now additional power capacity from 4pm to 9pm. Battery storage will allow solar customers to store the energy they produce for use at any time, but widespread adoption is being slowed by permitting bureaucracy and supply chain issues. The utilities claim that customer generated solar is being subsidized by the current NEM policy, thereby shifting costs to non-solar customers. In fact, they are committed to expanding their profits by building and maintaining the power lines (a guaranteed 8-10%), against the state’s environmental interests. In 2021 Californians will pay $9B in power lines and wildfire mitigation. Rooftop solar reduces the need to maintain these power lines because it keeps electricity in the community where it’s produced, thereby cutting into the utility's largest source of profit.
If you have been considering solar and would like to secure the benefits of the NEM 2.0 tariff you still have time. Contact us and we can assist you in getting grandfathered into NEM 2.0 for 20 years.
California is a leader in energy policy, what happens here will determine how the rest of the country sets their Net Energy Metering policies so it’s imperative that we tell our policy makers that energy independence is vital to our communities.
What Can I Do?
If you care about climate change, clean energy, and energy democracy for all Californians please sign a public comment today!
It’s easy and only takes 30 seconds to sign here: https://bit.ly/SaveCASolarFriend
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