‘Dark Day’ For California As Net Metering Changes Proposed

• CPUC's revised proposal for net metering in California proposes to replace it with net billing structure
• It is proposed to have affordability at the center, allocating $900 million funding with $630 million reserved for low-income customers
• Solar industry says it is too sudden a transition and will make payback period for solar and storage longer

The California Public Utilities Commission (CPUC) has issued a revised proposal to replace the state's very successful net metering regime for customer-sited rooftop solar segment with net billing structure, which the solar industry says will bring down export rate by 75%.

According to the commission, the updated billing structure will optimize grid use by the tariff's customers and incentivize adoption of combined solar and storage systems, while promoting affordability across all income levels.

Under the new proposal, sending solar power generated to the grid will be compensated at lower levels compared to NEM 2.0. Retail rate compensation will be ascertained with an avoided cost calculator and provided for solar and storage systems factoring in day and night supply.

It complains that NEM 2.0 tariff 'negatively impacts non-participating ratepayers, disproportionately harms low-income ratepayers, and is not cost-effective'. The proposed decision sees net metering in its present form as favoring only those who can afford solar while the net billing regime will have affordability in the 'front and center'.

The commission is offering $900 million funding to support capital costs of solar paired with storage systems and standalone storage. Of this, $630 million is reserved for low-income customers. It has also proposed to continue the current tariffs for multi-family housing and farms.

If all goes according to CPUC plan, the new billing structure will come into effect from April 2023.

However, the proposed decision has met with criticism from the solar industry that believes it will slow down the growth of solar in California that has installed over 12 GW distributed PV over 20 years thanks to the net energy metering. The industry claims big utilities are trying to eliminate a growing competitor in solar to maintain their monopoly in energy supply by blaming it for being expensive.

Basis initial analysis of CPUC decision, the California Solar & Storage Association (Calssa) points out that the new regime will elongate the payback period of solar and storage systems by years. "Today, California is installing roughly 30,000 batteries compared to 200,000 solar systems. With high costs, supply chain constraints, inflation and permitting and interconnection delays and challenges, it will take years before the storage market can match the solar market," it explained.

Calssa Executive Director Bernadette Del Chiaro called the proposal a 'loser for California on many levels' that puts clean energy 'further out of reach. It is a 'step backwards' when the need is to move forward with solar and storage. "It is a dark day in California when the utility regulators try to block out the sun," said Chiaro.

Vice President of State and Regulatory Affairs for the Solar Energy Industries Association (SEIA), Sean Gallagher called out CPUC for the transition from net metering to net billing too abrupt.

He explained, "While the proposal provides some support for schools and farms to invest in solar, the failure to adopt a more gradual transition to net billing risks putting solar out of reach for millions of residents across the state. This comes as climate-related disasters continue to intensify and the electric grid remains vulnerable to aging infrastructure and volatile global energy markets."

The commission's decision would have come earlier if it was not for the solar industry's objections to NEM 3.0 as it was labeled previously (see California's NEM 3.0 Stopped In Tracks).