Hello there, solar enthusiasts! I am excited to dig a bit deeper into the nuances of recent developments in the California solar sector. A recent report from the California Public Advocates Office (PAO) suggests a significant change that could require individuals who have invested in rooftop solar under net energy metering (NEM) 1.0 and 2.0 to shift to the less advantageous NEM 3.0 rate structure.
Now on the surface, this might seem like a straightforward paperwork issue. However, if you own solar panels for your home or have considered installing a solar array for your home, this could significantly impact your return on investment. The initial premise is based on what’s known as the “cost shift” problem, where utilities claim they are incurring a cost that needs to be offset by higher electric rates because they’re paying solar users a retail price for the electricity exported to the grid from their rooftop solar arrays.
The PAO suggests shifting from NEM 1.0 and 2.0 to NEM 3.0 (otherwise known as the net billing tariff, or NBT), could occur upon the sale of a home or 10 years after interconnection. This could potentially affect the many homeowners who signed their net metering agreement — typically spanning 25 years — under the expectation that it would cover the entire lifespan of their solar array.
Highlighting another significant suggestion by the PAO, it proposes that NEM 2.0 customers ought to have their compensation rates frozen at the level at the time of their agreement signing. This effectively means the rates won’t increase in line with rising utility rates, thereby reducing the financial benefit of going solar.
Despite the drawbacks, it’s crucial to also acknowledge the silver linings associated with the shift to NEM 3.0. Interestingly, a growing percentage of solar installations now come along with battery energy storage — over half, compared to less than 20% in 2023.
Battery storage not only lends more flexibility to homeowners but is instrumental in smoothing out California’s infamous “duck curve”, which represents the daily energy generation vs consumption imbalance that the state’s grid contends with. Battery storage enables the stored solar energy to be used during peak demand hours, averting the need for inefficient natural gas “peaker” power plants.
To put it simply, transitioning from solely having photovoltaic (PV) solar to incorporating an energy management system with a battery is like shifting from a one-blade knife to a Swiss Army Knife. The latter can serve a variety of functions, including whole-home backup, peak shaving, load management, and even grid-interactive services.
However, the reality remains that existing solar users, who installed their solar arrays during NEM 1.0 and 2.0 without a battery, could face challenges if the PAO’s suggestions become enforceable. It’s another reminder that as the solar industry evolves, solar companies need to be proactive in educating their customers about the potential financial implications of regulatory changes. As a solar expert, I’ll continue to monitor the situation closely and bring you the most important updates affecting your solar investments. Stay tuned and keep aiming for that bright, renewable future!
Original Articlehttps://pv-magazine-usa.com/2024/08/26/existing-california-solar-customers-may-get-blindsided-with-net-metering-cuts/
