My 2022 predictions came into clearer focus after the California Public Utilities Commission dropped a bomb on California’s solar and battery storage industry. NEM 3 cannot be considered net metering since new solar customers will actually be penalized for connecting under this rate. As the California solar and storage industry strives to modify this poorly-reasoned CPUC decision, I hold out hope that my predictions about the impact of NEM 3 turn out to be wrong.
1. California’s investor-owned utilities will have their best year ever in 2022
These IOUs — as they are politely referred to by California residents — will book record profits in 2022 as they raise rates, shift customer charges to stockholder profits, increase executive bonuses, and commit billions more in ratepayer funds to fix the transmission and distribution grids that they were supposed to be maintaining all along.
2. The NEM 3 transition will drive record solar installations in Q1 and Q2
As a result, customers will rush to install solar and battery systems before NEM 2 ends. And when NEM 3 goes into effect, I expect to see the biggest solar installation downturn in U.S. history.
3. Suppliers will not have stock to meet the Q1 and Q2 rush in California
We all know that supply chains are already stretched. Critical solar and storage components are already in short supply. Because of the NEM 3 spike in demand, inventories will be tight, suppliers will ration shipments, and prices may go up even more than expected in the first half of 2022.
4. New battery system suppliers focus more on technology than customer needs
As more and more battery storage companies release products, their failure to heed customer marketing requirements will derail their sales ramp up. Based on sales of existing battery systems using equipment from Tesla, SolarEdge, LG, Enphase and Generac, customers demand backup power that keeps the lights on at night, when we need lights. Duh. Customers also require backup systems that seamlessly integrate with their existing solar system. Systems that offer daytime-only backup power or cannot recharge the battery from solar during a blackout will not gain market traction.
5. Branded U.S. solar manufacturing will increase
Because of higher labor rates and component import costs, U.S. solar module manufacturing costs will always be greater than most overseas factories. To meet 25-year warranty requirements, a high degree of quality throughout the manufacturing process is necessary. Skimping on quality to achieve lower price points is a short-term strategy that often results in epidemic product failures. Deep-pocketed global module companies with well-known brands are best positioned to charge the premium prices that are necessary to support the quality level required for U.S. customers.
6. Poor data communications technology will challenge battery systems
Battery system and inverter manufacturers will continue to be challenged by unreliable communications infrastructure. Unlike ordinary rooftop solar systems, energy storage systems demand reliable and relatively fast communications. Any weak link from the battery to the inverter to the cloud and back to the customer’s cell phone will limit customer satisfaction and increase support costs. Other smart home technologies are plagued by these issues, which is why the Connectivity Standards Alliance is promoting a new standard called Matter.
7. Shortages of battery installers and technicians will slow down deployments
Although battery equipment shortages are likely to persist, the shortage of trained battery system electricians — especially those with computer expertise — will delay the widespread rollout of home and business energy storage systems. Not only do these energy storage systems require much more electrical wiring to provide backup power, they also require onsite datacom wiring and troubleshooting skills, as well as the aptitude to configure dozens of operating mode options on a cellphone app.
8. Small or unknown battery system manufacturers will not gain market traction
I get almost as many daily e-mails from small lithium-ion battery suppliers as I do from companies offering me solar leads. Unfortunately, these small suppliers do not have the quality reputation, balance sheet and systems expertise to meet the needs of customers who demand a 10+ year system guarantee.
9. Smart load control systems will become standard equipment
The typical home uses 30 kWh/day, with peak power demands often exceeding 25 kW — which is common if your EV is charging when you are cooking on a hot summer day. A typical 10-kWh battery connected to a 7.6-kW inverter cannot meet these energy and power requirements. Unless circuits are re-routed into an essential load panel, the only other way to provide reliable backup power is by automatically shedding loads during a blackout. Smart load control systems, either for every circuit or only the largest circuits, are the best way to ensure a good customer experience during extended blackouts.
10. PV module power capacities will increase until modules get too big to carry up a ladder.
Although efficiencies have increased slightly, most of the power increases are a result of simply increasing the size of the modules. 66-cell 450-watt residential modules are on the horizon. Higher-wattage modules require fewer module power electronics, less packaging and fewer racking components. However, these bigger modules are more difficult to transport to a roof, and also reduce roof coverage area.
Our industry cannot do much about COVID and other unforeseen black swan events. Nevertheless, we must be prepared for accelerating attacks by fossil fuel companies and utilities intent on limiting deployments of behind the meter solar and storage. Industry advocacy groups such as SEIA, CALSSA and Vote Solar are essential — but are no substitute for high volume grass roots protests. The work that CALSSA is doing in conjunction with the Solar Rights Alliance provides a template for future grass roots solar and storage advocacy in the United States — and it’s not too late to contribute to these efforts.