Solar companies, big and small, from local installers to OEMs, united with organizations like the California Solar & Storage Association (CALSSA) to fight against the end of California’s net-energy-metering solar incentive program. There were many credible and important justifications against the proposed changes, such as significantly reducing California’s residential solar market, harming California residents’ ability to have a competitive alternative to electric utilities, hurting solar employment, negatively impacting California’s ability to reach its climate goals and even damaging the entire solar industry.
But California went ahead with cutting NEM. And while CALSSA has said that it was able to prevent some of the worst parts of the rate change from being implemented, many of the warnings still came true. According to a survey performed by CALSSA, “17,000 jobs have or will be lost by the end of 2023 due the recent net-metering changes,” representing “22% of all solar jobs in California and the largest loss of solar jobs in U.S. history.”
The California Public Utilities Commission (CPUC) has routinely said that the changes to NEM were intended to incentivize solar + storage installations. But no such incentives have materialized and the rates tell a different story. According to CPUC’s export rates, there are only a few hours in the entire year when there is a financial incentive to sell energy back to the grid.
This screenshot of the PGE export rates for 2023 demonstrates that NEM 3.0 is net metering in name only. Learning from the successful destruction of NEM in California, utilities in other states are trying to move to time-of-use (ToU) rates. For instance, there has been recent news of Maine, Minnesota and Missouri announcing plans to transition to ToU. So, is ToU the next battlefront for clean energy? Should solar lobbying be focused on implementing ToU rates that truly support distributed energy instead of preserving NEM?
ToU rates can be beneficial to both utilities and energy consumers alike, but often this rate structure is implemented in a way that only benefits utilities and becomes just another rate hike for consumers. If there are not policies to promote technology for true demand-side management, then consumers usually end up paying more for the same exact service because behavioral changes are too difficult or even impossible. If utilities want to reduce demand and electrical network congestion during peak hours, a pre-condition of moving to ToU rates should be a binding plan to incentivize DERs for their customers and deployment of centralized DERMs platforms, like VPPs. Otherwise, all they are doing is surcharging.
While as a community, we should still be fighting for NEM, especially in areas where the penetration rates of solar remain low, we need to simultaneously build our second line of defense for the equitable implementation of ToU. Otherwise, the distributed and democratized energy will be in grave danger.
Jessica Fishman is a strategic marketing leader with nearly 20 years’ experience, including seven years as head of global public and media relations at inverter maker SolarEdge. Passionate about addressing climate change by accelerating the clean energy transition, she has worked at leading renewables companies, building marketing and communications departments.