Regulators approved a proposal to overhaul California‘s rooftop solar power incentive program following a yearlong battle to determine the future of residential solar in the state.
Members of the California Public Utilities Commission voted 5-0 to approve “net energy metering” reforms on Thursday that change the rate and compensation structure for residential solar users who sell their excess energy back to the grid.
The proposal was in some ways less extensive than electric utilities had sought but still included changes more significant than were preferred by solar energy trade groups, which said changing incentives would blunt the expansion of solar energy.
The reforms approved Thursday came after a wave of opposition to an earlier proposal and excluded an earlier proposed added “grid participation charge,” which was among the problems solar interest had with the earlier version. The approved proposal does, however, maintain changes to the rate structure that are designed to compensate residential solar users less for excess energy sold back to the grid than under the current regime.
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The NEM reforms were initially introduced with the intention of updating the structure of residential solar in light of the sector’s immense growth, as well as to create a fairer system by shielding utility customers who don’t have solar from paying for solar users’ compensation or otherwise shouldering a larger proportion of the costs of grid upkeep via their power bills.
The reforms adopted Thursday were introduced last month in place of an earlier CPUC rulemaking announced last December that had proposed even more significant changes.
CPUC’s proposal pitted electric utilities that lobbied for reforms against much of the solar sector and households that use rooftop, or “distributed,” solar energy.
Solar interests insisted the earlier proposed reforms would disincentivize the expansion of solar technology, for which California is the top market.
They also argued the reforms would blunt progress toward the climate change goals shared by California’s majority-Democratic government and President Joe Biden, which are built on an exponential increase in solar generating capacity.
Prominent lawmakers and figures, such as Sen. Dianne Feinstein (D-CA) and Tesla head Elon Musk, weighed in against the December 2021 proposal.
The proposal approved Thursday overall represented “a clear shift in favor of rooftop solar as the proposed reforms are comparatively more modest” than the initial reforms, according to analysis from consultancy ClearView Energy Partners.
CPUC President Alice Busching Reynolds said Thursday the reforms are “significantly more equitable than the status quo,” adding that the current regime “harms renters, low-income residents, and disadvantaged communities who are disproportionately paying for other people’s rooftop solar without receiving the benefits.”
Solar trade groups still expressed concerns over the changes.
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“The solar and storage industry remains concerned that the transition from net metering to the new net billing structure is too abrupt and threatens to slow the deployment of rooftop solar in California,” said Sean Gallagher, vice president of state and regulatory affairs for the Solar Energy Industries Association.
Matt Baker, director of the California Public Advocates Offices, said the reforms were about fairness.
“Net energy metering is effectively funded by ratepayers that do not have solar, and the tab makes up about 10% to 20% of the average customer’s monthly bill,” Baker said in a blog post. “This proposal aims to create a fairer rate structure.”
