Update California’s solar net metering policy to center equity, resilience and climate goals

One of California’s most watched clean energy debates of 2021 will center on the future of net metering, and will play out at the California Public Utilities Commission (CPUC). Change is in the air, but will the Commission focus on the right goals as it updates net metering?

First, some background. Since it was adopted by the Legislature in 1996, the state’s net energy metering (‘net metering’ or ‘NEM’) policy has required that customers installing customer-sited clean energy receive credit on their utility bills for the excess clean power they deliver to the grid. When solar customers send a kilowatt hour of clean energy back to the grid, they receive utility bill savings based on their retail rate, essentially spinning their energy meter backward. This simple concept has helped make net metering a cornerstone policy for empowering Californians to generate their own power from the sun, and for clean energy growth more broadly. It’s been a foundational tool for helping California’s schools, businesses, nonprofits, government buildings, homeowners and low-income housing developers install over one million solar roofs, a goal that seemed wildly ambitious only a decade ago.

In 2015, the CPUC was required to evaluate net metering’s impacts and consider changes. The state’s large investor-owned utilities applied enormous pressure on the agency to gut rooftop solar savings; fundamentally, many utilities are opposed to customer-sited clean energy because it reduces the need for the transmission and distribution upgrades that increase their profits under our nation’s outdated utility business model.  A broad range of clean energy supporters including Vote Solar pushed back against the utility attacks, and the Commission voted to largely preserve net metering in early 2016, while requiring future NEM participants to take service under a time of use tariff, which boosts their financial incentive to use less power from the grid during peak times and to store their solar power for use on-peak.  Under ‘NEM 2’, as it’s known in the policy space, rooftop solar has continued to grow at over 1000 megawatts a year in California. The Commission, concerned in 2016 about whether net metering properly balances costs and benefits for non-participants, planned to reevaluate changes to net metering at a later date.

Fast forward to today. CPUC is evaluating modifications to net metering by the end of 2021, against a dizzying backdrop of changes to our energy system in recent years. Across the three big utilities, about 9% of grid-connected buildings now have net metered systems installed, most of that rooftop solar, keeping California far ahead of any other state except Hawaii in per capita rooftop solar adoption. We’ve also deployed large amounts of utility-scale solar, increasingly low-cost and paired with battery storage; happily, much of our grid’s electricity in the midday hours is now supplied by large-scale and distributed solar rather than polluting gas plants. The climate crisis is battering our beautiful state, with massively destructive annual wildfires prompting the utilities to cut power for millions of people when chances are high that their grid could spark a blaze. (As our report last year discussed, onsite solar plus storage offers families and businesses an emissions-free, reliable form of backup power that also works year round to fight climate change, but currently only about 10% of new solar customers are installing batteries along with their panels.) Utility rates for many have increased significantly in recent years. PG&E’s average residential rate hovers around 30 cents/kWh and SDG&E’s is even higher. PG&E has announced it will hike residential rates by 11% by March 2021, with more increases likely later in the year, as it builds in the enormous costs of wildfire-related upgrades. And now, millions of families are reeling from the economic and health effects of COVID.

Our supporters know that we at Vote Solar are longtime champions of net metering in states across the country. We’re in favor of keeping the net metering framework in place here in the Golden State; dramatically expanding rooftop solar with storage will be essential for meeting our 100% clean electricity goal and for consumer choice. At the same time, as we approach 10% of IOU customers with solar roofs and with midday solar power being increasingly abundant in our power mix, we think it’s appropriate that CPUC evolve net metering in reasonable ways so that rooftop solar + storage can best fight climate change and foster equitable economic opportunity for California.

We urge the CPUC to design a net metering successor tariff that makes smart, measured, predictable changes for future customers who install clean energy, with the following key goals in mind:

  • Keep Rooftop Solar Growing to Fight Climate Change and Build a Safer, More Resilient Grid: State law requires that CPUC’s net metering successor tariff “ensures that customer-sited renewable distributed generation continues to grow sustainably.”Add to that, the climate crisis is real and bearing down on us and our grid is aging and unreliable; this is not the time to slow the pace of customer-sited solar adoption in our state. Instead, we should seek to speed it up, while also ensuring the policy reasonably balances costs and benefits to non-participants. As we electrify our buildings and vehicles, power demand on the distribution system is going to balloon, and rooftop solar + storage will serve that need locally, avoiding expensive infrastructure upgrades.
  • Prioritize Equity: Bring Rooftop Solar + Storage to More Low-Income Families and Disadvantaged Communities: Since 2010, rooftop solar has grown meaningfully in California’s lower- and middle-income neighborhoods, but policymakers have a moral obligation to do much more to make onsite clean energy truly accessible and affordable for low-income families and disadvantaged communities. Innovating to boost equity customers’ utility bill savings and cut red tape should be a major priority as we design the net metering successor. During COVID more than ever, low-income families need ways to reduce their energy burden and keep the power on during blackouts.
  •  Make Solar-Charged Batteries the Industry Standard for Rooftop Solar by 2030: Solar-charged batteries allow customers’ clean power to be used when the grid most needs it – California’s peak demand is currently in the evening hours of 4-9 pm — and when it can be most effective for reducing greenhouse gases. Solar-charged batteries also allow customers to serve their critical power needs during planned and unplanned blackouts. The net metering successor tariff should structure bill savings to further incentivize solar-charged batteries, so that by 2030, 90% or more of the rooftop solar being installed is paired with batteries.

By contrast, some other changes would take net metering in the wrong direction. Suddenly throwing out customers’ right to generate and use their own clean power onsite would be a radical change that runs counter to state and federal law. Drastically reducing NEM customer bill savings across the board and imposing NEM-specific fixed charges would put onsite clean energy out of reach for most Californians—especially low-income communities– and badly disrupt the distributed generation market. Making retroactive changes to net metering rules for existing solar customers, who invested in onsite clean energy assuming that the Commission would keep its word that the rules would remain in place for 20 years, would be a shocking reversal that would undermine consumers’ confidence in the agency’s decisionmaking. Unfortunately, we expect the utilities to propose all these changes to net metering this year.

That’s why Vote Solar staff will be working hard with our clean energy allies to advocate for a net metering successor tariff that keeps rooftop solar thriving and evolving to benefit all Californians. We expect to have many updates for our members as the debate at the CPUC progresses, and we will need your voices to ensure a good outcome.

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