California assembly member introduces bill to repeal NEM 3.0

California assemblymember introduces bill to repeal NEM 3.0

solarpowerworldonline.com

Kelly Pickerel

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California Assemblymember Damon Connolly (D-San Rafael) has introduced new legislation to reduce fees and taxes on residential solar projects and restore incentives to Californians that were recently diminished by the California Public Utilities Commission (CPUC)’s NEM 3.0 decision.

NEM 3.0 cut the incentives that utilities were required to pay solar homeowners when pushing surplus power to the grid by approximately 75%, plummeting demand for solar adoption throughout the state and threatening many solar installation businesses. In addition to the projected loss of 17,000 jobs, NEM 3.0 has also jeopardized California’s ability to meet its ambitious clean energy goals.

Assembly Bill (AB) 2619 will repeal the NEM 3.0 decision and require the CPUC to create a new rule structure based on the clean energy goals set by Senate Bill (SB) 100, which committed the state to achieving 100% clean carbon-free energy by 2045. AB 2619 will ensure that incentives are restored for residents who generate clean power for the grid and restrict the imposition of new charges, taxes, fees or rates on community solar customers that are different from what is assessed on all other ratepayers for electricity or any other service including energy transmission.

“When talking with North Bay residents and Californians throughout the state, it’s clear that additional taxes on solar and the removal of incentives that have helped offset the cost of solar installation has had severe consequences on our ability to generate clean energy,” said Assemblymember Connolly. “The NEM 3.0 decision has clearly disincentivized clean energy adoption with rooftop solar sales down between 66 to 83% and thousands of workers left without good-paying jobs. AB 2619 will restore our commitment to a sustainable, clean energy future and provide relief to Californians who are suffering under these new rules. We must commit to our goal of achieving 100% carbon-free energy by 2045.”

NEM 3.0 went into effect in April 2023. An analysis conducted by Wood Mackenzie estimates that the residential solar market in California will be cut in half by this year and payback periods for typical residential solar projects will increase from five to six years to 14 to 15 years, depending on the utility company. Additionally, according to a survey by the California Solar and Storage Association, these decisions have reduced rooftop solar sales between 66 and 83% compared to the same time in 2022. Additionally, nearly 43% of solar companies surveyed in California said it would be difficult to stay in business over the winter.

“We’re pleased to see Assemblymember Connolly taking seriously the issues facing the rooftop solar industry and addressing issues with the current Net Billing Tariff to ensure that California remains on track to meet its net zero emissions goals,” said Stephanie Doyle, California state affairs director at the Solar Energy Industries Association (SEIA). “Over the last year, the California rooftop solar and storage industry has struggled to adjust to the abrupt changes to California’s net metering program. The new bill would require the California Public Utilities Commission to develop a new solar tariff by 2027 and prohibit new fees on solar customers, helping to ensure that the solar market in California continues to grow. We will continue to work with California lawmakers to educate them on the impact of the CPUC’s Net Billing Tariff and other ways we can help the residential solar market thrive in California.”

AB 2619 now awaits assignment to a policy committee in the State Assembly.

News item from Assemblymember Connolly

California News> Politics> Legislature & Policy

California Bill Would Repeal Rules That Take the Shine off Rooftop Solar

A worker installs solar panels on the rooftop of a house in Pomona, Calif., on Oct. 19, 2023. (Mario Tama/Getty Images)

Travis Gillmore

2/19/2024

Updated: 2/19/2024

After changes implemented in April 2023 decreased incentives for solar customers in California and caused demand to plummet, a newly introduced bill seeks to repeal them.

Assembly Bill 2619, authored by Assemblyman Damon Connolly would require the state’s utility commission to develop new rates for credits provided to solar customers for producing more energy than they consume.

At issue are changes made last year by the California Public Utility Commission known as NEM 3.0—the third iteration of so-called “net energy metering” guidelines that dictate how much utility companies must reimburse solar customers for energy they provide to the grid—which decreased incentives by approximately 75 percent.

“The NEM 3.0 decision has clearly disincentivized clean energy adoption,” Mr. Connolly said in a Feb. 14 press release announcing the new bill. “AB 2619 will restore our commitment to a sustainable, clean energy future and provide relief to Californians who are suffering under these new rules.”

Citing higher fees—including a monthly grid participation charge— and lower reimbursement rates as why demand has diminished, the lawmaker said the impact is felt across the state, with provisions in his new bill prohibiting such charges, taxes, and fees.

“When talking with ... Californians ... it’s clear that additional taxes on solar and the removal of incentives that have helped offset the cost of solar installation has had severe consequences on our ability to generate clean energy,” Mr. Connolly said.

Rooftop solar sales declined by up to 83 percent after the rules were amended, according to the lawmaker.

With higher fees and fewer credits for energy produced, the return on investment for installing solar panels and battery storage increased from fewer than 10 years to 15 years or more, depending on system size and utility company, according to experts.

Solar panels on rooftops at a housing development in Folsom, Calif., on Feb. 12, 2020. (Rich Pedroncelli/AP Photo)

Layoffs ensued, with more than 17,000 workers let go across the industry in California after the rules took effect, according to a November 2023 survey conducted by the California Solar and Storage Association.

Some businesses are “on the brink of bankruptcy,” according to solar panel manufacturing firm Solarever USA.

A report issued in 2022 by Wood Mackenzie—a global analytics firm providing data to natural resources industries—predicted just such an outcome from the NEM 3.0 rules.

“Ultimately, the [regulations] will create a challenging business environment in the near- to mid-term,” co-author Bryan White, wrote in the report. “Many solar companies will not survive this double whammy of policy headwinds, resulting in significant consolidation in a contracting California residential solar market.”

Homeowners that installed solar panels in recent years also said NEM 3.0 is impacting their finances.

“Solar homes are getting paid pennies for power we feed back to the grid,” John Kes of the Los Angeles area, posted Feb. 10 on X.

Seeking to bring relief to businesses and consumers, AB 2619 awaits assignment by the Assembly Rules Committee to respective policy committees for review in the coming weeks.