Solar Net Energy Metering in California: From Rosy Inception to Rocky Realities
California’s journey with solar net energy metering (NEM) is a case study in the complexities of energy policy. What began as an ambitious drive to boost solar energy has evolved into a contentious battleground of policy shifts and market reactions. The recent developments, marked by job losses in the clean energy sector as reported by the Environmental Working Group (EWG), are a testament to these complexities.
California initiated solar net energy metering in the 1990s to encourage solar adoption. Under NEM, solar users could sell surplus electricity back to the grid at retail rates, offsetting their electricity costs. This policy aimed to stimulate solar energy use, reducing reliance on traditional energy sources.
The policy lead to a significant increase in solar installations. California’s solar industry saw a surge in growth, heralded as a triumph of renewable energy policy, but saddling utilities and non-solar customers with an additional cost burden.
As solar adoption grew, these concerns grew. Utilities argued that NEM shifted costs to non-solar customers, as maintaining the grid became increasingly funded by a shrinking base. These concerns led to policy revisions aimed at balancing the incentives for solar users with broader economic impacts.
In recent years, California has seen further adjustments to its NEM policies. These include reducing the rates paid for excess solar power and introducing new charges for solar users. These changes were designed to address the cost shift to non-solar users and ensure the economic sustainability of the energy grid.
These policy shifts have had a tangible impact on the solar market. The reduction in incentives has made solar installations less financially attractive, leading to a slowdown in new installations. This EWG report bemoans this downturn, noting widespread job losses in the clean energy sector as generous subsidies are being removed.
SAN FRANCISCO – California’s once-thriving residential solar industry is in ruins after state officials slashed rooftop solar incentives, causing thousands of job losses, said clean energy advocates and solar industry representatives during a recent virtual briefing.
The incentives played a crucial role in outfitting solar panels on approximately 2 million homes, establishing the state as the leader in the clean energy revolution. But the California Public Utilities Commission, or CPUC, bowed to demands from Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric to roll back those incentives.
https://www.ewg.org/news-insights/news-release/2023/12/california-clean-energy-industry-rocked-widespread-jobs-losses
The policy changes, essentially attempting to distribute costs fairly across consumers, appear to have dampened the growth of the solar sector, a critical component of California’s renewable energy strategy.
That decision has now led to the loss of over 17,000 solar jobs in California, says a new analysis by the California Solar and Storage Association, or CALSSA, discussed during the briefing. Many more layoffs and bankruptcies are likely by the end of the year and beyond.
https://www.ewg.org/news-insights/news-release/2023/12/california-clean-energy-industry-rocked-widespread-jobs-losses
Critics of the recent policy changes argue that California is undermining its own renewable energy goals. They contend that the state is backtracking on its commitment to clean energy by making solar less accessible and attractive. This perspective ignores the increasing costs to consumers of NEM subsidies.
“The volume [of solar installations] has dropped by 80 to 90 percent of the volume of activity, the volume of interest,” said Beccar. “Because it just doesn’t make any sense for a homeowner who goes solar and does it overwhelmingly to save money.”
Speakers during the briefing strongly condemned the CPUC for acquiescing to the monopoly utilities’ demands to eliminate their only source of competition: families with rooftop solar.
They made clear their ire toward state lawmakers and Gov. Gavin Newsom for permitting such actions to happen in a state that, until a few months ago, had been the unmatched leader in advancing clean energy and climate policy. In particular, they blamed Newsom and the CPUC for the decision.
https://www.ewg.org/news-insights/news-release/2023/12/california-clean-energy-industry-rocked-widespread-jobs-losses
California’s experience with solar net energy metering is instructive. Initial policies fueled rapid growth in solar adoption, with accompanying rises in electricity rates, subsequent adjustments in response to economic and infrastructural challenges have led to a cooling of the market. The state now faces the reality of fostering renewable energy with excess subsidies, while finally having to balance economics, and grid stability. This situation serves as a reminder that energy policy is a complex ecosystem, where changes can have far-reaching and sometimes unintended consequences, and the road to hell is usually paved with good intentions.
H/T Steve R
