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The states highest court grants review of a lawsuit challenging a “regressive” rooftop solar policy called NEM 3.0.
A controversial decision regarding the regulation of rooftop solar has reached the California Supreme Court, with the states highest court granting review of a petition filed by the Center for Biological Diversity.
The case concerns NEM 3.0, a rate structure that went into effect in April 2023. The California Public Utilities Commission (CPUC) approved a request by the states largest investor-owned utilities to cut compensation to customers exporting excess solar generation to the grid, a process called energy net metering.
Net metering rates were quickly reduced by 80% with NEM 3.0. This shift, combined with a high interest rate environment, has pushed the states robust rooftop solar industry off a cliff, damaging the return on investment for homeowners, and resulting in the loss of more than 17,000 jobs in the solar sector, demand falling by 80% after implementation, and numerous companies filing for bankruptcy.
“The Commissions new rooftop solar policy allows utilities to take a self-serving attack on rooftop solar,” says Bill Powers, energy expert at the Protect Our Communities Foundation. “The real problem is the reckless pursuit of maximum profit by utilities at the expense of reasonable rates and common-sense climate action.”
The petition under consideration raises the following question: “By ignoring the recognized social and other benefits of renewable generation at customer sites and assigning value only to limited economic benefits, did the Commission not proceed as required? by section 2827.1(b)(3), which states that a net energy metering rate must be based on the costs and benefits of the installation of renewable electric generation?”
According to a report by Environment America, rooftop solar offers “countless benefits to the environment and consumers.” This includes reducing the need for dirty power plants and expensive transmission lines, providing lower costs, and increasing the grids resilience to extreme weather and other shocks.
“The Supreme Court’s decision is a ray of hope for rooftop solar at a time when plummeting installations and mass layoffs are gutting this vital industry and jeopardizing California’s climate goals,” he said. Roger Lin, senior attorney at the Center for Biological Diversity.
Analyzes from the California Solar Energy and Storage Association (CALSSA) show that the State is unlikely to meet its clean energy goals without a robust rooftop solar market. The California Energy Commission (CEC) projects that the state will need to build 6 GW of solar plus storage each year for the next 26 years in a row to meet the 2045 goal. Over the past five years, California has only achieved an average of half the figure of 6 GW.
“In the last two years we have started to pick up pace, but the distributed [rooftop solar] market has driven at least 50% of that pace,” said Bernadette del Chiaro, executive director of CALSSA.
The CPUC has moved forward with NEM 3.0 despite postponement requests filed to conduct a full cost-benefit analysis of the rate structure that takes into account the non-energy benefits of rooftop solar. Critics of the rulemaking argue that the decision was made based on internal data and analysis from the states largest investor-owned utilities.
A report from the Center for Biological Diversity explains why utilities are motivated to gut rooftop solar and maintain their traditional profit model. |
