California is Reconsidering NEM 3.0’s Solar Tax

Back in February, the California Public Utilities Commission (CPUC) had elected to hold off on enacting their proposal for NEM 3.0. This decision was in response to widespread opposition of the proposed new rules, which would not only reduce net metering compensation by 70-80%, but also charge rooftop solar customers a monthly fee of $40-$60.

These changes would notably extend the payback timeline for those who invested in solar systems, greatly reducing the incentive to adopt the clean energy alternative. Leaders across the solar industry voiced opposition to NEM 3.0, citing unfairness to solar customers and a major negative impact on the market.

CPUC’s announcement claimed the postponement would run “indefinitely”, giving many hope that there would be quite some time bought before these changes threatened the solar industry once again. However, the stay only lasted a few months.

NEM 3.0 Revision Still Penalizes Solar Customers

Early May brought another announcement that the CPUC was revisiting the proposal. This came with a revision that offered an alternative to the monthly charges: a payment “glide path”, non-bypassable charges ($0.05/kWh), and a community solar tariff.

Another protest was held on June 3rd, with participants stating that these alternatives were still hostile to solar. A speaker at the protest, Jim Mikles of Alternative Energy Solutions, described the fallout of NEM 3.0 should the changes go into effect:

“This steep reduction in value will make it much more challenging for small solar PV systems to provide positive financial returns …especially if the federal Investment Tax Credit (ITC) for solar PV systems steps down from 26% today to 10% for commercial customers and 0% for residential customers in 2024, as currently scheduled by Congress, solar PV systems could struggle to compete with utility energy prices in all customer classes.”

California Solar is Under Threat

Now, Californians are stuck waiting to see if the future Mikles outlined is on its way. The CPUC has yet to announce any new activity regarding the proposal.

This has both solar customers and solar contractors feeling very uncertain. If the CPUC chooses to move forward with the current version of NEM 3.0, then both will suffer. Existing customers will see their solar savings go down, and would-be customers will have a much harder time justifying the investment. Installers, therefore, will experience much difficulty when it comes to landing new sales. Many are already seeing hesitance among customers in the wake of CPUC’s deliberations.

Contractors who need help in this sale-shy market can find it at Grid Freedom. Our agency connects installers with solar energy leads who have already been pre-screened for serious intent to purchase a solar system. Working with our leads can help contractors focus their efforts on prospects who have a much higher likelihood of becoming paying customers.

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