California Reduces Compensation for Renters’ Rooftop Solar Exports
The Treasury Department has recently issued new guidance regarding the Investment Tax Credit for clean energy, marking a significant development in the renewable energy sector. Meanwhile, the manufacturing of solar trackers is gaining momentum in East Texas, reflecting a growing interest in solar energy across the region. However, a recent decision by the California Public Utilities Commission (CPUC) has introduced changes that could impact the landscape of solar energy, particularly for multi-meter properties.
About a year ago, the CPUC made a move to reduce the payments for single-family homes in California that export electricity back to the grid. Now, in a unanimous decision, the CPUC has extended this policy to encompass multi-meter properties, including farms, schools, some commercial buildings, and more. This decision represents a significant shift in the state’s approach to managing solar energy distribution and compensation.
Previously, properties in California with multiple electric meters could connect through the Virtual Net Energy Metering (VNEM) and Net Energy Metering Aggregation (NEMA) programs. These programs allowed properties with several meters to install a single solar array for the entire property. This setup enabled all customers and meters on the property to share the electricity generated by one system, as well as the associated net metering credits.
Under these programs, properties could sell any excess solar generation back to the grid in exchange for bill credits. However, the CPUC’s new decision has dramatically reduced these payments by approximately 80%. This substantial cut has significantly affected the financial benefits for new rooftop solar customers, making the investment in solar less attractive.
Moreover, the ruling has brought about changes to the way common areas in residential buildings are treated under the VNEM and NEMA programs. Common areas are no longer eligible for the aggregation feature within these programs. This means that any solar capacity associated with electric meters in common areas must be exclusively used by those areas. If there is excess solar energy, it must be sold to the utility at a low rate. Unfortunately, if this energy is needed again, it must be purchased back at a much higher rate, often several times more than the selling price.
This decision by the CPUC has sparked a debate about the future of solar energy in California, especially concerning the economic viability of new solar installations on multi-meter properties. The drastic reduction in compensation for excess solar generation could discourage property owners from investing in solar energy systems. This could potentially slow down the state’s progress toward its clean energy goals.
In conclusion, while the Treasury’s new guidance on the Investment Tax Credit for clean energy and the expansion of solar tracker manufacturing in East Texas are positive developments for the renewable energy sector, the CPUC’s decision in California presents new challenges. The significant reduction in payments for excess solar generation and the changes in the treatment of common areas under VNEM and NEMA programs could have far-reaching implications for the adoption and expansion of solar energy in the state.
