By 2030, California needs to shut down dirty power plants by building a million sun-charged batteries on apartments, housing developments, schools, and churches and throughout our most polluted communities. Achieving this goal will help put an end to California’s heavy dependence on fossil fuels and bring the benefits of clean energy to all communities. If done right, changes to net metering in 2022 could increase the adoption of solar and energy storage systems in California’s environmental justice communities and among low-income and working-class families. But surprisingly, this is not what has been proposed by the California Public Utilities Commission (CPUC). Instead, the CPUC’s proposed NEM-3 decision makes solar and batteries more expensive for everyone, including low-income consumers.
First, the proposed decision would impose large new fees on California families. These fees would be the highest in the nation, adding up to more than $600 per year. These fees, alone, would bring the solar market in California to a screeching halt. While some low-income consumers would be exempt from the proposed fees, not all would.[1] The fees alone would turn the clock back on achieving greater equity and inclusion in the California solar market by making rooftop solar nearly twice as expensive as it is today.
It gets worse. The proposed decision would also reduce the value of solar electricity sent back to the grid on hot summer days by 80% for the general market and 70-75% for those on income-based assisted electric rates. This immediate reduction in the value of solar makes it harder for a rooftop solar system to pay for itself in bill savings in a reasonable amount of time. A simple payback of a rooftop solar system for a consumer on CARE rates, for example, goes from 9.5 years on average under today’s net metering policy to 12 years under the proposed NEM-3 decision. Achieving equity within California’s clean energy markets will become even harder, and that’s accounting for the proposed bill credit explained below.
Seemingly to acknowledge the problems with the new penalty tax on solar, the proposed decision would offer a bill credit to new solar customers on a temporary basis. The amount of that credit is higher for many of the low-income customers who are exempt from fees, though not all. However, this credit isn’t high enough, even for targeted low-income consumers, to make up for the 70-80% reduction in value for solar, hence the reduced payback period described above. In other words, even with the proposed bill credit, rooftop solar still becomes more expensive, not less, for low-income consumers.
Here are more details by the numbers:
The short-term credit is $26 per month for an eligible low-income PG&E customer (compared with $10/month for the general market) and $31 for an SCE customer (compared with $21/month for the general market), assuming they install an average-size system (the credit is less if a customer installs a smaller system). The credit isn’t available to customers of SDG&E, no matter their income.
A customer would get this credit for no more than 10 years.
The credit would be “transitional,” meaning that it would only be given to customers who go solar in the first four years. And the amount for new customers will decrease 25% each year. For example, a PG&E customer who signs up in year 2 gets $19.50 per month, and by year 4, new customers will get only $11 per month.
The proposed decision includes a fund of not more than $150 million per year over four years to expand solar access to low-income households and disadvantaged communities. Yet, there are no details provided as to how that money would be spent. While the fund has the potential to do some real good, it is treated in the proposed decision as an afterthought with no details and development of new programs has historically taken years with mixed success.
For renters, the proposed rules are a mixed bag, with more bad news than good. Low-income multifamily properties that participate in solar incentive programs (Solar on Multifamily Affordable Housing [SOMAH] and Multifamily Affordable Solar Housing [MASH]) temporarily keep the existing “virtual net metering” rules that have helped these programs bring solar to low-income renters across the state. But the good news is short lived because changes could come within the next few years. The proposed decision has only delayed decisions about changes to these rules until the CPUC can review information about affordability. We can’t predict what will happen after that review.
Further, not all low-income affordable housing projects qualify for the SOMAH or MASH programs, leaving gaps in solar adoption around the state. And other multifamily apartment buildings are being shifted onto the new rules that come with high monthly fees and a slashing of solar credits. Because of how the rules work for these buildings, all solar energy is treated as exports, even if it’s used by customers on the property. This would effectively shut down all solar development on apartment buildings that are not federally subsidized.
Lastly, the proposed decision explains that the CPUC will conduct an evaluation of “equity elements” after the new rules have been in operation for five years. This has the potential to be helpful, as it might make the CPUC realize that its policies have been more harmful than they thought and could lead to positive changes. But on the other hand, it means there’s more uncertainty—the rules could change after that five-year evaluation, and there are no guarantees beyond that. Equally important, waiting five years to revisit equity goals is a long period of time. In five years, California needs to be well on its way to building a 100% clean and reliable electric grid.
As California looks toward a clean energy future, it’s hard to imagine that state policies would make it harder for low-income customers to play a central role in that future. Solar and energy storage should be more affordable, not less, for all consumers and especially low-income families and environmental justice communities. California should not return to the days when solar was affordable only for the rich. Net metering is a policy that could drive solar adoption and achieve greater equity in clean energy, but the details matter. The CPUC should offer an alternative decision that gets California where it wants and needs to go: which is, solar and sun-charged batteries for everyone to create a more resilient, affordable, and clean energy grid with jobs and economic opportunity in every community and clean air for all.
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[1] For example, the proposed decision would exempt customers who are eligible for California Alternate Rates for Energy (CARE) and Family Electric Rate Assistance (FERA) rates from the $600 per year solar fee. This exemption would apply to consumers with incomes no greater than 200% and 250% of the federal poverty guidelines, respectively—or, $43,920 and $54,900 for a family of three in 2021-2022. The exemption also applies to single-family homeowners in state-designated “disadvantaged communities,” and some residential customers in California Indian Country. This exemption from the fee leaves out a lot of people who are having trouble making ends meet, as well as many renters, including those in affordable housing developments.