Net Metering Lives To See Another (Sunny) Day In California

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This week, the California Public Utilities Commission (CPUC) voted to keep the existing net metering regulation that plays a crucial role in enabling solar customers to generate power when they are not using it and “use it back” at a later time, only paying for the “net” usage on an annualized basis. With net metering having been recently overturned in Nevada and Hawaii, all eyes were on California to see how the CPUC would react to the prospect of altering net metering.

Solar advocacy groups are over the moon at the vote. Susannah Churchill, west coast regional director for Vote Solar shares that, “this decision to uphold net metering was the result of a thorough Commission-led stakeholder process from the state that knows solar best, our nation’s largest rooftop solar market by a long shot, and we hope other states will take note.”

CPUC voted 3–2 to approve the next incarnation of net metering, which also comes with a 4-year shelf life. This new and improved net metering regulation holds onto the hotly debated retail rate credit, which credits solar power feeding back into the grid at the full retail rate. While this provides a healthy incentive for homeowners to install solar, it is a net hurt to utilities who are forced to buy power from solar systems at a much higher cost than typical wholesale rates (but not necessarily peak demand rates).

Image Credit: Shutterstock

The tides are shifting from a pro-consumer view to a more balanced set of regulations. Greentech Media notes:

“Starting as soon as the successor tariff is implemented, net-metered solar customers will be required to move to TOU [Time of Use] rates that charge different prices during different times of the day, to better match real-time costs of generating and transmitting energy across the grid at large.”

From a net metering perspective, this should continue to incentivize solar installations over the short term, as daytime TOU rates will still reflect the high peak rates, but over time, as more solar is brought onto the grid, these rates will fall, reducing the credit solar system owners receive for their production. This is a very progressive step in the right direction as the overall grid and respective pricing models shift to not just support but to sustain renewable energy sources of generation.

It is clear, based on the 4-year lifespan of this second iteration of net metering, that more change is coming and it’s likely that future changes will continue to remove incentives from solar owners. However, with more and more grid-scale batteries being added to the grid each month and the residential storage market heating up, it’s anyone’s guess what net metering version 3.0 will look like.

For now, it’s clear that, for solar customers in California, it’s time to break out the bubbly for a little celebration.

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Kyle Field

I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. As an activist investor, Kyle owns long term holdings in Tesla, Lightning eMotors, Arcimoto, and SolarEdge.

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