Staff Opinion: NEM 3 Decision Could be Our Carpe Diem Posted on Dec 16, 2022

California energy regulators have the power to make, kill and stifle energy markets, and consumer choices. At a time when individual energy resiliency has never been more important, and will become increasingly so, that is what the California Public Utilities Commission ("CPUC") just did. 

On December 15, 2022, the CPUC voted 5-0 to reduce the value of solar owners’ energy exports by 75% of their current amounts. This will take effect in just a few months. 

Since 1996, solar owners in California have counted on the grid as their energy storage mechanism. This is because onsite energy storage technologies were not ready to serve this need. Since solar systems produce energy during the day, owners of the systems rely on the grid to take the energy when it is produced, and rely on the utilities to receive a credit on their bills for this energy sent to the grid that is then offset by their actual energy use.  The amount of this credit, and ability to receive it, has made California the most thriving distributed solar market in the country. 

As California policymakers and regulators create aggressive climate goals to achieve net zero carbon emissions, they are looking to utilities to meet these goals. The CPUC’s decision on December 15, 2022 shows that they consider individual solar owners as getting in the way. The same policy makers are putting all of their support behind electrifying our communities. Of course, interests are aligned since utility scale power producers enjoy increased demand for their products when everything goes electric.

Where does this leave the general public who want to own their own solar systems?  A nascent energy storage industry will be incentivized to scale even quicker than current demand. The small business solar installer sector will shrink and consolidate with only those left who can develop solar systems paired with the more complicated energy storage and demand control technologies. The public who wants to own their own solar systems will be left with fewer and more expensive options. This will result in a shrinking distributed solar sector in California.  Utilities will reap the benefit of having their competition diminished while the demand for their products increases. Everyone will be suffering from the increasing impacts of climate change and a more limited access to energy resiliency options. 

As important as climate change is in the discussion of energy policy, the more immediately pressing issue is personal energy security in the form of the energy resilience provided by nano and microgrids.  Perhaps an opportunity has opened up to push towards this change faster than ever. To turn Thursday’s NEM-3 decision into an opportunity verses a tragedy, solar installers, energy storage providers, microgrid parts companies, developers and electric appliance companies must be a merged brain trust that nimbly and rapidly integrates to consider the grid, at most, an emergency supply source. If the moment is seized well, this could help the solar industry enjoy the liberation of no longer being subjected to the decisions of policymakers beholden to the special interest groups that put them in power.