Baker Electric
Solar installers from Baker Home Energy place solar panels on the roof of a residential home in Scripps Ranch. REUTERS/Mike Blake

In a time when electric rates are constantly rising and there is a global movement to reduce greenhouse gases, experts agree that solar adoption is one of the most effective methods to address both. However, in November 2023, the California Public Utilities Commission voted to further slash how renewable energy is compensated for schools, small businesses, apartments, and farms opting to go solar.

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In a time when the state should be encouraging the production of its own clean energy, it is doing the opposite and making the adoption of solar even less economical.

The decision impacts the existing Virtual Net Energy Metering (VNEM) and Net Energy Metering Aggregation (NEMA) programs. Under the new rules, individual apartment units will be allowed to use the energy generated by their solar system in real time. However, common areas such as hallways, gyms, outdoor spaces, and electric vehicle charging stations must send all solar energy back to the grid and receive hardly any compensation for doing so.

With this change, it will be extremely difficult for property owners to find a way for renewable energy to make financial sense, decreasing the likelihood of solar adoption. For schools, small businesses, and farms, the decision is even worse. No net metering will be allowed at all, effectively making any solar installations cost prohibitive.

Why would a state which has led the nation for so long in renewable energy begin this backward slide?  When California first set its lofty goal of generating renewable energy, it introduced Net Energy Metering to increase the adoption of solar — and it worked. Jobs were created, the economy grew, and millions of Californians were able to produce and use their own energy. However, after some time, this worked too well, and the energy grid became stressed from too much solar energy.

To course-correct, the CPUC rolled out the Net Billing Tariff in April 2023, significantly reducing the compensation new solar installations received for their solar energy.  This means that unless one could store their own energy, it would no longer make financial sense to install solar panels. Last month, the tariff was challenged in California’s First Appellate District Court and dismissed by a panel of judges. 

For California homeowners, energy storage is helping to change the financial equation. A smart battery allows the excess solar generated to be stored and then consumed on site, both lowering a customer’s bill and reducing the stress on the electric grid. Just as previous NEM decisions incentivized solar adoption, we now need strong leadership to encourage the adoption of home batteries on a grand scale. The need is dire.

The recent VNEM and NEMA decision is all stick and no carrot. Without similar incentives to increase the adoption of home batteries in the same way that previous decisions accelerated the state’s renewable energy generation, the state will likely grind its electrification progress to a halt.

Our lawmakers should consider exploring new opportunities to encourage California property owners to have the ability to generate and store their own energy using solar panels and home batteries. Under these new CPUC rules, these could take the form of the expansion of the popular Self Generation Incentive Program, or tax credits on battery energy storage. Given the impending explosion of electric vehicle adoption, new paths must be made available to expand the adoption of batteries on a historic scale.

As product innovation manager for a solar and energy storage contractor, I spoke out at a CPUC hearing last year where the commissioners were prioritizing the desires of big utilities, like SDG&E, over the interests of consumers and the state’s clean energy goals.

I’m urging Governor Newsom and other state leaders to correct the damage done by the CPUC. We need California to remain a leader in clean energy and not stand in the way of innovation and progress.

Andy Gallagher is the product innovation manager for Baker Home Energy in Escondido with experience as an energy engineer in oil and gas as well as solar and storage.