Distributed Energy Resources

California Regulators Issue Major Decision on Net Metering

The California Public Utilities Commission (CPUC) on Thursday issued a decision revising the state’s Net Energy Metering (NEM) solar tariff to better reflect value of solar power and solar plus storage to the state’s grid.

The new NEM changes how customers of the state’s investor-owned utilities will be paid for solar power they do not consume and ship to the grid, basing those exports on the utilities’ avoided costs of buying clean electricity elsewhere rather than the utilities’ retail price of electricity.

The decision (Docket #: R.20-08-020) will promote solar exports during the late afternoon and early evening hours, particularly in the summer, when the grid is the most stressed, the CPUC said. The decision has no impact on existing rooftop solar customers, maintaining their current compensation rates.

The CPUC decision also provides extra electricity bill credits to residential customers who adopt solar or solar paired with battery storage in the next five years, which are paid on top of the avoided cost bill credits. Customers are guaranteed the extra bill credits for nine years.

The new NEM tariff also increases the allowable size of rooftop solar systems to cover 150 percent of a customer’s electricity usage in order to accommodate future electrification of appliances and vehicles. And the new NEM regime will also expand access to solar and storage for low-income customers, residents living in disadvantaged communities, and residents living in California tribal communities by providing a larger amount of extra bill credits.

The decision also applies new residential rates that have “significant differences” between peak and off-peak prices as a way of creating incentives for battery storage and load shifting from evening hours to overnight or midday hours, the CPUC said. The new rates aim to incentivize adoption of technologies to replace the use of fossil fuels such as battery storage, electric vehicles, and heat pump water heaters.

Reform of California’s net metering regime was mandated by a 2013 state law, Assembly Bill 327. The CPUC revised its original solar tariff program in 2016, creating NEM 2.0 and, most recently, revised its NEM proposal in November after the inclusion of a grid participation charge met with heavy criticism from many stakeholders.