California rooftop solar installations drop 80% following new net metering rules


From pv magazine USA

California, once a leader in residential solar, is feeling the effects from unpopular policy changes like the introduction of Net Energy Metering (NEM) 3.0 and more recent market rate cuts for rooftop solar generation by renters, schools, and farms. 

The two policy changes cut compensation rates for exporting local, clean solar generation to the grid by about 75%. State regulators said the change facilitating was a necessary evolution in the grid, but opponents argued that the move was a thinly veiled move to protect the profits of major utilities. 

“We are launching the solar and storage industry into the future so that it can support the modern grid. The new tariff promotes solar systems and battery storage with a focus on equity,” said the California Public Utilities Commission (CPUC) upon passing NEM 3.0. 

“The CPUC’s final proposal is a loser for California on many levels. For the solar industry, it will result in business closures and the loss of green jobs. For middle class and working-class neighborhoods where solar is growing fastest, it puts clean energy further out of reach,” said the California Solar and Storage Association (CALSSA). 

Which prediction came true? 

Unsurprisingly, gutting the return on investment for solar for homeowners, renters and small businesses in California did not encourage installations. 

Utility interconnection request data shows that solar sales have fallen between 66% and 83% year-over-year following NEM 3.0.  

What’s more, there have been massive layoffs industry wide. CALSSA said over 17,000 solar jobs have been lost in 2023, representing 22% of all solar jobs in the industry.

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Based on interviews of residential solar installers across the state, CALSSA found that 59% of installers expect more layoffs ahead, and 63% expect to have cash flow issues over the next three quarters. About 70% expressed concern about their business outlook, while 43%, or about 300 businesses, said it will be difficult to remain in business. 

To meet its clean energy goals, California needs to install 3.5 times as much solar and seven times as much energy storage as what is cumulatively installed today. With minimal demand, layoffs and business closures, it will be very difficult to meet these requirements. 

CALSSA said that short of reversing the decision altogether, there are a few things CPUC can do to repair the damage done. First, it recommends rejecting the Income Graduated Fixed Charge proposed by utilities that would assess minimum bills on all customers, regardless of whether they pull electricity from the grid or not. 

Other recommendations include: 

  • Simplify AB 2143 (Carrillo) to protect small businesses installing solar and storage 
  • Do not limit licensed solar contractors from installing solar + batteries 
  • Launch The Million Solar Batteries Initiative: Create new, massive investments in energy storage for all consumers (low-, working-, middle-class and non-residential consumers). 
  • Cut red tape 
  • Eliminate interconnection delays and establish penalties for utility non-compliance 
  • Simplify permitting at city and county level by fully implementing SB 379 (Wiener) 

“CPUC commissioners claimed their decision was about ‘launching the solar and storage industry into the future.’ Instead, they caused the nation’s largest-ever loss of clean energy jobs, pushed once thriving businesses out of the state or into bankruptcy, and derailed California’s fastest and most accessible path to a clean energy future,” said Bernadette del Chiaro, executive director of CALSSA.

Watch the October 2023 pv magazine USA Roundtables discussion of the California rooftop solar and storage market, including commentary from del Chiaro and other market experts below:



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