Rooftop

California NEM 3.0: Appeals court to hear arguments against rooftop solar policy

California NEM 3.0: Appeals court to hear arguments against rooftop solar policy
(Courtesy: Ricardo Gomez Angel/Unsplash)

A California appeals court panel will hear oral arguments Wednesday in a lawsuit challenging the state’s new rooftop solar policy. The policy, approved by the California Public Utilities Commission and effective April 15, reduces the credit new solar users get for sharing their extra solar energy with the grid.

Arguments will be heard at 9:30 a.m. PT on Wednesday at the California Court of Appeal, First Appellate District, and the hearing will be livestreamed.

California’s new net metering policy slashes customer credits by up to 80% for electricity generated on rooftops and sold back to the grid. Opponents say this has stymied efforts to expand rooftop solar in the state and led to layoffs in the solar industry.

The petition says the commission ignored a host of rooftop solar benefits, including reducing greenhouse gas emissions, resilience to extreme weather and power outages, and decreasing the need for utility transmission lines. It also says for-profit utilities across the country are trying to gut rooftop solar programs because distributed energy resources, like rooftop solar, threaten the utility business model.

GO DEEPER: Renewable Properties founder and president Aaron Halimi joined Episode 33 of the Factor This! podcast to discuss the future of community solar in California which, to date, has lagged behind other markets, despite the state’s role as a leader of the energy transition. Subscribe wherever you get your podcasts.

On Dec. 15, 2022, the CPUC adopted a draft decision that would revise the state’s net energy metering tariff in a bid to improve price signals by better aligning them with the electric grid’s conditions, both day and night. The tariff’s updated billing structure is designed to optimize grid use by the tariff’s customers and incentivize the adoption of combined solar and storage systems.

In its NEM 3.0 decision, the CPUC opted for an “improved version of net billing” with a retail export compensation rate aligned with the “value that behind-the-meter energy generation systems provide to the grid” and retail import rates that “encourage electrification and adoption of solar systems paired with storage.”

In May 2023, the Center for Biological Diversity, The Protect Our Communities Foundation, and the Environmental Working Group petitioned the California Court of Appeal to review the policy after the commission rejected the group’s appeal.

The tariff applies to electrification retail import rates, with what it said would be “high differentials between winter off-peak and summer on-peak rates” to new residential solar and storage customers instead of the time-of-use rates in the current tariff. It also replaced retail rate compensation for exported energy with Avoided Cost Calculator values that vary according to grid needs.