Rooftop

California NEM 3.0: Layoffs and closures set in six months after controversial ruling

California NEM 3.0: Layoffs and closures set in six months after controversial ruling
(Photo by Vivint Solar on Unsplash)

Together with local business and environmental leaders, the California Solar and Storage Association (CALSSA) shared a new analysis on the impact of the recently adopted deep cutbacks to rooftop solar incentives on California’s progress toward 100% renewable energy, small businesses, and green jobs.

Just over six months ago, the California Public Utilities Commission (CPUC) made drastic reductions to Net Energy Metering — the program responsible for reducing the costs of going solar — by slashing the value of solar energy shared back to the grid by solar homes and businesses by 70-80%. 

Since the CPUC’s decision, CALSSA says the solar industry has experienced devastating results in the form of business closures and layoffs.

“CPUC commissioners claimed their decision was about ‘launching the solar and storage industry into the future,'” said CALSSA Executive Director Bernadette Del Chiaro. “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. All as California holds itself out there as a world leader in the fight against climate change.”

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A survey of California solar and storage companies found 17,000 jobs have or will be lost by the end of 2023 due to the recent net metering changes, CALSSA said. The job loss represents 22% of all solar jobs in California. An additional 59% of residential solar and storage contractors anticipate further layoffs, and another 11% are still unsure.

The CPUC’s changes left an uncertain future for solar businesses. Seventy percent of residential solar and storage contractors expressed concern about their business outlook. Nearly 43% (~300 companies) believe it will be difficult to stay in business this winter.

“There is no way to launch an industry forward by making its products more expensive for consumers. The overwhelming reason customers go solar is to save money. When you take away the ability for consumers to save money it puts a brick wall in front of our whole industry,” said Carlos Beccar with Energy Concepts in Fresno. “We have laid off 50% of our workforce since the new rules came into effect”, Beccar added.

CALSSA argues the CPUC’s changes to net metering are also pushing California off its path to meeting renewable energy goals. To reach 100% renewable energy, California needs 3.5 times more solar energy than it has today. Rooftop solar, today, makes up half of the state’s solar market and is the fastest growing among all renewable energy markets. A resilient and reliable energy grid for an electrified future will require 7 times more energy storage capacity than the state holds today yet solar energy drives storage development.

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Those goals now appear out of reach, CALSSA said, as changes to net metering slowed California’s solar and storage progress. Rooftop solar sales are down between 66% and 83% from the same time last year following the implementation of net metering changes.

On November 16, 2023, the CPUC unanimously approved new regulations on the state’s virtual net metering (VNEM) and net energy metering aggregation (NEMA) programs, impacting how properties with multiple electric meters can share a solar system’s benefits.

With its latest action, the CPUC has excluded properties with multiple electric meters — think schools, farms, multifamily housing facilities, small businesses in strip malls, etc. — from accessing VNEM or NEMA incentives. Instead, those facilities with on-site solar power generation will be required to buy back the power from the utility at full retail prices, according to the California Solar and Storage Association.

These changes modify earlier rules, which decidedly didn’t go far enough to enable renters access to clean energy. Still, many people believe massive groups of Californians are being carved out of the transition.

The ruling came nearly a year after a CPUC decision on “NEM 3.0,” which has since rocked the state’s industry-leading residential solar market. In that decision, the CPUC began the process of sunsetting the state’s net metering construct in favor of an “improved version of net billing” designed to incentivize co-located energy storage.