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he California Public Utilities Commission (CPUC) has stirred up the state's solar energy sector with its latest decision. After much anticipation, marked by debates and delayed votes, the CPUC has unanimously voted to reshape the rules for properties with multiple meters and solar-savvy small businesses.
A New Dusk for Solar?
This decision follows the controversial NEM 3.0 vote in December 2022, which already dialed down the financial benefits for single-meter residential solar setups. The new regulations aim to restructure incentives targeting properties with multiple meters.
Previously, California's multi-meter properties enjoyed benefits under the Virtual Net Energy Metering (VNEM) and Net Energy Metering Aggregation (NEMA) programs. These allowed a single solar system to power entire buildings - from apartment blocks to commercial centers - sharing both electricity and net metering credits.
The Commission’s latest move backed by utilities slashes the compensation for excess solar power produced by these systems. Now, building owners and tenants will receive much less for the energy they send back to the grid, and they'll need to repurchase their own energy at higher retail prices set by utilities. Additionally, the compensation they receive will vary depending on the time of day and the season.
For new solar adopters, these revised rules are immediate, whereas those with existing setups will see a gradual transition over the next two decades. On a brighter note, participants in affordable housing programs will retain their current rates.
Immediate Changes and Long-Term Impacts
Under the new regulations, properties like apartment complexes, schools, farms, and commercial strips with multiple meters on-site will be paid about 80% less per unit of solar energy they produce and sell back. This hefty reduction in returns is likely to reduce the appeal of installing solar panels on many of the state's ideally-suited rooftops.
With California boasting the largest solar market in the U.S., these policy shifts could dim the state's shine. In its latest report, The Solar Energy Industries Association (SEIA) predicts a sharp 38% fall in the Golden State's solar installations in 2024. Policy shifts could ripple through the entire U.S. solar market, leading to a 4% dip nationwide.
New California rules are crushing the solar industry
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Key takeaways
The California Public Utilities Commission (CPUC) unanimously votes to revise rules for properties with multiple meters, impacting solar-savvy small businesses and multi-meter setups.
Background:
- NEM 3.0 vote in December 2022 already reduced benefits for single-meter residential solar setups.
- Previous programs like VNEM and NEMA allowed single solar systems to power entire buildings, sharing electricity and net metering credits.
Changes:
- Utilities-backed decision slashes compensation for excess solar power, requiring owners and tenants to repurchase energy at higher retail prices.
- Compensation varies by time of day and season, impacting new adopters immediately and existing setups gradually over two decades.
- Affordable housing program participants retain current rates.
Immediate Impacts:
- Properties with multiple meters face an 80% reduction in compensation for solar energy sold back.
- Reduced returns may decrease the appeal of solar panel installations in California, potentially leading to a 38% decline in solar installations in 2024.
- Nationwide, the U.S. solar market could see a 4% dip due to policy shifts.
These policy changes could dim California's leading solar market status and have ripple effects on the broader U.S. solar market.
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