California slashes incentives for new rooftop solar

California Public Utilities Commission subsidy cuts for new Net Energy Metering customers don’t go as far as utilities wanted, but too far for solar industry.

The California Public Utilities Commission on Thursday overhauled its rules for rooftop solar power, slashing subsidies for new solar installations while providing incentives for customers to add battery storage to their systems.

Commissioners approved a complicated new 260-page framework on a 5-0 vote, saying the changes will shift costs from non-solar users and promote grid reliability.

At issue is NEM, or Net Energy Metering — the rules that determine the size of the credits customers receive on their utility bills when their rooftop solar systems generate more energy than they consume. Roughly 1.5 million customers in the state have installed rooftop solar on their homes and businesses.

California’s NEM rules had not been updated since 2016. Solar advocates said the state needs to continue offering strong subsidies to encourage the transition to clean energy. Critics said the existing rules unfairly burdens non-solar customers — especially lower-income residents — with the rising costs of maintaining the power grid.

“This decision is about encouraging solar and storage but also, fundamentally, about the right way to charge NEM customers for use of the grid,” said Alice Busching Reynolds, president of the utilities commission, known as the CPUC for short.

The new rules — known as NEM 3.0 — include $900 million in upfront incentives for customers to pair solar with battery storage systems, with $630 million set aside for low-income customers. The CPUC estimates the new rules will save average residential customers with solar-plus-storage at least $136 a month on their utility bills.

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