A proposed piece of legislation on the California State Assembly floor could alter the length and level of compensation solar project owners receive through net metering agreements.
California Assemblymember Lisa Calderon (D-56) introduced Assembly Bill No. 942 in February that, if enacted, would force legacy solar projects operating on previous net-metering programs to shift to a net-billing tariff, also known as NEM 3.0, after the systems have been in operation for 10 years. The two previous net-metering policies, NEM 1.0 and 2.0, gave eligible residential and commercial solar customers a 20-year period where they would be compensated by utilities for any extra electricity their arrays generated.
“Solar users, who are now mostly working and middle-class families, relied on a contract with the state when they spent or borrowed money to invest in solar,” said Brad Heavner, executive director of the California Solar & Storage Association, in a press statement. “They did so to save money for their families and help the planet, with the added benefit of reducing strain and demand on the energy grid.”
The California Public Utilities Commission passed NEM 3.0 in December 2022 and started the program in April 2023. The net billing tariff shifted from compensation based on retail energy prices to avoided costs, which has varying rates based on when that solar energy is exported. Following its passage, the California solar market has experienced record job losses, especially residential contractors, and industry organizations have cited NEM 3.0 as the cause.
Legacy solar projects were able to continue operating on previous net-metering programs for the agreed-upon 20-year term, but Bill 942 would reduce that to 10 years and move those projects to NEM 3.0. Additionally, the bill would prevent California’s Cap-and-Trade Program, which funds greenhouse gas emission reduction measures, from providing credits to solar customers.
“Rather than offer consumers actual solutions, utilities want to point fingers at their favorite scapegoat: rooftop solar,” Heavner said.
The bill was amended on March 25 and referred to the state assembly’s Committee on Utilities and Energy, awaiting further action.
