March 13, 2024

The Wild Wild West of California Solar in 2024!

The state of California’s solar industry and how it relates to solar consumers moving forward.

As the ashes settle from last years transition from NEM 2.0 to the current tariff which is called NEM 3.0 or the NBT tariff.  Let’s see where we stand, where we came from and where we are headed.

The CPUC all but pulled the plug on rooftop solar growth in California when it approved the NBT Tariff on December 15, 2022 which was ultimately put in place on April 14, 2023.

NEM 3.0 cut the compensation rate for net-generated solar kilowatt hours (kWh) by more than 75%.  Under NEM 2.0 ratepayers would receive retail credit for their ‘net generated’ kWh but under NEM 3.0, now they receive a wholesale rate that’s between 3 to 7 cents per kWh. (NEM 2.0 customers are grandfathered for 20 years.)

Since the new tariff took effect in April of 2023, the California solar industry has seen an 80% drop in solar installations and a loss of more than 20,000 jobs.

CAPUC Logo

The CA Public Utilities Commission is mandated to serve the public by securing electricity reliability and affordability but it feels like the CPUC is dead set on blocking the growth of solar at the expense of consumers and the state’s clean energy goals.  And who benefits?  The investor-owned utilities (PG&E, SDG&E and SCE) NEM 3.0 feels like it was designed to protect their profits on the backs of the ratepayers.

Remember SB100? It was signed by governor Jerry Brown into law in 2018.  The bill set the goal of powering all retail electricity sold in California with renewable and zero-carbon resources by 2045.  It also updated the state’s Renewables Portfolio Standard to ensure that by 2030 at least 60% of CA’s electricity is renewable.  This includes renewable resources such as solar and wind energy that do not emit climate-altering greenhouse gases.  The truth is, we cannot even come close to meeting these clean energy goals without distributed generation.

Meanwhile, energy prices continue to inflate at an alarming rate.  According to the Bureau of Labor Statistics energy prices are currently rising at double the rate of inflation.  SCE’s average ratepayers are seeing annual rate increases between 12 and 20% year over year since 2020.  This is not based off finding information online but of my personally downloading the maximum available 3 years of SCE statements from dozens of solar prospects over the last few years.  The average increase for SCE ratepayers is over 15% and at that rate their electricity bills will double in 5 years.

SCE Logo

If you are an SCE customer, look at your January 2024 statement.  On the last 2 pages, SCE’s legal notices include their General Rate Case for 2025 which requests a 1.9 billion dollar increase for that year alone or a 22.6% increase over 2024’s rates.  Those increases are followed by 6% increases year after year until 2028.  Okay enough of the bad news.

Fortunately, going solar still makes sense for California homeowner’s who are trying to take control of their energy costs and gain their energy independence from the utility.  Solar also significantly increases the value of your home.  By going solar not only you will freeze your costs for electricity but you will protect yourself from the ever-increasing energy rates moving forward.  The systems we are installing today have a 40-year useful life so once you have achieved a 100% return on your solar investment, typically in 6 to 9 years, your savings will compound.  No exaggeration here, you will save tens of thousands of dollars in the years moving forward.

Energy Growth Chart

You can also maximize the return on investment for solar by installing an advanced energy storage system or home-based batteries.  Here in the desert, our energy consumption in the summer months is 3 to 5 times higher than the spring and winter months.  Solar customers with batteries could be compensated more during evening hours when the demand for electricity is highest.  With home-based battery storage, you can store your solar generated kWh during the daytime or off-peak hours and use those kilowatt hours during the evening when energy costs escalate.

There is still a federal solar tax credit available for homeowners who choose to install solar PV and home-based batteries.  It is currently at 30% until 2033 when it will drop to 26%.  The credit will further decrease to 22% in 2034 and expire in 2035.

Call us today and we can discuss by phone or set up an in-person consultation.

(760) 641-7179