Now that California’s NEM 3.0 legislation has curbed panel sales and Arizona heads a bevy of other US states preparing to cut solar export payments, it’s time for the US solar industry to take action , both for ourselves and for our customers.
If you look through the December 2023 issue Time magazine, you may have seen an article focusing on fraud in the solar industry and the bad actors who perpetuate it.
In the twenty years since installer Independent Solar was founded, I have seen these bad actors and their shady business practices firsthand. While I am sad to say that these companies have eroded some of the public’s trust in our industry, they are not the only ones to blame. Thanks to changing regulations, customers don’t always see their promised savings, and if customers feel like solar is just a lure followed by an endless maze of changing regulations, it’s no wonder fewer households are willing to sign up for solar -take energy. contracts.
I’ve already seen that shift begin. The regulatory winds are blowing and solar customers are in what can only be called a sea of confusion. This has become clear since it washed over California in April 2023 in the form of the new net energy metering rate NEM 3.0.
NEM 3.0
If you’re unfamiliar with the situation, NEM 3.0 has dramatically reduced the amount of compensation solar homeowners receive for unused electricity fed back into the grid.
Before NEM 3.0, California did what most states do: it used one-to-one net metering, so customers got the same amount for exported solar energy as they would pay to use that amount of electricity from the grid. That meant their electricity often paid for itself.
NEM 3.0 has moved from net metering to net billing. It’s a small change in terminology, but a big change in practice. With net billing, the reimbursement rate is calculated based on the day, time and even month the customer uses the electricity. It is a deliberately complicated system and the bottom line is that customers are reimbursed approximately 75% less than before.
Industry is suffering
As a result, some solar customers are understandably starting to panic. They are not alone. Research firm Wood Mackenzie has predicted that the number of solar installations in California will decline by 38% by 2024. Investment bank Roth Capital Partners expects something even worse: a 50% contraction in the solar energy market by 2024.
Unfortunately, customers who purchased solar energy systems because of the savings are seeing these returns evaporate before their eyes. Under the new regulations, customers can still save almost as much as before by installing a battery, but that is quite expensive and therefore not an option for everyone.
If you live in another US state, you may be relieved that you don’t have to deal with NEM 3.0, but the truth is that many other states are following suit. Arizona even beat California by a wide margin when it came to reducing overall energy savings for customers. It dramatically reduced savings for customers in 2016, well ahead of California.
Further blow
The Arizona Legislature is now considering whether to reduce compensation rates even further. Unfortunately, I think it is likely that Arizona will reduce these compensation rates.
I believe this was always the legislative plan: incentivize homeowners to install solar panels at artificially low rates and then appease utilities by lowering the fees. This is hardly a regional problem. Several other states – including Arkansas, Hawaii, Idaho and North Carolina – have recently made similar changes to drastically reduce savings.
This makes it an uncertain time for customers. Unless something changes, solar companies across the country will see a continued reduction in solar installations, and this is especially true in states with turbulent legislation like Arizona, where panels are installed with the promise of significant savings. consider reducing them again.
I think Arizona Solar Energy Industries Association Executive Director Autumn T. Johnson was spot on when she said, “It’s hard to argue that you should invest $30,000, $40,000 or $50,000 in a solar system in your home if you have absolutely no idea how [public utilities] The committee is going to deal with that from a regulatory perspective tomorrow or next year because they cannot be counted on to enforce the decisions they have made previously.”
Reward
Solar energy is a large initial investment intended to reduce costs in the long term, but only works to the customer’s advantage if they save enough on their energy bills to make the solar panels pay for themselves. The less consumers save on energy, the longer it takes.
If the customer is still paying almost the same amount for utilities as before, why should they care about the cost of solar energy?
As an industry, we are responsible for showing our customers that solar energy is still good for their wallets. After all, it’s still good for the environment.
We also have a responsibility to advocate against bill adjustments that decimate consumer savings. NEM 3.0 could make solar energy look like bait, and without adjustment on our part, it will be. However, with trust, open communication and intelligent advocacy, we can help customers reach the new frontier of true on-site solar.
About the author: Randy French, owner and founder of Phoenix-based Independent Solar, started the company in 2003. French pioneered rooftop solar installations and expanded statewide. His company has built a reputation for quality and customer satisfaction. Independent Solar provides residential and commercial solar solutions, is committed to innovation and customer service, and now serves Arizona, Nevada and Texas.
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