The NEM 3.0 Debacle: A Dark Cloud Over California’s Solar Industry
by Brad Bartz | CEO – ABC Solar
Los Angeles CA (SPX) May 26, 2023
The sunny state of California, revered for its burgeoning renewable energy industry, now finds itself in the midst of an unprecedented crisis. The catalyst for this predicament is the California Public Utilities Commission’s (CPUC) Net Energy Metering (NEM) 3.0 policy, which has brought the solar industry to its knees, even outpacing the detrimental effects of the COVID-19 pandemic on the sector.
This new policy, which went into effect on April 14th, has sent ripples of concern through the solar industry and its consumers alike. The consequences are starkly visible in the declining rate of solar adoption, as if the industry has been driven off a cliff.
To fully comprehend the extent of the damage, it’s important to analyze the historical context. In 2000, Bradley Bartz founded ABC Solar Inc., a business committed to propelling the solar revolution. Bartz was forewarned about the CPUC’s propensity to push small solar players to the sidelines through their policies. At the time, it seemed unfathomable. But today, as we see NEM 3.0 come into play, it feels like a bleak prophecy coming true.
NEM 3.0, under the guise of a reform, is the third instance where the CPUC has used its authority to impede solar adoption rather than promote it. The process through which it was imposed leaves a lot to be questioned. The backroom discussions and arguably flawed due process have raised eyebrows, sparking a debate on the fairness and transparency of the Commission’s operations.
Moreover, SCE’s lethargic application process has only added fuel to the fire. By taking every available day to review applications and utilizing trivial corrections to extend their review period, SCE has essentially placed the solar industry in limbo. The result is a backlog of NEM 2.0 applications tangled in a convoluted bureaucratic web.
Contrasting this with the COVID-19 pandemic paints an interesting picture. Every market, every industry, everywhere was equally affected. It was a shared experience. But what we’re witnessing with NEM 3.0 is an isolated onslaught on the solar industry that has far outstripped the impacts of the pandemic.
As the industry battles this policy storm, it’s crucial to revisit the economic value of consumer-owned solar. For instance, a consumer saving $200 per month by adopting solar is likely to reinvest that money into their local community. This not only fosters a more vibrant community culture but also drives increased tax revenue for local cities.
Additionally, the water-saving value of every solar kWh is significantly underestimated. Traditional thermal power generation squanders water resources, whereas solar power generation is largely water-free. These values have, regrettably, been neglected in the policy discourse.
Forty days post the deadline, most NEM 2.0 applications remain in bureaucratic limbo, illustrating the stagnating impact of NEM 3.0 on the solar industry.
However, the current scenario also provides an opportunity for advocacy. It’s high time to articulate the disadvantages of NEM 3.0 and the value of solar power cogently and convince policymakers to rethink their approach. If California is to remain a beacon for renewable energy, the sun must continue to shine on its solar industry. It’s time for the CPUC to recalibrate its compass and steer the state towards a truly sustainable future.
As we navigate these stormy waters, it becomes increasingly clear that the CPUC’s current framework is unable to efficiently and effectively manage its responsibilities. Bradley Bartz, the founder of ABC Solar Inc., is a vocal proponent of this view. Bartz, having witnessed the workings of the CPUC up close, believes the commission is presently overwhelmed by its obligations.
The current system allows the regulated, such as SCE, to overload the commission with responsibilities to the point of confusion. This is a case of the regulator being ‘gamed’ by the regulated, leading to an imbalance of power and influence. The result is policies like NEM 3.0, which seem to be more detrimental than beneficial to the renewable energy sector.
To rectify this, Bartz proposes increasing the number of commissioners from 5 to 15. This proposal has a two-fold rationale.
Firstly, he draws parallels with the Contractor State License Board, which has 15 commissioners overseeing a comparatively smaller set of stakeholders. If a smaller governing body warrants such a commission size, it stands to reason that the CPUC, overseeing a larger and more complex sector, would benefit from an expanded commission.
Secondly, Bartz references the Lanterman Act, which recognized that the Department of Education had become difficult for citizens to access. This led to the creation of 22 regional centers that dispersed governance and services to the population more effectively. If applied to the CPUC, this could enhance efficiency, transparency, and accessibility to services.
The silver lining to the predicament we find ourselves in is that it gives us a chance to reflect, reassess, and reform. The CPUC needs to transform from a centralized, overwhelmed entity into a more distributed, effective commission that can efficiently handle the tasks at hand. Only then can we expect fair and advantageous policies that genuinely champion the cause of renewable energy.
In conclusion, the NEM 3.0 debacle has exposed flaws in our policy-making mechanisms, but it also presents an opportunity for reform. By increasing the number of commissioners and fostering a more distributed governance structure, we can ensure that our solar industry continues to shine brightly and sustainably. This restructuring is necessary if we wish to preserve California’s status as a renewable energy powerhouse, safeguard our resources, and champion the economic benefits of consumer-owned solar power.
Analyst A: Solar Energy Analyst
Relevance rating: 8/10
For a Solar Energy Analyst, this article has high relevance. It provides a detailed and comprehensive analysis of how recent policy changes, notably the NEM 3.0, have significantly impacted California’s solar industry, especially small businesses like ABC Solar. The nuanced critique of CPUC’s current governance structure, as well as the proposed solutions to improve efficiency and responsiveness, offers invaluable insights for industry professionals. The exploration of the economic and water-saving value of solar also sheds light on key facets that can drive future industry narratives. However, it might lack in-depth technical analysis of the policy itself, which would have made it a 10/10.
Analyst B: Regulatory Analyst
Relevance rating: 9/10
The article’s focus on the regulation of solar energy and the CPUC’s role makes it highly relevant for a Regulatory Analyst. It discusses regulatory challenges, critiques the CPUC’s operational effectiveness, and examines SCE’s role in the application process. The proposal to increase the number of commissioners and distribute governance provides a concrete solution, making it a compelling read. It could be a perfect 10 if it included more about the larger regulatory landscape beyond California.
Analyst C: Environmental Economist
Relevance rating: 7/10
The environmental and economic implications of the NEM 3.0 policy, as discussed in this article, are pertinent to an Environmental Economist. The focus on the economic value of consumer-owned solar, the savings to the consumer, and the potential to boost local economies is of great interest. The water-saving advantages of solar power also provide a unique perspective. However, the rating is not a full 10 as the article largely focuses on regulatory and industry-specific challenges, which may not be the primary interest of an economist.
Over the past 25 years, California has been a global leader in adopting renewable energy, particularly solar power. However, the introduction of the NEM 3.0 policy by the CPUC has led to a dramatic slowdown in the solar industry, outpacing even the impacts of the COVID-19 pandemic. The policy, its adoption process, and the subsequent application process led by SCE have drawn criticism for their lack of transparency and efficiency. The article argues that the economic and water-saving benefits of solar power have been overlooked and calls for a reform in the CPUC’s governance structure. It suggests increasing the number of commissioners from 5 to 15, mirroring structures in other sectors, to improve efficiency, transparency, and accessibility.
The solar industry has been an engine of economic growth and a model of sustainability, with consumers’ savings from solar power being reinvested into local communities. The sector’s slowdown has broader implications for local economies and California’s leadership in renewable energy. If these issues are not addressed, the state could lose its status as a renewable energy powerhouse. By fostering a more distributed and larger governance structure, the CPUC can potentially address these challenges and ensure that the solar industry continues to thrive.
What specific aspects of the NEM 3.0 policy have led to the slowdown in the solar industry? Understanding these specifics can provide a more nuanced view of the challenges facing the industry.
What are the broader implications of the slowdown in solar adoption for the renewable energy industry in California and the US? Assessing the potential impact can help gauge the policy’s relevance and provide insights for future decision-making.
How might the solar industry evolve in response to the NEM 3.0 policy, and what future developments can be expected? Exploring potential industry responses and future trajectories can provide foresight into potential opportunities and challenges.
What practical challenges might the CPUC face in increasing its commission size and implementing a more distributed governance structure? Understanding the obstacles to proposed solutions can provide a realistic perspective on their feasibility.
How have key stakeholders, including other solar companies, consumers, and environmental advocacy groups, responded to the NEM 3.0 policy? Assessing the perspectives of these stakeholders can reveal the wider impacts of the policy and its acceptability.