ICYMI: NRDC says solar industry’s NEM proposals result in "very high levels of cost shift”

Posted on July 29, 2021

SACRAMENTO – In a blog post this week, Mohit Chhabra and Julia De Lamare, researchers from the Natural Resources Defense Council (NRDC), said current Net Energy Metering (NEM) reform proposals offered by the solar industry “look a lot like existing NEM 2.0 policy and result in very low payback periods but very high levels of cost-shift. [The solar industry proposals] thus encourage rapid solar adoption at large costs to those that don’t have solar.

“Unfortunately, those customers that adopt solar also tend to be disproportionally wealthy.”

The blog reviewed AB 327, the policy governing the California Public Utilities Commission (CPUC) development of new NEM regulations. AB 327 mandates the CPUC to come up with regulations that meet twin goals: cost-effective for all customers while also ensuring rooftop solar continues to grow sustainably.

Chhabra and De Lamare said NEM 2.0, is “not sustainable because it overcompensates NEM customers, creating a cost burden to non-NEM customers.”

“Money to pay for electricity generated by rooftop solar panels come from those customers who don’t have rooftop solar. To the extent these payments are higher than the value of solar electricity, non-NEM customers pay more expensive energy bills and NEM customers get over-subsidized.”

The blog promotes NRDC’s NEM reform proposal as a better balance between “incentives for solar adoption with the interests of non-solar customers to ensure that rooftop solar continues to grow sustainably.”

NRDC is not a member of Affordable Clean Energy for All.

Affordable Clean Energy for All is a diverse coalition of clean energy, seniors, faith-based, community and business groups seeking changes to California’s 25-year-old NEM program. The coalition supports the continued growth of rooftop solar and the state’s commitment to clean energy and is encouraging reform of NEM’s antiquated rate structure that is needlessly increasing electricity rates for millions of residents including those least able to pay.