ICYMI: Sierra Club urges NEM reform -- “Tying the NEM incentive to retail rates pays rooftop solar customers far more than their electricity is worth.

Posted on November 3, 2021

SACRAMENTO – In a new blog post, Katherine Ramsey, staff attorney for the Sierra Club’s Environmental Law Program, called for reform of the state’s rooftop solar Net Energy Metering program (NEM) “to achieve climate goals and benefit Californians of all income levels.”

Specifically, the Sierra Club argues that paying rooftop solar customers the full retail rate for excess solar-generated electricity is outdated and the benefits of rooftop solar at that high subsidy level don’t pencil out. “Tying the NEM incentive to retail rates pays rooftop solar customers far more than their electricity is worth,” Ramsey writes. 

She continues:

“Paying a premium for energy from rooftop solar is a reasonable policy decision to account for the unique benefits of local energy (like avoided transmission and increased local resiliency) and it’s appropriate to pay a premium where solar technology is an emerging resource. In California, however, the solar industry has matured to a point where a smaller incentive is appropriate since the benefits don’t make up the full gap between the retail rates and the wholesale rate.”

“Another consequence of the gap between NEM and the actual cost of powering our homes is that rooftop solar customers avoid paying those extra non-energy costs. Instead, everyone else has to pick up the difference. This raises pointed equity concerns for customers who do not, or cannot, adopt rooftop solar themselves — such as renters or people living in multi-buildings. A thriving and equitable rooftop solar program requires a reasonable balance of costs between customer groups.”