Study Quantifies Annual Subsidy Solar Customers Will Receive in 2023 if Net Energy Metering is Not Changed: $1,857 per Customer (and growing)

Posted on June 11, 2021

Subsidies for Solar Customers Are Paid for by Low- and Middle-Income Customers Without Solar Panels

Sacramento – A new independent report analyzing Net Energy Metering (NEM) reform proposals submitted to the California Public Utilities Commission (CPUC) found that if NEM is not reformed homeowners installing rooftop solar in 2023 will receive an average of $1,857[1] in NEM subsidies in just the first year of owning solar panels.

Because the NEM subsidy is directly tied to the ever-increasing retail rate for electricity, the first-year subsidy average of $1,857 will continue to grow as retail rates increase over time, even though the price of solar has come down significantly since the program began 25 years ago.

The same report shows that if NEM is not reformed, the subsidy for solar customers will grow to an average of $2,623[2] by 2030. Non-solar customers, many of whom are low-income or on fixed incomes, end up paying for that subsidy.

The report also found that while several diverse organizations are proposing changes to significantly reduce this unfair cost-shift, interest groups backed by solar companies have proposed only minor changes to NEM which would keep the generous subsidies mostly intact. (See chart from the report below or page 3 here).[3][4][5]

Azizza Davis Goines, president & CEO of the Sacramento Black Chamber of Commerce and member of Affordable Clean Energy for All said, “The generous subsidies given to homeowners with solar panels are still based on conditions from 25 years ago. Since then, the price of solar has dropped by 70% yet the subsidies to those who have rooftop solar are mandated to keep going up and up.”

She added, “Given California’s clean energy progress, dramatically falling rooftop solar prices, and policies that assure continued growth of rooftop solar in California, it’s difficult to rationalize why the same generous subsidies should remain. This is particularly so when those subsidies end up being paid predominantly by lower-income residents and small businesses. We want NEM reform to ensure solar homeowners pay their fair share.”

The E3 report, commissioned by the CPUC earlier this year, compares the various proposals submitted by participants in the formal NEM proceeding at the CPUC. The proceeding is required by state law and will consider much needed changes to the state’s rooftop solar subsidy program.

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 the CPUC to reform NEM’s antiquated rate structure that is needlessly increasing electricity rates for millions of residents including those least able to pay.

1 This figure is an average of Non-CARE Solar Only First Year Cost Shift in 2023 if NEM is not reformed: PG&E ($1,817); SDG&E ($2,467) and SCE ($1,287) Source: E3: “Cost-Effectiveness of NEM Successor Rate Proposals under Rulemaking 20-08-020 – A Comparative Analysis.” May 28, 2021. Page 34.

2 This figure is an average of Non-CARE Solar Only Cost Shift in 2030 if NEM is not reformed: PG&E ($2,651); SDG&E ($3,432) and SCE ($1,788) Source: E3: “Cost-Effectiveness of NEM Successor Rate Proposals under Rulemaking 20-08-020 – A Comparative Analysis.” May 28, 2021. Page 38.

3 The chart represents the cost shift in PG&E’s service area. See footnote 1 for comparable figures for SDG&E and SCE.

4 The report calculated the subsidies solar customers will receive in 2023 based on the various proposals submitted to the CPUC. NEM 2.0 represents the subsidy for solar customers on the current version of NEM in 2023 if the program is not changed.  Source: E3: “Cost-Effectiveness of NEM Successor Rate Proposals under Rulemaking 20-08-020 – A Comparative Analysis.” May 28, 2021.

5 Groups listed in the chart:

Cal Advocates (Public Advocates Office at the CPUC)
CALSSA (California Solar and Storage Association)
CARE (Californians for Renewable Energy)
CCSA (Coalition for Community Solar Access)
Joint IOUs (PG&E, SCE, SDG&E)
NRDC (Natural Resources Defense Council)
PCF A (Protect our Communities Foundation)
SBUA (Small Business Utility Advocates)
SEIA/Vote Solar (Solar Energies Industries Assn and Vote Solar)
Sierra Club
TURN (The Utility Reform Network)