SAN DIEGO (KGTV) — The California Supreme Court has agreed to review the case challenging the controversial reform to rooftop solar energy payments known as NEM 3.0, which stands for net-metering.
Under NEM 3.0, homeowners with rooftop solar panels are compensated for any surplus energy they produce beyond their consumption at the actual value of the energy generated.
Under the previous iteration, NEM 2.0, solar owners were generally paid market rate. The reform changed that calculation to pay at the actual value of the energy produced.
Since the implementation of NEM 3.0, payments have seen a reduction of around 75%.
Supporters of NEM 3.0 say the old system was unfair for several reasons.
First, they say wealthier homeowners were more likely to afford solar, which meant low-income households without solar were paying more to subsidize solar owners. The Utility Reform Network (TURN), a utility watchdog which supports NEM 3.0, says about 15% of the average utility customer's bill went to subsidize ratepayers who have solar.
Second, Californians now produce so much solar energy that the cost has dropped significantly. Under NEM 2.0, solar owners were getting paid much more than their energy was actually worth.
Third, there are times when California actually produces much more energy than it needs or can sell, which has to be disposed of unused. Supporters of NEM 3.0 say the reform encourages and create incentives for solar owners to install battery storage systems that will hold on to that excess energy until peak times.
However, the new policy seems to have had a devastating effect on solar businesses.
“I think the impact on the rooftop solar industry is just obvious when you look at the data," said Walker Wright, a vice president at solar company Sunrun.
According to data from the California Solar & Storage Association, new solar installations dropped by 66% from February of 2023 to February of 2024.
This downturn has resulted in business closures and a 25% reduction in rooftop solar jobs in California compared to previous years. Wright said Sunrun has laid of 62 employees in San Diego County in April.
“That’s just because there’s less demand for these types of projects right now," he said.
While lower courts have sided with the California Public Utilities Commission, which approved the policy, the challengers are hoping the California Supreme Court will rule differently when it hears the case later this year.
Concurrently, an effort is underway by some state lawmakers to eliminate NEM 3.0 through legislation.
