On January 28th, the California Public Utility Commission (CPUC) decided in a 3-2 vote to adopt the December 2015 Proposed Decision for the Net Energy Metering successor tariff (NEM 2.0). Ultimately, under NEM 2.0 the CPUC has preserved full retail rate compensation for net-metered solar systems. This is great news for California businesses.
One of the most significant outcomes from NEM 2.0 is the removal of the net-metering capacity cap for total net-metered solar energy interconnected to the grid. These changes will continue the CPUC’s progression of utilizing rate-based policies to dictate the growth and valuation of solar power in California. The NEM 2.0 tariff will go into effect once the current NEM capacity cap of 5% total peak grid-demand is reached, which will likely be in the second half of 2016. Businesses that interconnect solar systems under NEM 2.0 will be grandfathered under that tariff for 20 years from the date of interconnection.
This decision has sent a very clear message to California electricity ratepayers and the state’s Investor Owned Utilities (IOUs: PG&E, SCE, SDG&E) that consumers deserve more choice when it comes to procuring electricity. Along with the December 2015 extension of the federal Investment Tax Credit (ITC) and the inclusion of 50% bonus depreciation, there is a clearer path for businesses to make high returning solar energy investments (e.g. acquiring solar kWh at prices well below retail rate through various project structures).
In 2019, the CPUC is planning to overhaul solar rates in California to maintain the sustainable growth of solar, which will have a significant impact on future project economics. Over the next 3 years the CPUC will utilize the Distribution Resources Plan (DRP) and the Integration of Distributed Energy Resources (IDER) proceedings to quantify the true value of distributed technologies, and their systemic grid benefits. According to Brad Heavner, Policy Director at CalSEIA, the next CPUC rate decision in 2019 will likely result in a solar export tariff at a stipulated value-of-solar rate, instead of the current net-metered retail rate.
Until then, California businesses have a clear 3 year investment runway. To find out more about how California solar policies can impact your business, click HERE to contact PowerFlex, or email us at firstname.lastname@example.org.Contact Us Today!