California's rooftop solar policy becomes a national warning

California's rooftop solar policy becomes a national warning


The residential solar market has been facing all sorts of difficulties over the past year as high interest rates have squeezed available savings for homeowners.Policy changes such as California's Net Energy Metering (NEM) 3.0 are putting pressure on rooftop solar customers' value claims, leading to a significant drop in rooftop solar demand in recent months.

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With major publicly traded solar stocks down more than 75 percent over the past year and demand down 40 to 80 percent in major markets such as California, the adverse effects of NEM 3.0 have yet to be fully assessed.

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While California has long been held up as a success story for the solar market, that success may not continue. At a live event at the 2023 U.S. Roundtable, PV Magazine USA invited a panel of four experts in the field of distributed solar and energy storage to offer their views on how the market is responding to policy changes and to draw some lessons from California's recent woes.

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Participants included Carina Brockl, chief revenue officer at Aurora Solar; Blake Richetta, chairman and CEO of Sonnen; Walker Wright, vice president of public policy at Sunrun; and Bernadette del Chiaro.

Wright began the conversation by acknowledging that the net metering program played an important role in jumpstarting the market in California, which accounts for approximately 50 percent of the U.S. rooftop solar market. The net metering program, along with federal policies and California's incentives, has made rooftop solar a strong customer proposition.

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"The largest renewable energy market in California is the distributed solar market," said del Chiaro, "however, the measures we just put in place have brought more than just dramatic changes to the market ...... Under the new NBT rates, our sales are down 80% and the next few months look set to be bleaker, not brighter."

While the residential solar market is currently suffering from headwinds, there are still forces that can offset the market's pullback, Brockl said, adding that while inflation has steadily risen, electricity prices have risen even more, in some cases by twice the rate of inflation. This makes our advice to rooftop solar customers slightly more attractive, as it can be a hedge against rising electricity costs, even if the day one savings are very small or even negative.

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Richetta expressed more optimism than the rest of the panel on behalf of energy storage provider Sonnen, a company founded in Germany, where the rooftop solar market experienced a similar contraction when feed-in tariff policies supporting market creation were phased out. Since then, the market has recovered and Germany now has one of the highest rates of rooftop solar penetration in the world.

Richetta says: "Utilizing solar energy and harmonizing it with grid operations is an objective market demand ...... There is also a need to transform intermittent forms of generation into stable and dispatchable forms of generation."

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