From left, Serena DiMauro, Daniel DiMauro, Jason Sturdevent and Levi Franklin are the team behind SunStack Solar pushing sales as the energy credit outlook grows murky. Photo by Frank Lopez

Homeowners could see the economics of their solar power systems shift with passage of a California Assembly bill that could strip an owner’s net energy metering (NEM) compensation when a property is transferred.

Last week, the Assembly Appropriations Committee passed AB 942, drafted by Assemblymember Lisa Calderon (D-Whittier), which would cancel an existing net-metering agreement with a utility if that property was sold to another party.

Net metering refers to a system in which solar panels or other renewable energy generators are connected to a public-utility power grid with surplus powered transferred back to the grid. That allows customers to offset the cost of power drawn from the utility.

California enacted its first net metering policy in 1996, with the current version NEM 3.0 taking effect in the spring 2023.

AB 942 was amended earlier this month, removing language that would have slashed net metering compensation periods from 20 to 10 years.

Currently, the credit for exported surplus energy — the energy a solar home puts back into the grid — ranges from 22 to 36 cents per kilowatt hour.

New solar owners can expect a 75% cut in average surplus energy payments. That means an owner who had been getting a credit of 36 cents could see it fall to about 8 cents.

 

Local industry perspective

SunStack Solar, a division of Fresno Sierra Contractors, has seen demand increase for their services since they launched about five years ago.

SunStack Solar co-Owner Daniel DiMauro said increasing Pacific Gas & Electric Co. (PG&E) rates in the last few years have driven more people to adopting solar.

Co-Owner Jason Sturdevent noted that all new residential construction requires solar, and many people are upgrading their systems.

DiMauro said regular wear-and-tear of solar panels leads to a reduction in efficiency.

“You have all these existing homes that are starting to get 15-20 years old and those need to be completely overhauled,” Sturdevent said.

Manager Levi Franklin worries whether this new system will cause solar customers to lose confidence in government contracts.

“I think people will lose faith in the government,” Franklin said. “They signed up with these policies thinking they’re getting grandfathered in for 20 years and they’re changing the policy. When we sell solar to people they might not have as much trust with solar companies because they think PG&E will change it.”

Upfront costs for customers have also increased, Franklin added, with half of the costs going towards a battery system to make the solar feasible.

Costs for materials including steel, batteries and other products used in solar power systems have increased recently, especially after talks of tariffs, Franklin said.

DiMauro said SunStack Solar has been busy on the contracting side with Fresno Sierra Contractors. But now they are looking at a renewed push in solar with DiMauro’s daughter Serena, an executive assistant, working with Franklin as manager.

“Now it’s about putting more energy and focus on the solar business and they’re growing it. All it’s about is getting your name out there,” DiMauro said.

He said he’s optimistic for the next five years, hoping for staying power over unsustainable growth.

Mike Nemat, founder and CEO of Nemat, Inc. in Madera, parent company of Lean Solar, said that current political and economic activity has led to a decline in orders for their products, including solar, with clients waiting to see how things turn out.

“People are just panicking with the condition of the country. There is different news coming out every day that is contradicting so everyone is waiting to see where we land. Also, the utility companies taking away a lot of perks and benefits led people to stop buying solar,” Nemat said.

He noted that battery storage system prices have been going down as the technology improves, with many companies investing in vehicle battery storage for homes.

Higher upfront costs and interest rates have also led to a decline in homeowners switching to solar Nemat added.

The decline in demand has led to substantial layoffs in the industry, Nemat said, including for his own company.

Nemat said he has reduced staff by 10%, and if the company can’t get more substantial projects, more layoffs are expected.

“It’s hard to say what will happen with the instability of the federal government,” Nemat said. “Things change from hour to hour and day to day and that’s not a good economic environment.”

 

Cost burden

During the Assembly Appropriations Committee meeting on May 21, Calderon said that 30 years ago California launched solar subsidies when the industry was new to spur investment, but today, those subsidies have led to a cost shift to non-solar customers to ensure the grid is maintained.

“This cost shift amounted to an estimated $8.5 billion last year alone and is expected to increase in future years,” Calderon said.

She said that the cost shift is roughly one-quarter of a non-solar customer’s energy bill.

Calderon said that the bill exempts school and agricultural solar customers.

Brad Heavner, policy director at the California Solar & Storage Association, said at the hearing that solar customers signed long-term lease agreements with expectations of savings over time.

He said the agreement is essentially a contract that incorporates the NEM tariffs in it.

Heavner said that reviewing real estate sales and rental agreements of customers will overburden the California Public Utilities Commission, which does not have the resources of managing and reigning in “runaway utility rates.”

He said the utilities have concocted a math that blames high rates on solar customers instead of their “own runaway spending.”

“Solar customers do buy less energy from the utilities — we want them to buy less energy from them. We have always encouraged that and will continue to encourage that. Solar customers have allowed the utilities to take weight off the grid,” Heavner said.