The Public Advocates Office reports that California’s main rooftop solar incentive program (Net Energy Metering) will cost customers without solar an estimated $8.5 billion by the end of 2024, a figure that has more than doubled since 2021. They write:
WHAT IS THE COST SHIFT AND HOW IS IT CALCULATED?
NEM 1.0, 2.0, and NBT customers typically reduce their utility bills significantly because they generate their own power. However, utilities have fixed costs (such as those incurred from wildfire safety measures and grid infrastructure and maintenance) that need to be paid regardless of how much electricity is consumed. If rooftop solar customers are paying less, these fixed costs need to be recovered from all other customers, dramatically increasing rates for non-rooftop solar customers.A non-bypassable charge is a fee included in a utility bill that all electric customers must pay. These charges are typically associated with costs related to maintaining the electric grid, public purpose programs, or other state-mandated initiatives. Under NEM 2.0, these charges were excluded from the compensation rate paid to solar customers for their excess energy, thereby reducing the compensation to NEM 2.0 customers relative to NEM 1.0 customers.
Based on our most recent analysis, we estimate that by the end of 2024, approximately 21-27% of the average non-rooftop solar household’s electricity bill will go to subsidizing the program across all utilities.
The total cost of the program on households without solar is the difference between the total amount that NEM 1.0, 2.0, and NBT customers are compensated (referred to as bill savings) and the total benefits solar projects provide (referred to as avoided costs). These benefits in terms of costs that are avoided include greenhouse gas emissions reductions, power plant fuel and generation cost savings, and other avoided grid infrastructure costs.
Read more here.
