Utilities and Consumers in California are in a pitched battle over the value of residential solar generated electricity fed back to the grid. It’s important because the money consumers are paid for their excess solar directly affects how quickly their panels pay for themselves. If the state’s utilities have their way in the upcoming “Net Metering 3.0” debates, California’s local energy market could get shut down overnight. Listen in as Bernadette Del Chiaro, Executive Director of the California Storage and Storage Association, explains net metering, California’s 2021 review process, and offers a way advocates of clean energy can lend their voice to this critical issue.
If you are reading this, make sure to check out the petition Bernadette is asking all of us to consider signing: https://www.savecaliforniasolar.org/
Bernadette made a lot of really powerful points. Here are a few…
If they make changes that are drastic to this net metering policy, it could just ruin the market, simply put California’s rooftop solar market… the local solar energy market could drive right over a cliff within the next 18 months.
If you cut out the economics of rooftop solar, you’re cutting into the heart of consumer motivation to go solar and the market will dry up.
For every dollar that the utility spends on transmission lines, for example, we as rate payers, pay them $3.50 for repairs. And that is a guaranteed rate of return.
You can also listen to this podcast and others in our series on these platforms:
Learn more
- Both sides of the argument…
- CALSSA’s argument why net-metering needs to remain in place: https://www.savecaliforniasolar.org/
- The website put up by the California utilities and their partners to change net metering: https://fixthecostshift.com/
- California Solar + Storage Association: https://calssa.org
- The Edison Electric Institute’s infamous death spiral white paper: Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business, January 2013
- Utility Dive Article on Net Metering Clash in California: https://www.utilitydive.com/news/the-search-for-the-next-net-metering-policy-takes-center-stage-in-californi/589060/
- NC STATE Clean Energy Technology Center (NCCETC): and their 50 States of Solar Net Metering Report: https://nccleantech.ncsu.edu/2021/01/27/the-50-states-of-solar-net-metering-reforms-lead-solar-policy-activity-in-2020/
Transcript
Bill Nussey:
Hello, hello, hello, and welcome to the Freeing Energy family. This is another great podcast. And today we are going to go into the deep, hard issues that are at the very, very heart of local energy. We talk a lot about policy, but there is one policy more than any other that affects this industry, and that is net metering. And today’s guest is on the vanguard of these local energy policies. And she does it in a state that leads the nation and arguably the world when it comes to clean energy and clean local energy. So I’m very, very excited to introduce today, the CEO of California Solar & Storage Association, Bernadette Del Chiaro. So welcome Bernadette. Great to have you here.
Bernadette Del Chiaro:
Thank you, Bill. It’s really, really great to be here.
Bill Nussey:
Wonderful name. Where does that name come from?
Bernadette Del Chiaro:
My two grandparents on my father’s side immigrated here from northern Italy, from the Lucca region, in Tuscany. And my grandfather’s name, Del Chiaro, it means of the lights. Chiaro is lights or clarity. And that’s what it means.
Bill Nussey:
So obviously, when your family adopted that name many generations ago, they were destined that their granddaughter would become a world leader in the solar industry, clearly.
Bernadette Del Chiaro:
Yes. And when I got married, I told my husband, “I’m not taking your name of Blackledge, because that is just not good for me. I’m going to keep Del Chiaro, and keep leading the light.
Bill Nussey:
I love it. So the timing of today’s conversation is actually really important. And we’re going to delve into with Bernadette, a topic that is going to affect the entire, certainly all of California and by virtue of their leadership, the entire country, if not the world. So we’re going to take a hard look at this, but before we dive into the particular issue on the table today, tell us a little bit about CALSSA. People outside of California may not have heard of it, but it’s obviously one of the leading organizations thinking about clean local energy in the world. I will read from your website, which I loved, you are here to promote the widespread deployment of smart, local, clean energy technologies. That’s what we do. So you guys are doing it [inaudible 00:03:40] states and countries, and we’re just talking about it. So it’s really great to find a spirit guide for this for all of us. So what do you guys actually do every day?
Bernadette Del Chiaro:
Yeah. Great. So CALSSA, the California Solar & Storage Association, is formerly CALSEIA. So the California Solar Energy Industries Association. So we’ve actually been around for over 40 years in California.
Bill Nussey:
Wow.
Bernadette Del Chiaro:
Yeah, we changed our name a few years back to incorporate more upfront and clearly energy storage. And we are everything related to local energy. We’ve got 600 business members, makes us one of the largest, actually the largest clean energy business voice in California, and one of the largest in the country. We service our members kind of soup to nuts. So first of all, who we focus on, who our membership is, it’s in terms of the industries we support, it’s obviously the solar photovoltaic industry, the energy storage industry, and then also the solar heating and cooling through water heating and cooling. And then from there, it’s everybody from literally father, son, installation companies on up to the largest publicly traded companies in America, international manufacturers, to entrepreneurial startups, developing the latest software tools to help us be smarter in how we control our energy.
Bernadette Del Chiaro:
So it’s really a diverse membership, both in terms of the technologies to support that goal of localized energy. And then also the types of companies that are involved. And it’s actually a real pleasure to be able to build this organization, to really represent the whole of the local clean energy business and entrepreneurial inventors side of this clean energy movement and to bring everybody together, like when we have CALSSA calls, it’s just really fun to literally have on the same table, these, like I said, father, son, or mother, daughter companies that have been in business since the oil embargo of the 1970s, and two fresh out of college Oakland based software startup type hipsters, and we’re all aiming toward the same goal. So it’s really a privilege to be able to work with CALSSA and the team that we are.
Bill Nussey:
I just have to say that I really appreciate you using software and hipster in the same sentence. I spent 30 years in software and there’s nobody that ever accused me of being hipster. I was so delighted when I saw that you added the second S, storage, right? So what made you guys to be the early adopter of the second S?
Bernadette Del Chiaro:
One of my board members, Rick Reed, he always says that we’re about the big S, so we think of it as all of the S’s under the S, so solar hot water, solar PV, and now storage. Honestly we did it a few years back and it was just pretty obvious that energy storage was the to-bridge to a clean energy future, not natural gas. And that it was just critical. Energy storage, if you think about it, has been part of the California solar industry since its inception, from repurposed car batteries that powered the off-gridders that essentially took solar panels, invented by [inaudible 00:07:09], and turned them into home generation sources. They always included a battery, because it was off grid, right? I mean, [inaudible 00:07:16] led acid car batteries, but.
Bill Nussey:
Right. Right.
Bernadette Del Chiaro:
If you go back, actually the old newsletters that I have here sitting next to me, from going back to the 70s, of CALSEIA’s/ CALSSA’s, we have lots of articles about energy storage and batteries pairing with Pb, before the invention of net metering. So we’ll get to that. So it’s actually always been… And then the thermal guys like to remind us that the hot water storage tank is really also energy storage, right? So it’s always been there. It was not a hard jump, and it was just simply realizing that rebranding this 40 year old organization to make it just extra clear that energy storage was a part of our DNA, was just critical branding. And so that’s why we did it. It was exciting. And a lot of other state associations now are following suit, Colorado, Oregon, Maryland, are just, I think, three that have recently announced they’ve changed their name following California’s lead. So that’s exciting.
Bill Nussey:
Yeah. And I have a lot of respect for California, as a technology leadership part of the world. And I think it’s worth mentioning that what you described as history, and obvious, is really the future and groundbreaking for so many other places, which is why this issue we’re going to talk about today, taking place in California is so important, because, the state really sets the tempo and tone for the rest of the world. And what we’re going to talk about is net metering, give me a very quick overview of the contentious time urgent issue. And then let’s take a step back and dive into, some of our listeners may not really understand what net metering is, it’s really not the history in California, but just as a headline, start me off with what’s the issue today?
Bernadette Del Chiaro:
Net energy metering, which we’ll get to exactly what it is, but in terms of its importance, it is the foundation of the distributed local rooftop, whatever you want to call it, solar market in California, and in many states all throughout the country. And it is right now under review by one state agency who, if they make changes that are drastic to that metering policy, it could just ruin the market, California’s rooftop solar market, local solar energy market could drive right over a cliff within the next, I’d say 18 months. I know that sounds dramatic, but it’s absolutely the reality of what’s at stake.
Bill Nussey:
Well, I’m going to look forward to you explaining when other states have tried to do dramatic actions, and it had no less draconian outcomes than you’re concerned about for California, you’d think that lessons would be learned, but maybe that’s part of what we can do today is make sure more people understand. So let’s step back and talk a little bit about net metering.
Bernadette Del Chiaro:
Net metering is in some ways, a little bit complicated. The name itself is not exactly street ready, but it is actually one of the simplest ways to help support and to provide for a fair and easy economic profile for consumers to go solar. So what I mean by that is, net energy metering essentially allows for a consumer to put solar panels on their roof, and be able to put enough solar panels on their roof to cover their energy needs for the entire year. As opposed to back with before net metering, you had to put only the amount of solar on your roof to meet your maximum minimum load.
Bernadette Del Chiaro:
So in other words, you would just put a very, very small solar system on your roof, because you can only use solar energy exactly when it’s generated. So when the sun shines, and those sun’s rays hit a solar panel, and generate an electron, you use it or lose it, right? So you have to use it right away for it to be useful to you, or you’d store it in the battery. So we’ll come back to batteries and why they’re revolutionary. But without a battery, you have to just use it right then and there.
Bernadette Del Chiaro:
So for a lot of consumers that just makes, sometimes we’re not home or at the office, or if we are home, we’re just not using as much electricity as our solar panels are generating. So what net-metering does is allows you to send that surplus electricity back to the grid, your meter spins backwards, and those electrons flow to your next door neighbor’s house, or the neighbor two doors down. And it literally supplies that solar electricity to nearby buildings, your nearby neighbors. You get a credit for that. Because you are supplying a product and a service to your neighbors, and that credit is valued more or less at the price you would otherwise have paid, or what your neighbors are paying, the utility for your electricity.
Bernadette Del Chiaro:
So what this does is it allows you to put a big solar system on your roof and use that credit feature to then offset what your energy consumption, or your energy usage would pay the utility for energy consumed at nighttime when the sun is down. So you build up these credits during the summer, and then you basically utilize them in the winter. And that allows you to get your bill reduced, if not down to close to zero. Now it’s never zero, there’s minimum bills and charges and fees, but you can significantly reduce your energy bill. And your neighbors in turn, get to power their home partially by solar energy. So it’s a win-win. And then we can get into some of the other values of local energy, reliability, competition in the marketplace, all sorts of other values, but that’s net metering in a nutshell.
Bill Nussey:
It’s obvious as a consumer, why it’s so great. And I should add that it allows you to decrease the payback time on your panels. So if you put up panels without net-metering, it might take 10 or 12 years to pay them back. When that metering, it could be as soon as three or four or five years. And that’s a massive difference to the economics of solar.
Bernadette Del Chiaro:
With net metering in California, as it is today, the payback period for a solar system is four to five for a commercial project, primarily, usually typically. And it’s six to seven years, sometimes eight, for a residential. It’s under 10 and that’s key. And it’s five or under for commercial, under 10 for residential. And that’s key because we know that if you bump up the payback period above 10 years, that consumers just don’t have that amount of patience, they tend to not live in their homes that long on average, they will not make that investment in clean energy, if you bump up the expense and the payback period beyond that, because, essentially, what makes solar valuable to you is what it’s offsetting in terms of your otherwise grid supplied electricity.
Bernadette Del Chiaro:
So net metering, and when you tinker with the policy, then that means you are tinkering with the economics of going solar. And why that’s so critical is because, most consumers, the vast majority of consumers, primarily go solar to save money. They don’t primarily go solar to help spike climate change or produce clean air, or just feel good about themselves. That is like sugarcoating, it’s makes them feel good about themselves, if those are qualities to go in solar. But primarily they make it on an economics decision. And so if you cut out the economics of rooftop solar, you’re cutting into the heart of consumer motivation to go solar and the market will dry up.
Bill Nussey:
And so in the absence of a net metering policy, the payback period could easily go over 10 years?
Bernadette Del Chiaro:
Easily. And way worse than that, even 20 years. Yeah.
Bill Nussey:
So it seems like an incredibly straightforward idea. You’re putting electricity back into the grid, you’re getting paid for it the same way you’re paying for it. But there’s a tremendous amount of resistance, and as I’ve written in my book and the research I’ve done, the amount of battles, the money spent to fight these battles is epic. What’s wrong with this? And who are making this a big fight?
Bernadette Del Chiaro:
Yeah. It comes down to the utilities which, let’s just make this personal in California to make it not too general for people. There are three investor owned utilities in California, PG&E, Pacific Gas and Electric, been in the headlines a lot lately.
Bill Nussey:
I’ve heard about them. Yeah, something about the wildfires.
Bernadette Del Chiaro:
Something about wildfires and felony convictions, and what have you.
Bill Nussey:
And outages, that’s the other one. So you guys are on the cutting edge.
Bernadette Del Chiaro:
And bankruptcies. Yes, yes, yes. The other two are Southern California Edison. And then Sempra, is a natural gas company that owns San Diego Gas & Electric, the smallest of the three. These three investor-owned utilities make money off of building infrastructure. They don’t actually make money technically on selling electrons, but they make money off of building poles and wires.
Bill Nussey:
Very important point.
Bernadette Del Chiaro:
It’s a really important… And people just don’t quite understand this. And in fact, for every dollar that the utility spend on transmission lines, for example, we as rate payers, pay them $3.5. So for every dollar they earn $3.5 from repairs. And that is a guaranteed rate of return.
Bill Nussey:
And it’s also worth mentioning that you say it because you’re in the industry, but you and I are called rate payers.
Bernadette Del Chiaro:
Yeah.
Bill Nussey:
That is the perfect definition of our role. We’re not customers. The customers are the public utility commissions who make decisions about how the money is made by the utilities. We’re just the rate payers. We’re the plug in the side that does the revenue.
Bernadette Del Chiaro:
Yeah. Exactly, exactly. Good point. So that rate of return, I mean you know you’ve run businesses that is unheard of in the real business world to have a guarantee like that, for every capital investment that you make in your company. And so they have, in the aggregate, and the PUC just came out with a study on this, they are looking at $19 billion in transmission costs over a 10 year period, $19 billion. That is money that is directly threatened by the growth of non wires alternatives or local solar.
Bernadette Del Chiaro:
So when we build power plants worth of solar energy on roofs, on parking lot structures, or in ground mount systems, on unused lands, or on big warehouses, that reduces the need to build big transmission lines, and cuts at the heart of the utilities profits. And so what we’re offering, sort of what we as individual people that put solar on our roof which, by the way, in California, right now we build 400 solar systems a day on average, 400 individual systems are energized every day, statistically, which in the aggregate adds up to a coal-fired power plant every five months.
Bernadette Del Chiaro:
So in the aggregate, you can envision just how powerful that is, and how that does have an actual real downward pressure on the need to build a bigger and bigger and a more supersized electricity grid, which for rate payers and consumers, that is a win-win, you’re getting clean energy and you’re reducing your need to feed that $19 billion kind of beast, that is the utilities and their shareholder profits. But you can see what’s at stake. So the utilities have billions and billions of dollars of profit at stake. And so they want to fight it. And so they’re throwing everything they can, legions of lawyers, PR firms and lobbyists, and they’re putting this, and they’re casting a whole new light, of course, they’re spinning this of consumer versus consumer, pitting solar users against non-solar users as if that’s the problem.
Bill Nussey:
Well, let’s explore that, because that’s an argument that I’ve looked at pretty deeply myself. I’d love to get your take on it. So when the utilities who are fighting that mirroring are telling the regulators, the public utility commissions, “Hey, local solar is a bad idea.” They’re not probably telling those folks that, “Hey, it’s going to impact our profits.” I they’re not saying, “We’re not going to make as much money, so we should stop it.” They’re making a very different argument. And what is that argument?
Bernadette Del Chiaro:
So they talk of it a little bit both sides of their mouth. On the one hand, they say, this does hurt our profits and we’re too big to fail. And because we’re on the brink of bankruptcy, you need to be really careful not to bankrupt us, right? This is the whole death spiral that Edison Electric Institute put out in 2013. And they’d been beating that drum ever since. And it really, with legislators in particular, that has a lot of resonance because they feel like our electric grid is too critical of a service. And we need some company there to take care of the poles and wires. And so, if the company there that’s taking care of this community infrastructure essentially is on the brink of bankruptcy, we can’t let that happen. So what does the utility need to stay whole, oh, you need to get rid of this annoying rooftop solar industry. Okay. Yeah.
Bernadette Del Chiaro:
So there’s sort of these two dual conversations. And so just to hang on this for a minute, if you think about the giant tug of war between this idea and the whole industry supporting it of self-generation and consumer choice, which is essentially what’s on one side of the rope, on a tug of war, and then this utility profit driven shareholder focused energy industry, on the one side you have… And then you put it in California, and I’m sure from Georgia, you look at us and you just go, how could these guys not just get whatever they want when they walk in the room? Because you’ve got wildfires caused by utility malfeasance of not maintaining their poles and wires adequately. So that’s sparking wildfires every time the wind blows. You have a company that’s bankrupt and unable, and this is not the first time they’ve gone through bankruptcy. They’ve literally killed scores of people, not just from sparking wildfires, but not long ago, by not maintaining their natural gas pipelines and blowing up the town of San Bruno, hence California.
Bernadette Del Chiaro:
And then you have the clean energy goals, right? That the state is so focused on, that you would think that the kind of antidote to the utility model that is clearly not servicing the state very well would be able to just get whatever it needs. But the irony is that not only do those companies have a lot of money to pour into politics, and all of this is political, it’s very little that’s really truly fact-based, but you also have this concern, this victimization of the utility that is playing this, we’re a victim of climate change. We’re a victim of the big, bad solar industry that just wants to do us in, and you decision-maker need to protect us. And so the irony here is the bigger the crisis that utility is in, however self-made it is. The bigger their pull on that tug of rope against consumer choice and self-generation, because of this too big to fail concept that they lead with.
Bill Nussey:
Drop the mic. So well said.
Bernadette Del Chiaro:
It’s crazy. It’s crazy. Yeah.
Bill Nussey:
And one of the other arguments that they’ve used here in Georgia, and I think around the country, is the notion of cost shifting. The argument goes something like, I’m going to put up solar on my roof and I’m going to still pay the same for my electricity as my neighbor, but now I’m not using the grid as much, and I’m not contributing as much money to the grid maintenance, what’s effectively happening is I’m shifting the cost of the grid maintenance onto my neighbors. And you expand that idea, and you say, it’s not just the people who live down the street from me, but it’s the community that’s disadvantaged. And those folks are even having to pay even more and they’re the least able to do it. And this is a common argument.
Bill Nussey:
Now, this is one of those arguments that makes a lot of sense, superficially. There’s been a tremendous number of studies, a recent one that really pokes a wholeness, because the opposite is often the case, right? So when do you need the most electricity? Well, typically when it’s really warm and sunny happens to be exactly when solar is strongest. And so there’s strong arguments and a lot of data that says this is quite the opposite, actually, if you put solar in your house, you’re actually reducing the costs. And for better, for worse, this argument is in the domain of economists and deep strategic analysis, which is not interesting, and something that doesn’t make the headlines. But this is one of the arguments they lead with. And I assume this is one of the arguments that’s being bandied about in California as well.
Bernadette Del Chiaro:
Oh, this is the argument. In fact, the utilities in California just launched a website called fix the cost shift.org.
Bill Nussey:
No. No. Are you serious?
Bernadette Del Chiaro:
Yeah, you should check it out. It’s perfect. It’s everything they argue. But, no, the cost shift is the argument and absolutely they are pouring fuel on the fire by taking it one next step, which is what’s new. And didn’t happen in our previous net metering fights, in that they’re really going hard on this idea of equity and this idea that rich people go solar. So the cost shift is just not only this fairness issue, but it’s not poor people, and so it’s also this equity issue, and they’re really going hard on that argument, so we could unpack it. But, it is the domain, as you mentioned, of the world of economists. But our goal and our job, I see it, is to actually make it the domain of everyday people, and a good democracy information and ideas are debated and challenged in the court of public opinion.
And that is our challenge with the way in which net metering decisions are made by this esoteric unknown agency ruled by five people, but it is also kind of our hope. And so, ultimately we can talk about our campaign and our work to save this policy and save rooftop solar. But we’ll lose if we stay within the domain of economists. That doesn’t mean we shouldn’t dive in deeper and understand it better, but just plants a little flag there on this idea of democratizing both, not only energy itself, but democratizing the conversation and the vote, essentially.
INTERSTITIAL
Sam Easterby:
The debate among utilities, community leaders, homeowners, and the solar industry over the value of locally generated solar electricity has been brewing for a while. Utility struggle over how to balance a century old monopolistic business model with the rapid growth of residential and community solar energy. For those utilities, their demand falls as local distributed generation increases. But they still have to manage around their high fixed costs. And importantly, around the cost of peak demands for all customers, whether they have solar or not. But the transition to new cleaner local generation business models is only accelerated. So the debate over the real value of distributed generation is complex and thorny, and all parties are digging in.
Sam Easterby:
Now, you might think that buying and selling electricity is regulated at the federal level like banking and other financial services are, but a key decision by the Federal Energy Regulatory Commission in 2020, reaffirmed that the most important policy decisions around electricity remains in the state governments, where they have been for a century. If you are an innovator or entrepreneur interested in clean local energy, keeping track of all the changes being considered can be a challenge. Fortunately, our friends at the North Carolina Clean Energy Technology Center produce a series called The 50 States reports, including The 50 States of Solar net metering report, which provides an in-depth analysis of where things stand state by state. Just Google, The 50 States of Solar net metering to find out more. Now, back to Bill and Bernadette, to hear more about how this may all play out.
INTERSTITIAL END
Bill Nussey:
To me, that question is very simple. Utilities have been monopolies. So if I wanted to go to my neighbor and sell them solar, it’s illegal. But if I did, if I could, if the monopoly laws allowed me to go to my neighbor, I would sell him or her electricity that I’m generating for the same price they’re paying the utility, maybe a little bit less. And I might pay a slight fee to have the utility, have the wires between our houses, but it doesn’t cost them much to do that. But I can’t, that’s illegal, it’s illegal everywhere. And so in the absence, I only have one buyer of my electricity, which is my utility.
So if they want to monopoly, which they’ve argued four and a half, they can’t have it both ways. They can’t also say that I want absolute right to sell it, but I’m never going to pay a market rate. And that’s what they’re basically asking for and why I feel so strongly about this. So, Bernadette, let’s dive into the specific issue on the table. What’s being decided? What’s led up to this decision? And what do we need to have our listeners be paying attention to and how can they help?
Bernadette Del Chiaro:
So the quick history of net metering in one minute is, it was first adopted in California by the California State legislature in 1995.
Bill Nussey:
Wow.
Bernadette Del Chiaro:
Yep. And it was this revolution idea that utilities opposed it, but legislature went for it, and nobody saw really what was coming. It wasn’t until one of the other energy crisis, the Enron scandal in 2000, 2001, that consumers started to wake up and realize that nobody can really own the sun, while Enron could try to manipulate things, if you had your own energy system, you’re free of Enron. So if you look at the history in a bar chart way, the growth of solar, you’ll see this bunk after 2000, 2001, where consumers start to go, “Well, this is not working.”
Bernadette Del Chiaro:
And so we saw shortly thereafter passage of the million solar roofs initiative in 2006, which increased the limits on net metering, there previously where the statutory limits increased at five fold. We’ve slowly increased it over the past few years to just allow more and more people to net meter their solar systems. And you’ve seen as a result an addition to incentives like rebates, the growth of this market. In 2013, the same year that Edison Electric Institute came out with their death spiral paper and started to really get scared at what distributed generation could threaten. Now you’ll remember solar city was a thing. We were starting to see significant growth in the market. We had big mainstream companies like Google and Target and Walmart going solar. So it was no longer just these backwoods, hippies and techie heads going solar, but real mainstream industry.
And so they started this campaign to frame this as a cost shift fairness that threatened the very viability of the electric grid. And they passed through the legislature in California, a law, that basically said, we are no longer going to allow for net metering as we’ve known it, which is the retail rate, that’s the credit. And we’re going to task this public agency, this public utilities commission with the job of modifying net metering going forward. Now there’s a hidden silver lining of this, which is, we actually eliminated the cap. So whereas net metering was capped at 5% of energy from rate payers, essentially, 5% of California’s energy market, to put it simply. There is no longer a cap, but this agency dictated this job of modifying the policy to adjust for, and to minimize this cost shifting concept. And so as a result in 2016, the California Public Utilities Commission adopted what is termed as NEM 2.0. So just the second iteration of net-metering separate from the one that was first put in place in 1995.
Bill Nussey:
Is that literally the name, NEM 2.0? You can tell it’s just California.
Bernadette Del Chiaro:
Yeah. I know. I know.
Bill Nussey:
Go ahead. So silly [inaudible 00:32:43] sounding.
Bernadette Del Chiaro:
And when they made that decision, which gave the industry a huge haircut, if you look at, again, our annual growth year over year, we were growing up until 2016, decision was adopted, and you see the steep decline. And it’s only now, in this past year, that we’ve built back up to the annual market that we had in 2016. So that haircut is a basically visualization of the impact that changes to net metering can have. And that was a very small, minor adjustment to the net metering program. And when they made that decision, they said, but we’re going to come back to this and keep iterating net metering. And so today we have an open decision, an open proceeding at this agency called the public utilities commission, to decide on what NEM 3.0 is going to look like.
Bill Nussey:
Perfect.
Bernadette Del Chiaro:
And so, 3.0 decision could be a small, modest adjustment. It could be a draconian, huge earth shaking, earth shattering the big decision, it could obviously be the opposite in a perfect world. The commission would look at net metering and say, “How do we make this even better?” Installing a gigawatt a year of distributed solar energy is not enough for the climate crisis we’re facing. We should be doing more.
Bill Nussey:
Nor the rolling outages the state’s facing.
Bernadette Del Chiaro:
Exactly, exactly.
Bill Nussey:
This is the time to double down, triple down on this, not to [crosstalk 00:34:13] that.
Bernadette Del Chiaro:
Exactly. But they could go better with this decision, but they could go a lot worse, then we could get into the politics. But let’s just say we have more to lose than gain in this decision as an industry and as a community who cares about local energy. And this decision will be made this year. So sometime we [inaudible 00:34:35].
Bill Nussey:
Let me see if I understand this, because the public utility commission in California has five members.
Bernadette Del Chiaro:
Yep.
Bill Nussey:
Is that what you said? And I believe they are appointed by the governor.
Bernadette Del Chiaro:
Yes. Three of them have been appointed by current Governor, Gavin Newsom, and two of them, they serve a term of five years. Two of them were appointed by former Governor, Jerry Brown.
Bill Nussey:
I’m I correct to understand that these five people unilaterally decide the entire fate of this program?
Bernadette Del Chiaro:
Yep.
Bill Nussey:
I guess the legislator could choose to intervene and take back some of the authority they have given them, but that’s not likely. So these five people are going to determine the course of the entirety of local energy. This is crazy. Given this is a topic where so many people in California, for which California is famous, care so deeply, and hopefully they will do the right thing and listen to the strong arguments of the citizens of the state. But that’s what we’re here to talk about. So can you give us a quick overview of particularly what people who are listening into this can do to have their opinions heard?
Bernadette Del Chiaro:
Our whole hope, the lifeline here that we have, to get this decision to not just be less bad, but to actually get it to be good so that we can actually grow and meet California’s clean energy and energy reliability needs, is actually focused on the governor, the current governor, Gavin Newsom. If we can bring and elevate this issue and this decision and bring it to his attention, and make sure he weighs in and makes sure they get it right, then we have a hope. If it stays down in the bowels of this little known agency and these five people, where the utilities control the whole conversation, then I think we’ll lose. So what we’re asking everybody who listening and who really cares about this is to get involved in our campaign. We also have a website, it’s called savecaliforniasolar.org. And it is a campaign totally focused on raising and elevating this issue, bringing it to the attention of the governor and urging him to get involved.
Bill Nussey:
Fantastic. That’s a great, great action item, particularly for everyone in California. What is the timing on this?
Bernadette Del Chiaro:
So the proceeding officially opened in August of 2020, and we’re expecting a final decision sometime late this year. So November 2021 is our best guess. And then the critical question is, when does the alternate NEM 3.0 tariff go into effect? And, again, we’re guessing sometime summer 2022. So that’d be a little bit of room for the market to adjust. So we’re looking at whatever net metering 3.0, whatever that program is, will become the new program in California as early as summer of 2022. It’s important to note that the commission has done one good thing in all of these debates and that they have embraced this idea of grandfathering of existing customers. So if somebody is under, either the NEM 1.0 or the NEM 2.0, they’re granted that program as it is when they signed up for 20 years, regardless of the changing of hands of property ownership.
So that’s been a critical piece of all of this that we fought very hard for in 2016 and one, and that’s proving out to be precedential. So people don’t need to worry if they have a solar system already, but obviously most of us should worry just because 1.2 million people have solar in California. That’s not enough. And so we want to keep growing the market and that’s, what’s at stake.
Bill Nussey:
Wow. And to just reiterate what’s going on here is that, roughly half of all the rooftop solar in the United States is in the State of California. And California is looked at across the United States and the world as an exemplar, as a canary in the cave for what’s possible. And generally, it provides an excellent example of what can be done. A couple of really bad examples, like rolling outages and bankrupt utilities, but the state is really leading on the move to clean energy at every level.
So this isn’t just another state. This isn’t just an issue that’s for you alone in California. It’s the whole world, we’re all watching and we’re all learning. And I think what we’ve seen in other states, who perhaps were a little less thoughtful, they cut it off, and what ended up with such a strong backlash. The outcry was so strong that the legislators got involved. It became heavy-handed. And I think in almost all cases, it got back to where it should have been, in most cases. Is that right? Eventually the citizenry really makes us think about it. Or can you get away with turning off net metering and still get elected again?
Bernadette Del Chiaro:
Yeah. There was a backlash in Nevada. There’ve been other states that have tried to kill net metering and there sometimes has been an effective uprising. Sometimes it’s just died a quiet death and nobody knows about it, because it’s not an important market. California has seen some of its own utilities that are local municipal utilities, kill net metering, and nobody knows about it. So Imperial Irrigation District, the sixth largest utility in California actually did away with net metering years ago. And the market’s never recovered since.
So it would be a shame for Governor Newsom to preside over, essentially the death, even if it’s a short lived death, because the people rise up and pass a ballot initiative to reinstate it or however the story unfolds. It would be an absolute shame to bring this industry to a screeching halt when we support over 70,000 jobs in the state, which is more than all of the investor-owned utilities combined, when we support over 2,000 businesses, and when we’re saving consumers and giving them real opportunities to keep the lights on when we’re facing this increasing unreliability and climate disasters and threats. So it would be a shame. But it absolutely could happen. And we have to fight back.
Bill Nussey:
And fight back, we need to do it, and make our voices heard, especially across California. But I think from the rest of the country, we need to reach out and make sure that this canary in the cave continues to thrive, and sets a great example. I have this mental image, Bernadette, of you, sword in hand taking on these giant utilities, you and your colleagues at CALSSA, joined by other organizations who are trying to make this case. And we wish you Godspeed and tremendous success in this. I think really important, fundamental issue for local energy. It really the right for people to decide how they will power their future. Hopefully all of our listeners will take a moment to go to your site, which we’ll link to, and to let their voice be heard as to the governor. And if there’s other areas that you want to send on, we’ll put them on the site so people can reach out in other ways too.
So, one of the things we torture all of our guests with as we wrap up today’s conversation, is the so-called lightning round, which we push all of you through just the four quick questions. They’re really interesting. Our listeners love them. So I’m just going to hit you with the four quick lightning questions and we’ll call it a day. So what excites you most about being in the clean energy industry?
Bernadette Del Chiaro:
Net metering is just the beginning. I’m really excited about the potential of virtual power plants, and all that we can do with smart energy controls and energy storage. But if we rip the rug out from underneath the foundational policy of net metering, we will not have a market to build all of these really cool clean technology solutions and bring it to the market.
Bill Nussey:
Well, the second question is, if you could wave a magic wand and see one thing to transition clean energy, I have a feeling I know your answer on that.
Bernadette Del Chiaro:
Well, I don’t know. I think it would be that every company invested in local solar commit 1% of their profits to policy and politics and activism, and that every one of our 1.3 million customers join the Solar Rights Alliance, which is like the [inaudible 00:42:33] for the sun. If we could mobilize all of our companies and mobilize all of our customers, we would actually have an army of people to make these battles easier to win.
Bill Nussey:
Leah Stokes, in her book, Short Circuiting Policy, just does a great job of describing just how well world policy influence machines are from larger organizations, and not just utilities, but they are a great example, and how difficult it is for more grassroots organizations, like yours and mine to be heard and to work collectively. So today you and I are arm in arm, and locked arms moving forward towards the same goal. But it’s hard to do. Third question, what do you think is going to be the biggest change in the next five years in how we generate and use electricity?
Bernadette Del Chiaro:
Well, we’ve got a vision of a million solar batteries. We want to do it in five years, not 10. And then, like I mentioned already, virtual power plants linking all of those batteries together to get us to that bridge to the evening. That will be the biggest change, that will be life-changing for energy if we can make it, but got to get there.
Bill Nussey:
And net metering is a key platform for that to be achieved. And final questions, we all get a lot of inbound requests for advice, what can I do to make a difference? I’m just an individual. What do you tell people?
Bernadette Del Chiaro:
Well, this is easy. If you can go solar, go solar. There’s so many different financing options. And that really is one of the most permanent long-term things you can do to be part of the solution. And if you can’t go solar, even though there’s lots of ways to go solar, even as a renter, then in either way you should join an advocacy group focused on local clean energy. So we’re one, if you’re in the industry, there’s Solar Rights Alliance, already mentioned, in California, and then there’s another group that’s just formed called Local Solar for All, with a good friend of mine, Rob Sargent, just heading up. There’s options for people all across the country to get involved in the policy decisions that matter. And all of this is political. It’s all policy driven. And so we want to realize this, we can’t do it solely by inventing these technologies. We have to bring them to market, and to bring them to market requires policy and activism.
Bill Nussey:
Perfect. Well, Bernadette, thank you. This is great. I’ve looked at this issue so deeply and you’ve given it a color and a depth and an urgency that I think speaks to the tremendous important role you and your organization are in. I hope that our listeners realize how big a deal this is and lean into it. And hopefully we can look forward to the next many decades of all the states in the United States paying what’s a fair amount for the electricity that we put back on the grid. So thanks again for your time today. And really it’s been an honor to talk with you and thanks for all the great work you’re doing.
Bernadette Del Chiaro:
Thank you, Bill, thanks to the whole team, and it’s my pleasure.
