After the California Electric Power Commission canceled the net metering policy, the commission recently introduced a ban on electricity offsets for photovoltaic + energy storage, which has sounded the alarm for the global "photovoltaic + energy storage" business model.
From net metering to integrated optical and storage
In order to encourage household photovoltaic applications, California was one of the first regions to launch a photovoltaic net metering policy. The so-called net metering (NEM) means that the electricity consumption of rooftop photovoltaic owners can be offset from the grid electricity. This solves the problem of mismatch between the electricity consumption of household photovoltaic owners and the peak hours of power generation.
However, with the continuous reduction of photovoltaic costs, the California Electricity Department has canceled the net metering policy that has been implemented for many years, and instead encourages rooftop photovoltaic owners to adopt the photovoltaic + energy storage model, encouraging owners to use storage when electricity consumption is low (when electricity prices are lowest). In the energy mode, energy storage is put online during the peak hours of electricity consumption (when electricity prices are the highest) to achieve peak shaving and valley filling, thereby achieving stable pricing for the entire power grid.
The use of photovoltaic + energy storage to achieve peak shaving and valley filling has also become an important measure for countries around the world to solve the problem of abandoning light and develop energy storage. In China, some regions have specially issued policies requiring that photovoltaic projects must be accompanied by energy storage.
However, the California Public Utilities Commission (CPUC) made what was considered an "anti-rooftop solar decision," ruling that photovoltaic-plus-storage customers cannot export power to the grid in exchange for offsetting their electricity use. According to the new regulations, the "electricity" and "generation" charges on the utility bills of California rooftop photovoltaic owners are classified separately, and the feed-in tariff and electricity consumption will be calculated separately.
According to the report, while the "PV + energy storage" model has adapted to the adverse effects of the elimination of net metering, California power companies are clearly inclined to support the interests of natural gas and electric companies, the utilities owned by their major investors. Since the photovoltaic + energy storage model will reduce the demand for natural gas peak shaving, this new policy of California Electric Power Company is obviously to maintain the demand for natural gas power generation.
Expected consequences:
The American Solar Energy Industry Association stated that California's series of devastating decisions for the photovoltaic industry will completely change the environment for rooftop solar in California. California's once prosperous rooftop solar market will be shaken by the new regulations enacted by California Electric Power Company this year.
In December last year, the California Public Utilities Commission began implementing the NEM 3.0 policy for residential rooftop solar customers. Relevant statistics show that since the implementation of the NEM 3.0 policy, requests for photovoltaic array connections have dropped by about 80%; and if the power offset of photovoltaic + energy storage is prohibited, relevant agencies expect that nearly 20,000 solar workers will be laid off.
In addition to this, California also implemented another anti-solar action in November this year, cutting the value of rooftop solar feed-in tariff compensation for multi-metered accounts such as apartment buildings, schools and farms, on the grounds that it is to help restore supply and demand caused by intermittent power generation. An imbalanced balance.
Despite previous commitments from the Commission to incentivize more PV+storage after reducing net metering, the latest ruling negates some of the value of PV+storage systems. Analysts estimate that the ruling will reduce the cost of PV-plus-storage systems in California by another 10% to 15%, extending the average return on investment from about 4 to 7 years to 9 years or more.
The Solar Energy Industries Association estimates that the latest ruling will lead to a 40% decline in California's residential photovoltaic market next year, and the state's commercial rooftop industry is expected to decline by 25% from 2024 to 2025.