California NEM 3.0 delayed indefinitely

Sure, if you want to look at just the price for the generation of electricity all by itself, then sure, it may get down to $0.05/kW. But that means nothing if you can’t deliver the power to the customer. Thus, the grid and PG&E’s super high transmission and distribution fees that are tacked on top of that.

I can’t comment on how other countries work, but I live in California and the local communities have already switched over to using green energy generation (Solar, Wind, and Hydro). My bill is broken up into two main parts. One is the generation of energy (which is outside of PG&E). For that I’m paying a flat rate of $0.08/kW for the generation of power no matter how much energy I use. However, the other section of my bill is the transmission and distribution of that energy via PG&E. This is also a tiered system, where it’s $0.16/kW if you’re under your baseline and if you hit the 3rd tier, it’s just over $0.36/kW. So when you combine these two together, I’m paying a $0.24/kW if I stay under their baseline allotment and $0.44/kW when I hit the 3rd tier.

So I stand by my statement, while it could be argued that we may get the generation of power down $0.05/kW, that’s also the smallest part of the equation and your bill. The transmission and distribution fees are many magnitudes higher than the generation costs. I don’t see those prices budging at all because those represent the physical grid infrastructure itself which is unrelated to how power is generated. Wire, transformers, etc, are not decreasing in price. Labor to work on the lines is also not decreasing. So I stand by my point that the over-all price of electricity delivered to your house is never going to be even close to $0.05/kW.

And yes, I am quite familiar with the time-of-use plans. If you go solar, you’re automatically switched over to a time-of-use plan. I’ve downloaded PG&E’s price sheet for four different Time-of-Use plans, and the cheapest the energy ever gets between the 4 plans is $0.26/kW which is at night in the middle of winter. Its significantly more expensive at peak times during the summer. So switching to those plans might save you a little money, but they’re not going to be life altering either.

Solar however, over the course of a 20 year period under NEM 2.0, averages out to be about $0.11/kW right now. NEM 3.0 will double the time it takes to recoup your investment, meaning the price per solar kW basically doubles and goes up to about $0.22/kW. Sure, technically solar is still cheaper than pulling from the grid, but not much.

I’m not familiar with the 3.5-5% returns that Germany is enjoying on their power so I can’t comment on that, however, I for one would not be happy with those returns! The S&P 500 has averaged over 10% per year since the mid 1920’s. If you’re not getting a return that’s at least equal to the S&P 500, then it’s not a good investment! We’re obviously getting off topic here, but my returns over the last 20 years have significantly beaten the S&P 500 as well. So if you’re telling me solar is going to give me a 3.5-5% return on my money, I’d much rather stay on the grid and invest my money instead for a higher return. I mean, looking at it another way, if my grid connected bill is currently $200/month but I can go solar under NEM 3.0 and save 5% off my bill, that means my bill would be $190/month. Is it really worth the hassle of going solar to only save $10/month. Most people will say no. Especially like I said, even though the solar parts are warrantied for 20-25 years, the labor to replace them is not. I was quoted at $500 in labor to replace a broken inverter. All you need is one inverter to fail and you’ve already blew your 5% savings on labor costs. Not to mention the fact that now the panel isn’t producing any power while you wait for the replacement, thus forcing you to pull more grid connected power and pay even more. It’s simply not worth the risk for a 5% return.

And yes, I realize that the utilities aren’t the only ones pushing for NEM 3.0. It’s also all the fixed and low income groups. But again, we need to look at cause and effect here. Under NEM 2.0 the utilizes are receiving money for the grid via connection fees and NBC’s, and on top of that any over-generation at the end of the year they pay me a measly $0.02/kW for while they charge my non-grid connected neighbor anywhere from $0.24-$0.44/kW for my excess generated power. So they are most definitely making money off me under NEM 2.0! Under 3.0 however, people will just disconnect and the utilizes won’t receive a single dime from the solar customers. Which means even fewer people paying for the grid which means everyone still connected will definitely see their rates go up.

I also disagree that it’s the rich that are getting solar. I am not rich by any stretch of the imagination. I would argue the vast majority of the rich you speak of have already made the switch over to solar. The group that is considering solar right now is the middle class group like myself. My friends are also middle class. Enacting NEM 3.0 effectively screws the middle class, once again. The rich can afford whatever they want because they’re well, rich. The poor get handouts via the CARES act and similar programs. It’s the middle class that gets screwed once again!

Lastly, to address your statement on the fact that solar has gotten cheaper over the past 20 years so why haven’t we seen a mass exodus yet. The reasons are quite simple and straightforward:

The first is that it’s still cheaper to be connected to the grid with NEM 2.0 than it is to go off-grid. Most people are looking for the cheapest solution to solve 99% of their problems. The people that want 100% coverage and have the money are the ones going completely off grid right now. But I want to re-iterate this, it’s being connected via NEM 2.0 with the minimal connection fee and NBC’s that makes grid connection cheap, feasible and the right solution for most solar people right now. Once NEM 3.0 hits, it makes being connected to the grid exponentially more expensive! When NEM 3.0 hits you will most definitely start seeing a more dramatic shift of people going off grid. Me for one! Like I mentioned before, a NEM 3.0 connection fee of $10/month/kW means a 10kW system will cost $10/kW * 10kW * 12 months * 20 years = $24,000. That’s enough to buy 2-3 Tesla power walls. And that’s not even taking into consideration the exploding NBC’s they want to charge on top of that. This isn’t an empty threat like you seem to think it is. The math doesn’t lie. When it becomes more expensive to be connected to the grid via NEM 3.0 than it is to buy batteries, people will go off-grid.

The second reason is that the battery technology hasn’t been able to keep up yet. But as I mentioned, solid state batteries will be here soon and they’ll be cheaper and have higher capacities. Look at Lithium Ion batteries over the years. They were super expensive at first and now they’re 97% cheaper than when they were first released. Solid state is the next big advancement which will drive the cost of batteries down significantly! So while the sky high NEM 3.0 fees will be the start of the great exodus, cheaper batteries will be the catalyst that really drives people over the edge to disconnect.

As I said, this whole argument comes down to simple math. The price of the solar panels, inverters, combiner, etc, etc, are all pretty much a fixed price regardless of if you tie into the grid or go off-grid. The wild cards in the equation are the sky high NEM 3.0 fees versus the decreasing price of battery storage. As soon as batteries are cheaper than the NEM 3.0 grid connection fees, people will disconnect in droves. It’s not rocket science or empty threats!