Net energy metering in California: Current Issues and Policy Recommendations

California’s renewable energy journey has been remarkable and the popularity of “rooftop solar” has played a major role in it. For over two decades, this has been driven by the State’s Net energy metering (NEM) policy which has gone through multiple revisions since its introduction in 1996. This policy brief discusses a few urgent equity issues with the latest NEM 3.0 rate design and proposes some tweaks. First, an increase in both the fixed ‘grid participation’ charge and the variable price paid for electricity exports to the grid are proposed. This is designed to revive flagging solar industry growth while also addressing equity concerns in how the grid’s fixed costs are shared by utility customers. Next, policy recommendations are made for increasing low-and-middle income communities’ participation in renewable energy. The proposed policy changes seek a balance between competing but equally critical environmental justice goals.