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Jul 14, 2023

Thinking of installing rooftop solar? Deadline is fast approaching before state's new rules kick in

Stellar Solar has been in the rooftop solar business for more than 20 years, but

Stellar Solar has been in the rooftop solar business for more than 20 years, but company co-founder Michael Powers has never seen his Oceanside-based operation so busy.

"We’re running as fast we can right now," Powers said, "trying to handle all the incoming requests for information and people wanting to move forward to try to get something done before the rules change."

The new rules, passed in December by the California Public Utilities Commission, overhauled the financial incentives to install new solar systems on the roofs of homes and businesses across the Golden State.

But the updated regulations don't go into effect for another three weeks. In many cases, that's led solar installers to cope with a surge of potential customers, looking to beat the deadline and get their systems grandfathered into older, more generous, financial terms.

A survey of 34 installers in California reported consumer demand is up an average of 64 percent compared to last year, according to EnergySage, a company that helps customers find reputable solar companies and installers.

"There has been nothing like this; this is unprecedented," said EnergySage CEO Vikram Aggarwal. "Installers are working 18-hour days, seven days a week."

In December, the Public Utilities Commission updated the regulations for net energy metering, which determines the size of the credits that California's 1.6 million rooftop solar customers receive on their utility bills when their solar systems generate more energy than they consume.

One of the key provisions of what's called NEM 3.0 alters the way rooftop solar owners are compensated for the excess electricity their systems send back to the grid.

Instead of being credited at the retail rate of electricity, customers will get paid at the "actual avoided cost," which is lower during the daylight hours when the sun is out and solar energy is abundant and cheap. Solar industry advocates have estimated the new rules will reduce the average compensation rate by 75 percent.

But the NEM 3.0 rules don't go into effect until midnight April 14.

A solar system does not have to be installed by April 14 to qualify under the old rules but new customers need to have two important documents in hand:

First, a valid sales contract between the customer and a solar installer. Second, an interconnection agreement with the utility in the customer's area — for San Diego area customers, that means filing with San Diego Gas & Electric.

Powers said the interconnection submission includes numerous specifics, such as the customer's meter number, what kind of solar panels will be used, where they will go and even "an architectural-type drawing."

"We really want to be able to turn those applications in as quickly as possible and have them be correct — have the i's dotted and the t's crossed," Powers said.

Stellar Solar has hired 25 percent more employees since last fall to handle the rush.

"Time is of the essence," Powers said. "We’re trying to focus on helping (customers) get across the deadline as quickly as possible."

Bernadette Del Chiaro, executive director of the California Solar & Storage Association, said some of her group's members have set an unofficial deadline of April 1 to make sure all the paperwork gets done in time.

With the clock ticking, the California Solar & Storage Association compiled a list of suggestions for potential solar customers to follow, including getting three bids from a licensed solar contractor.

"I know when you feel rushed, you may not want to do that, but it is one of the best ways to protect yourself on any major home improvement," Del Chiaro said.

Other tips include:

"We really want to make sure consumers take a deep breath, protect themselves by just being smart and calm-headed," Del Chiaro said.But if potential customers aren't quite ready to pull the trigger, Aggarwal of EnergySage said they shouldn't freak out.

"While NEM 3.0 may be less economically beneficial for consumers, there is still a lot of good savings out there," Aggarwal said, pointing to the time it takes for a solar installation to pay for itself through accumulated savings from monthly utility bills.

"Typically for consumers, today their average payback period was about six years. Now it will be likely about nine years," he said. "So it's still a very good payback. The utilities, as we know, will continue to raise prices and raise them aggressively, so solar will continue to protect consumers from those rising prices."

The provisions of NEM 3.0 include $900 million in upfront incentives for customers to pair solar with battery storage systems, with $630 million set aside for low-income customers. Combining batteries with rooftop installations will allow customers to store solar during the day and then discharge those electrons at night.

Powers said about 30 percent of Stellar Solar's customers are adding battery storage to their solar installations.

"Under NEM 3.0, it makes sense to fill (the battery) up with sunlight during the daytime and then from 4 p.m. to 9 p.m. when (electricity is) expensive, run your house off of the battery," Powers said.

The new rules also increase the allowable size of rooftop solar systems to cover 150 percent of a customer's electricity usage to accommodate future electrification of appliances and vehicles.