So why is all of this changing now? Flattening out the "Duck Curve"

California has produced so much renewable energy in the form of solar and wind power that there`s now a glut of excess power - generally in the afternoons when the sun is shining and the wind is blowing.

So the state now needs to flatten out this imbalance by incentivizing grid customers to use MORE energy in the afternoon and LESS in the evenings. Or store it.

This new grid imbalance is referred to in the energy industry as the "duck curve":

The "duck curve" with a midday drop in power consumption in Megawatts across California due to over-production of renewable energy. Credit: vox.com

Another reason for the rate changes (that doesn`t get talked about as much) is the fact that it`s expensive for utilities to run "standby" power plants to meet this imbalance. These "standby" plants are referred to in the energy industry as “peaker plants” that are typically fueled by natural gas which can be subject to price swings in energy markets and environmental regulations. The 2021 winter storm fiasco in Texas is a perfect example of this!

The ultimate goal is to be able to store excess solar/wind energy with on-site batteries, or some other form of energy storage - including hydrogen fuel cells. So the new rates have been built to incentivize this and make grid loads more predictable.

And let`s be honest, this also siphons more money out of our pockets to go to monopoly utility companies that have had horrendous safety records and declared bankruptcy in recent years due to sparking massive wildfires, resulting in lost lives and billions of dollars in damage to communities (looking at you, PG&E).

NEM 3.0 - What the heck is going on?

Rubbing salt in the wound of already-sky-high energy costs, in December 2022 the California Public Utility Commission (CPUC) passed a new regulation collectively referred to as "NEM 3.0."

This new ruling heavily favors incumbent utility companies over solar producers/consumers and private solar installers. Over the past decade, a rooftop solar producer would be well-compensated for all excess energy they sent back to the grid i.e. "net metering" by as much as $0.25/kWh. These systems could pay for themselves within a few years and customers could essentially wipe out their energy costs, while saving $ millions in utility bills over the 20 year life of the solar system.

Now, these net metering incentives are being slashed by ~75%. This essentially guts the economics of installing your own solar panels and makes it very difficult to break even on your solar investment. It also incentivizes utility customers to install expensive, on-site batteries to store excess energy and discharge it during expensive "peak" hours - assuming they can afford the equipment and installation costs and the $ savings math pencils out.

California Ag Utility Rates: TRIPLE the National Average

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