In recent years, renewable energy has become an increasingly popular option for individuals and businesses. With net metering 3.0 changes in California coming, it’s important for solar installers to understand the impact that these changes will have on renewable energy adoption and solar business growth, and how to overcome them. Let’s take a closer look.
Why Net Metering Matters
Net metering is an important part of the transition to renewable energy sources, as it allows customers with solar installations to receive credits for excess electricity generated from their systems. This program has been very successful over the years as property owners have been incentivized to place large arrays that create more energy than needed. They then receive credits when excess energy is put back into the grid. Unfortunately, changes are coming in California that will drastically reduce the number of net metering credits customers can receive. As a result, this could slow down the rate of solar adoption and affect the growth of many solar businesses in the state. In December 2022 the California Public Utilities Commission voted to lower net metering effective April 2023.
The Impact on Renewable Energy Adoption
The proposed changes to net metering could have a significant impact on renewable energy adoption nationwide. With fewer incentives available to those investing in solar installations, there is a fear that people may be less likely to commit to making such an investment. This could slow down overall progress towards transitioning away from fossil fuels and shift focus away from sustainability initiatives. For installers in California, that means the economic headwinds that you currently face just got stiffer.
The Impact on Solar Business Growth
In addition to affecting renewable energy adoption rates, these proposed changes could also negatively impact solar business growth. If customers are not receiving as many credits for their excess electricity generation, then they may not be willing to invest as much money into their solar systems—which could mean fewer sales for companies within this industry. Furthermore, if more people start turning away from solar because of these reduced incentives, then businesses within this industry will feel the effects both directly and indirectly.
The Installer Playbook in a Net Metering 3.0 World
There are a few key strategies that solar installers in California can use to continue growing their businesses even if net metering policies are changed in a way that reduces the financial incentives for solar energy adoption. These strategies include:
- Offer energy storage solutions: As battery technology improves and costs continue to decline, solar installers can offer energy storage solutions, such as home batteries, to customers. These solutions allow customers to store excess solar energy for use during times when the sun is not shining, which can further reduce their reliance on grid-generated electricity and negate the net metering changes since customers can keep more of the energy their system generates.
- Maintain or create a strong operational focus: Solar installers can continue to grow their businesses by focusing on strong operational practices, such as accurate site surveys to cut callbacks, efficient project management, quicker design turnarounds, clearing backlogs, and effective marketing and sales efforts. By keeping costs low and maximizing efficiency, solar installers can remain competitive and continue to grow their businesses even in a challenging market. Installers need to master their costs, then cut them, and then increase profits through efficiency.
- Diversify their customer base: Solar installers can focus on expanding their customer base beyond residential homeowners to include commercial and industrial customers, who may have larger energy needs and net metering changes will play less of a factor in their calculation to adopt solar energy solutions.
- Bundle with energy efficiency offerings: Solar installers can help customers reduce their energy consumption by offering energy efficiency solutions, such as LED lighting and energy-efficient appliances. By reducing their energy needs, customers can reduce the size and cost of their solar panel systems and make them more financially viable.
All in all, these changes should have far-reaching implications for both consumers and businesses alike—especially those in California’s renewable energy sector. By reducing incentives and complicating access to net metering programs, it’s likely that these changes will ultimately harm renewable energy adoption and slow down business growth in this sector. However, if businesses can find creative ways around these challenges—such as the 4 suggestions listed above—they can remain competitive and profitable in spite of these new regulations.