How Does the 2023 NEMA Decision Affect JKB Clients?
At JKB Energy, we pledge to provide our clients with the most up-to-date information on changes to solar policy. On August 2, 2023, the California Public Utilities Commission (CPUC) announced a preliminary decision based on net energy metering aggregation (NEMA) that impacts many of our solar customers. Following this decision, energy generated by systems over 1 meter must be categorized as an export––even if the electricity is consumed on site and off the grid.
JKB––as well as solar industry groups, agricultural leaders and California schools––has been fighting this unfair decision since its release. In response to criticism, the CPUC scheduled a vote on revised NEMA and virtual net energy metering (VNEM) decisions. The vote has since been postponed to November 2, 2023.
Unfortunately, due to this delay, an assessment of AB 2143––which set prevailing wage requirements––will be addressed during the NEMA and VNEM revision decisions. However, solar customers are not subject to prevailing wage requirements so long as they submit an interconnection application by December 31, 2023.
Prevailing Wages in Place
As of January 1, 2022, AB 2143 set prevailing wage standards for all on-site workers at non-residential, commercial, industrial, agricultural and government renewable energy systems that use net energy metering (NEM). If solar customers do not abide by these requirements, they risk losing NEM alongside other penalties.
Further, the Inflation Reduction Act (IRA) introduced new prevailing wage inducements for solar system projects based on capacity. For projects less than 1 MW, solar customers can expect to receive a 30% investment tax credit (ITC). On the other hand, for projects greater than 1 MW, solar customers must meet prevailing wage requirements in order to maintain their 30% ITC; if they do not, their ITC may decrease to 6%.
All projects that meet made-in-America requirements or are sited in an energy community have the potential to earn bonus credits. Bonus credits may be equivalent to one-third of the project’s ITC.
Non-Export vs. Net Energy Metering (NEM) Systems
Beyond NEM systems, solar customers are able to interconnect their on-site generation systems by installing non-export systems. While NEM systems transfer unused energy to the grid and earn credits, non-export systems do not––ensuring that all electricity remains on-site.
If a project is less than 1 MW and uses a non-export system, it is exempt from California’s prevailing wage laws and may be eligible for a 30% ITC. Additionally, because power is off the grid, non-export systems tend to have shorter interconnection timelines and fewer mitigation measures than NEM systems.
Although NEM systems may offer more financial benefits, if most of your energy is generated and consumed onsite, non-export systems may better suit your needs. All power generated by non-export systems can be saved for later use––with one- to four-hour short-term storage showing the best returns. Predictable systems (unlike agricultural projects due to seasonal instability) do best with non-export systems matched to their energy load.
Summary of Impacts
CPUC released an unpopular preliminary NEMA decision that changes standards for many solar customers.
Due to a voting delay, AB 2143 will now be reassessed alongside NEMA and VNEM decisions––which will affect California’s preliminary wage requirements.
AB 2143 and the IRA set prevailing wage requirements for on-site energy workers and established tax credit rules that benefit projects less than 1 MW.
Non-export systems are eligible for a 30% ITC and do not export energy to the grid, offering some solar customers better support than NEM systems.
If you have a system that generates more than 1 meter of energy, consider applying under NEMA immediately in order to avoid prevailing wage requirements and to receive full retail credit for all energy exports. After NEMA policy changes, the value of exports will be reduced by 80%.
We’re committed to keeping our client community informed about changes to the American energy landscape. If you have any questions about the NEMA decision, please contact rich@jkbenergy.com. Our solar customers are our top priority!