Article by:
Austin Young
December 6, 2023
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Policy Update: CPUC Votes 5-0 on VNEM Successor Tariff

The California Public Utilities Commission (CPUC) has made a crucial decision, voting unanimously to revise the state's solar energy programs and create a new net billing successor tariff. This affects the Virtual Net Energy Metering (VNEM) and Net Energy Metering Aggregation (NEMA) programs. Here's what this means for shared real estate owners:

What's Changing?

  • Reduced Compensation for Exported Solar Energy: The CPUC's decision reduces the value of export solar energy for customers, particularly for multi-tenant housing, businesses, and farms by lowering the compensation for excess solar power sent back to the grid.
  • Timeline for New Projects: These changes will start impacting new solar projects with major utilities (Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric) in February 2024.

Ivy Energy’s Achievement in the CPUC Proceedings

Together with other stakeholders, Ivy Energy has played a pivotal role in influencing the CPUC NEM 3.0 proceedings. The CPUC revised its initial proposal to allow residential customers to receive full credit for the solar power they use directly (netting), rather than treating all solar power as exported. This is a significant win for multifamily property owners and renters, keeping solar investments more financially attractive.

Understanding the VNEM Successor Tariff

  • Netting at Unit Level for Residential Meters: Under the new VNEM net billing tariff, solar generation can now offset individual utility bills in multifamily buildings. This is great news as it makes investing in solar more appealing for residential properties.
  • Commercial Meters Exclusion: Unfortunately, commercial meters (like those in shared common areas of buildings) are excluded from this benefit, which might lessen the incentives for installing solar in these areas. While this is one of the negative results of the new tariff, solar contractors are exploring different options to optimize projects for mixed-use buildings. 
  • Grandfathering Period: There’s a crucial 90-day period that has begun when the decision was adopted, during which new and existing projects can secure VNEM 2.0 rates if they get their applications submitted within the 90-day grandfathering period. 
  • Application Time Limits: From the submission of your interconnection application, there’s a three-year limit to get the final building permit to maintain eligibility.

The Strategic Advantage of Grandfathering

With the new successor tariff coming into effect, it’s vital to consider grandfathering your existing or planned solar projects under the current, more favorable VNEM 2.0 tariff. This allows you to lock in the existing rates and conditions before the changes take place.

How to Grandfather Your Solar Projects:

To qualify for VNEM 2.0 and be locked in for 9 years, you need:

  • 1. An Engineering Single Line Diagram and Site Plan.
  • 2. An interconnection application with a contractor license.
  • 3. A dry utility package and building service gear engineering.
  • 4. To complete the project within three years from the application date.

Understand the Deadline: 

Sunset Date: February 14, 2024 (90 days from vote on PD)

Legacy Period: Nine years for all projects submitted successfully between April 15, 2023 and the sunset date (February 14, 2024). After nine years, solar allocated to residential meters will continue to be netted, while solar allocated to nonresidential meters will be compensated at ACC export rate.

Evaluate Your Solar Projects: Look at your properties or upcoming projects and determine which ones could benefit from grandfathering VNEM 2.0.

Submit Your Interconnection Applications: Make sure your applications are complete and submitted before the deadline to qualify for grandfathering.

Prevailing Wage Grandfathering Scenarios

  • NEM 2.0 for 9 Years Without Prevailing Wage: Grandfather projects between November 16th, 2023, and December 31st, 2023.
  • NEM 2.0 for 9 Years With Prevailing Wage: Grandfather projects between January 1st, 2024, and February 15, 2024.
  • NEM 3.0 for 20 Years With Prevailing Wage: This applies to projects submitted after February 15, 2024.

The CPUC’s decision is a significant change for shared real estate owners in California. While it introduces new challenges, understanding and utilizing the opportunity to grandfather projects under VNEM 2.0 is essential. At Ivy Energy, We recognize that the interconnection application process might seem intricate. That's why our team, backed by a strong network of partners, is prepared to guide you through each step, ensuring accuracy and timeliness in all documentation. Trust Ivy to be your advocate and partner during this pivotal time. Please reach out to our team, and let's discuss how we can assist you in starting the grandfathering process to secure the VNEM 2.0 tariff.