Is it still worth investing in SOLAR PANELS?
INDUSTRY EXPERTS WEIGH IN
The arithmetic on new installations has changed, but it rarely breaks even without a battery system
A little over a year ago, the California Public Utilities Commission overhauled the rules for rooftop solar installations across the state. In its December 2022 decision, the commission added incentives for customers to pair solar with batteries, but the new rules also dramatically reduced net energy metering, or NEM, compensation rates.
New panels can be a hefty investment, costing on average $2.8 per watt, including installation, according to the EnergySage quote comparison tool. “For a 5 (kilowatt-hour) installation, this comes out to about $14,004 before incentives, though prices range from $11,903 to $16,105. After the federal tax credit, the average price drops by 30%,” the site says.
NEM 2.0 was phased out in April, leaving the new NEM compensation rates — what solar customers receive when their rooftop systems generate more energy than they consume — as the only option for new solar installations.
Given that today's export rates — the compensation to solar panel owners for
the excess electricity their panels export to the grid — are 75% lower under the new rules, the math on new installations has changed.
The payoff point is later and now it's essential to add a battery, which adds more to the upfront cost. Tax incentives take off some of the edge. But other key incentives recently ended or are expected to sunset after this year.
Given all this, does it still make sense
to add solar?
Many homeowners say no. Solar installations fell dramatically in 2023.
“Utility interconnection request data shows that solar sales have fallen between 66% and 83% year-over-year following NEM 3.0,” pv magazine USA, a trade publication, reported in December. “What's more, there have been massive layoffs industrywide.”