Solar Fights Back: CPUC Now Faces Lawsuit Over NEM 3.0
After a year of turmoil for the solar industry, a new lawsuit against the California Public Utilities Commission (CPUC) over its Net Energy Metering (NEM) 3.0 policy has reached the California Supreme Court. This legal challenge could bring a turning point for the sector, which has seen substantial market contraction since the policy’s implementation.
Below, we discuss the details of the lawsuit and its possible outcomes. We also delve into one of the top solutions California’s contractors are using to get through these troubled times: exclusive pre-set appointments.
One Year Later: The Fallout of NEM 3.0
Implemented in April 2023, NEM 3.0 drastically altered the compensation structure for solar energy, significantly reducing the rates at which customers are credited for excess power returned to the grid.
The impact was immediate and severe, with a reported 80+% drop in solar installations and a sharp increase in business closures within the industry. According to Solar Insure, approximately 75% of rooftop solar companies in California are now considered at high risk for bankruptcy due to the financial impact of NEM 3.0. Recent statistics also show that over 3,000 solar-related jobs have been lost in the aftermath of this policy shift.
In the wake of all this damage, the industry has hotly contested the new changes. Protests, public engagement, and legal actions have mounted as California’s solar market suffers.
The 2024 Supreme Court Lawsuit
This May, industry figures mobilized against the California Public Utilities Commission (CPUC) to file a lawsuit challenging NEM 3.0. Spearheaded by The California Solar & Storage Association (CALSSA) alongside a coalition of environmental groups and legal advocates, it aims to overturn or significantly modify the policy’s regulatory framework.
The suit alleges that the CPUC’s adoption of NEM 3.0 violates several statutory and constitutional provisions, particularly those relating to environmental and economic sustainability.
Specifically, the lawsuit claims that NEM 3.0 undermines the state’s Renewable Portfolio Standard, which aims to increase electricity generation from renewable sources. Furthermore, the coalition argues that the CPUC did not adequately consider the economic and environmental impacts of drastically reducing the compensation solar customers receive for excess energy. This conflicts with state laws that require assessments to foster sustainable development and economic stability.
The lawsuit claims violations of the California Environmental Quality Act (CEQA), which mandates state agencies to evaluate the significant environmental impacts of their decisions. By failing to conduct a comprehensive environmental review before implementing NEM 3.0, the CPUC is accused of neglecting its duty to protect public environmental interests.
Moreover, the plaintiffs argue that the CPUC’s actions have disproportionately affected lower-income communities and those who could benefit most from affordable renewable energy solutions, effectively deepening the state’s energy divide. By challenging these points, the lawsuit seeks to not only overturn the CPUC’s ruling but also to establish a precedent for how energy regulations must align with broader environmental and social equity goals.
Attorney Roger Lin, representing the coalition, made the following statement in an article by Solar Power World:
“The Supreme Court’s decision is a ray of hope for rooftop solar at a time when plummeting installations and massive layoffs are wrecking this vital industry and jeopardizing California’s climate goals. The Public Utilities Commission made a huge mistake that’s putting rooftop solar benefits out of reach for working-class families. But the commission isn’t immune from legal review, and I’m now a lot more optimistic that we can get back to a reasonable policy that helps California fight the climate emergency and environmental injustice.”
What Lies Ahead
The legal proceedings are set to unfold over the next several months, with preliminary hearings already drawing significant attention both statewide and nationally. Briefings are expected to endure through the summer, followed by oral arguments.
A victory for the solar industry could mandate a revision of NEM 3.0, potentially reinstating more favorable terms for solar customers and providing a much-needed boost to the industry.
Should the lawsuit succeed, it could set a precedent for how energy policies are crafted and contested in California. A reversal or modification of NEM 3.0 could reinvigorate the solar industry, potentially leading to a resurgence in solar installations and job creation. Moreover, it could reaffirm the state’s commitment to its ambitious renewable energy targets, which have been jeopardized under the current NEM framework.
Grid Freedom’s Support is Helping Contractors Push Through
As the battle unfolds, Grid Freedom acts as a crucial ally to solar contractors affected by NEM 3.0. The agency offers a service that is keeping contractors operational: providing exclusive pre-set solar appointments with homeowners ready to install solar systems — even under NEM 3.0’s less favorable conditions. This work is helping to sustain California’s contractors at a time when finding customers is growing more and more challenging.
Contractors can source as many leads as they need, whenever they need them, with no binding terms, contracts, or subscriptions. Grid Freedom simply delivers customer connections with their first meeting already scheduled, making it easy for installers to speed right to a sale.
All customers who come through Grid Freedom have been sourced via attraction-based marketing, ensuring a pool of only those who are actively interested in and researching solar. These prospects are then interviewed by live agents who perform in-depth screening, assessing their readiness to say “yes” to solar. As a result, contractors only meet with the most capable, prepared, and excited buyers, paving the way for smooth sales.
