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California NEM 3.0: Rooftop solar’s biggest fight is back on

California NEM 3.0: Rooftop solar’s biggest fight is back on

In Episode 6 of the Factor This! podcast, rooftop solar's biggest fight — California's net energy metering reform process — is back on. The California Public Utilities Commission has reopened the docket for NEM 3.0, which rooftop solar advocates warn could have a devastating impact on the industry nationwide.

Vote Solar's new executive director, Sachu Constantine, takes Factor This! to the front lines of the policy fight and shares how he plans to move one of the leading solar advocacy groups to its next chapter.

Sachu Constantine doesn't have much time for introductions.

He was tapped to lead Vote Solar as its new executive director after the organization's co-founder and original boss, Adam Browning, stepped down from the role last year.

Having led Vote Solar's policy shop for the past five years, Constantine is anxious to establish himself as the organization's new leader.

But the industry's latest fight, California's overhaul of its net energy metering program, which itself could have a seismic impact on the broader U.S. rooftop solar market, won't allow Constantine to emerge from the policy frontlines any time soon.

"As far as the U.S. goes, this is ground zero for the distributed solar industry," Constantine said on the Factor This! podcast. "The shot has been fired across the bow here. And it's a very dangerous shot because this is the flagship."

What is California NEM 3.0

Rooftop Solar
A rooftop solar system.

The California Public Utilities Commission is required by state law to reassess how rooftop solar customers are compensated for surplus energy that they send to the grid. This proceeding is commonly referred to as NEM 3.0 as the third generation of net energy metering reform in the state.

The changes will apply to all customers of Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric.

Released last December, the CPUC's NEM 3.0 proposal was met with immediate and fierce backlash from solar advocates, Gov. Gavin Newsom, and two Hulks.

Analysis from the consulting firm Wood Mackenzie predicted that the proposal would cut California's residential solar market in half by 2024 and more than double payback periods from 5-6 years to 14-15 years, depending on the utility.

Industry advocates have called a proposed monthly $8 per kW grid access fee a "solar tax." Grandfather periods for NEM 1.0 and NEM 2.0 would be reduced under the proposal. And the switch to a time-of-use rate structure, based on an avoided cost calculator, would slash the credit customers receive for sending surplus solar energy to the grid.

Outrage to the NEM 3.0 proposal led the judge overseeing the proceeding to indefinitely pause the process. That work has resumed, though, pressing play on rooftop solar's biggest fight yet.

While the pause and the subsequent reopening of the docket didn't materially change any of the proposed reforms, Constantine believes the break shouldn't be discounted.

"We know there's popular support for (rooftop solar)," he said. "The (CPUC) recognizes that. They also recognize, I think, in reopening (the docket) that they may have overstepped on the size of the fixed fee, on the sudden decline, on basically ignoring any chance at a true glide path."

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What's next

Constantine believes now is an appropriate time to reassess California's net metering program. On June 10, Vote Solar and the Solar Energy Industries Association submitted a list of recommendations in response to the judge's request.

The CPUC is "one of the most technically proficient" commissions in the country, according to Constantine, who served as a senior regulatory analyst for the CPUC from 2007-10.

The multitude of challenges before the CPUC, and the maturity of the California solar market, puts this net metering fight in a different category than other states. California, meanwhile, has ambitious climate and labor goals that also factor into the debate.

Vote Solar has identified three objectives in the California NEM 3.0 proceeding:

  1. Gradual decline (ramp or glide path) to the avoided cost rate
  2. Protection for low-income customers: simplify the market adjustment credit by holding the export value flat
  3. Eliminate the grid access fee

As California goes…

The potential impact of the California NEM 3.0 decision on the broader rooftop solar market can't be overstated.

The vast majority of distributed solar generating capacity -- 12 of 18 GW -- is installed in California. In many ways, the rooftop solar industry can exist in some states because of the strength of the California market.

Not only that, Constantine adds, but California and a stripped-down net metering program could be used as ammunition for states looking to dismantle or squash distributed energy deployment.

The CPUC ruling on net metering is not just about California. It's about the future of distributed solar energy in the U.S.

"If you undermine the market here — if you destroy the value proposition of rooftop solar — not only will it have a significant effect on the availability of financing and capital and technical know-how and the general volumes in the market, it's also going to send a signal (to other states) which we already see happening, just from the proposal in December," Constantine said.

A vision for Vote Solar

Sachu Constantine, Vote Solar Executive Director

Vote Solar will continue its push to address climate change through the deployment of solar energy.

But Constantine sees opportunities to expand Vote Solar's tent to feature a "portfolio" approach to shared clean energy goals.

No, the organization will not become Vote Wind. But advocacy efforts that go hand-in-hand with solar, like the advancement of battery storage, electric heat pumps, the decarbonization of buildings, and the electrification of transport, can be added to the mix.

And it's not just about technology. Improving equity in solar will be a pillar of Vote Solar's work going forward under Constantine's leadership, he said.

"We can't just sit on the laurels of being the lowest marginal cost energy out there."

Constantine has some fresh ideas for Vote Solar. But the positive and conciliatory tone that the organization became known for under Browning isn't going to change just because of the gravity of the California NEM 3.0 decision.

The solar industry's fight against the Auxin Solar tariff petition was (and remains) heated. While California's NEM 3.0 proposal could have similar cataclysmic effects on the rooftop industry that the trade case threatened for utility-scale projects, Constantine is taking a different approach.

"We don't think that being bombastic or overly negative is going to help. We know that this is something that we all want. It's a popular issue. We know it's a popular issue. We don't need to alienate anybody. That doesn't mean we're not going to fight hard," Constantine said.

Episode transcript

Sachu Constantine, Vote Solar  00:09

The shot has been fired across the bow here and it's a very dangerous shot because this is the flagship. But other ships in the fleet, other ships in the Navy, are taking notice. So we have to be very careful about how California goes because that sends a signal. And that's really the danger.

Host: John Engel  00:19

Rooftop solar lives and dies on what happens in California. There's no overstating that. And maybe its biggest fight yet is back on. The California Public Utilities Commission has restarted its work on its controversial overhaul to the state's solar energy focused net energy metering policy. This third generation is called NEM 3.0. The CPUC decision would directly impact roughly 1.3 million Californians who have rooftop solar, but the implications are far greater for the broader industry and rooftop solar markets across the country. Sachu Constantine is on the front lines of that fight as the new executive director of the advocacy group Vote Solar. This week on Factor This!, we get to know Constantine, and hear how he plans to lead Vote Solar into its next chapter after more than two decades under the control of Adam Browning. Plus everything you need to know about NEM 3.0 and rooftop solar's fight for survival. That's all next on Factor This! Well, Sachu Constantine, thanks so much for joining us here on Factor This!

Sachu Constantine, Vote Solar  01:30

John, a pleasure to be here. Thank you.

Host: John Engel  01:32

So you're taking over Vote Solar after the advocacy organization was led by Adam Browning for two decades. So very intertwined, Adam's journey and Vote Solar. And and the two are mentioned typically in the same breath. And you're also taking over at a time when Vote Solar is in the midst of, of maybe debatably, its biggest fight yet with the California net metering issue, and what we're seeing play out there. So I want this conversation to serve both as an opportunity for our audience to get to know you individually outside of the Adam Browning advocacy tree, and also get those nitty gritty details on the NEM 3.0 restart. So first, would love to start with your background and your entrance to solar and how you ended up as the executive director at Vote Solar.

Sachu Constantine, Vote Solar  02:18

Sure, John. Well, again, thanks for having me on. I'm really glad to have this opportunity to talk to you and your audience. And you're absolutely right. Adam, as one as the one of the founders of Vote Solar and the founding executive director had a great run and we've had 20 years of really effective advocacy in front of PUCs, expert witness testimony, and regulatory proceedings in front of legislatures. And that was a great organization for me to join about five years ago, and Adam brought me in, and I had been friends and colleagues with Adam for a long time, but he brought me in about five years ago, to run the regulatory team to think around corners to think what are we going to do on our next evolution. So I've had a great opportunity to see that success, the 20 year evolution of Vote Solar firsthand, and to incorporate that into my thinking now as as the executive director. If you if you got something that ain't broke, don't fix it. So on the one hand, I come into an organization that's really successful, again, that expert regulatory intervention model has worked for us at the state level, we're going to continue to focus at that level. And and I've really been focused the last five years on making sure that our regulatory expertise and capacity are able to continue that, but there's another evolution going on and one that that I was really privileged to be a part of for these last five years, and now as the executive director to help lead and that is bringing the issues of equity and access in into the fold. And and, you know, I've had a nearly three decade career in energy and energy efficiency, clean energy worked at the at the PUC in 2007, when solar was just getting started there in California at the at the Public Utilities Commission. And all through that career, we have just recognized that as a clean energy future that we all want has to be very inclusive, has to be accessible, and affordable, and beneficial to all segments of the economy: to rural middle-income customers and low-income urban customers, low-income rural customers, and high-income single family homes in our urban and residential centers. So we're bringing that perspective in. And we're also I think, from my seat as a regulatory and technical expert, I've recognized that solar is a pillar in the tent of clean energy, but it's not the only pillar. There are many others and we need to broaden our agenda. And I've been very fortunate to put both of those ideas forward. We've folded that into regional structure for Vote Solar, that's been the one of the latest evolutions for us where we're really focused on our partnerships and our understanding of the deep local issues at each state and each region. And, quite frankly, I think we're we're poised for tremendous growth at this at this pivot point, as you point out.

Host: John Engel  05:20

Well, you lead right into what my next question was going to be: how does Vote Solar look in this next chapter? And what do you hope to bring to it not not in any sense different than what Adam Browning had in his vision for the organization, but obviously, a fresh set of eyes at the helm and leadership always shakes things up a little bit. I am interested about this this point that you made about expanding the tent. What does that look like in practical terms for Vote Solar, it Are you are you getting more into storage issues? Are you are you Vote Wind as well?

Sachu Constantine, Vote Solar  05:51

Well, certainly wind is a part of the picture. But But Vote Solar is Vote Solar. Right, our Northstar is still climate change and using solar, especially PV solar as a driver to decarbonize the grid and to decarbonize the economy. But we know and we've known for some time, that storage is a really important technology to add into solar, but so is demand response. So is the the shift, shape, shift shimmy construct that that LBNL in the labs put forward, but we've got to be flexible. We've got to be able to move energy around the country physically, but also in terms of time we've got it, we've got a lot of energy in the middle of the day, we need it in those evening peaks. So storage is a big part of expanding that tent, understanding how to advocate for rates, rate design deployment, that includes both solar and storage and efficiency and demand response. We've got to recognize the tie in with electrification of the transport sector, decarbonisation of our buildings and electrification of those buildings. So heat pumps, and solar is also a combination, we should think about, you know, in many ways, hot water, and even HVAC, that heating and cooling are like thermal batteries, right? So so the idea of being able to take the energy of the sun and move it into the time period and into the places that we need, has to be part of our advocacy. We can't just sit on the laurels of being the lowest marginal cost energy out there. And I think that's what I mean, by expanding that tent, taking that portfolio approach.

Host: John Engel

Yeah. And utilizing your energy efficiency background, too. So you mentioned that it's bringing that into the fold. And you use the word equity earlier and wanting to maximize that making that a focus in your time as a executive director at vote solar, the word equity is one that both sides of this conversation that we're talking about with net metering and California, both sides will adopt it and use it for the debate around how we should approach rooftop solar but really distributed energy in general. So how do we look at this current issue that we're in with NEM 3.0, that the utility side will will use the cost shift argument and the equity argument to say that wealthier Californians are benefiting from the subsidies that they receive for their solar at the detriment to low and moderate income housing? How do we how do we reconcile all the issues with equity on this one?

Sachu Constantine, Vote Solar

Well, that's a great question. And it is one that we are really trying to grapple with not just in California, but across the country in California. Let me just take you back for one second. And I want to I don't want to delay answering your question. But what has NEM done for us? NEM was part of the triumvirate of policies back in 2007. And even earlier, that helped us drive the price down. It was a proxy for the value of solar, that was the retail exchange rate that we gave for exports of the solar energy was a good proxy at the time. We also had direct subsidies at the time, we had tax subsidies at that time. And we had streamlined interconnection. So you put all those things together. It's a market transformation program. And it was a fair approximation of the value of solar, especially at low penetration rates. Well, now we've driven cost out of the system, but what we're seeing is that people still aren't able to uptake solar in lower income households and lower wealth communities. And so equity for us means making sure that those benefits, just as you say, get to all of those families. We have we have a utility disconnection crisis in this country. 2.6 million customers were disconnected from their critical utility services between 2020 and early 2022. Right, affordability is a real issue, and we need to make solar which is a potential cost saving technique and make that accessible and available to those consumers. And if that's in the form of direct subsidies for income qualified consumers, if it's in the form of, of different rates or a better rate or a better cost recovery mechanism for them, I think that's really important because there are going to be costs, there are going to be increases, because we need to make investments to decarbonize our grid, the cost of electricity, the cost of power, the cost of utilities is all going up and the current price gouging that's going on from the the oil and gas industry and falling through to the the utility sector is just an example of how utility rates can can skyrocket, we need to make that affordable. And solar is a big part of that that portfolio approach, we need more efficiency, we need more solar, we need more storage. We need to electrify these homes, insulate customers from the price spikes, real volatile fossil fuel market, all of that needs to happen and they need access into that market. That's how we're going to get equity. Access comes by and large through policy. And we know that so we're really focusing on the kinds of policies the kinds of rate designs that help those families to go solar to manage their bills going forward to make sure that they are benefiting from solar. And there's another piece to it too, right. The these are the communities and the people that are most affected by climate change by the outages by disaster, the increased intensity of storms by hot and heat and cold. If their buildings aren't as well insulated as, as other homes, they're gonna lose heat or gain heat far too quickly. All of that that whole package has to be made available to these lower income customers, these lower wealth communities, because they need to be able to participate in that clean energy of the future.

Host: John Engel  12:01

And so then let's let's piece out what NEM 3.0 would do, at least as it exists today, before the CPUC. And I'll try my best to summarize this and feel free to jump in whenever you want, because I'm sure you will have other thoughts. So the way I understand it is we have an $8 per kilowatt of solar for everyone after the effective date, that's the grid access fee, which I think has been branded by advocacy groups, yours included, as the solar tax in California. Within that there are some credits for the transition and some exemptions for low income households. And then we also have changes to the NEM 1.0 and 2.0 grandfather periods. And we do have some time-of-use rate structures as well, which I think you were sort of touching on there with with the equity component. What's most concerning from Vote Solar's approach? Is it the package in totality? Or is it it certain pieces that are just not workable on this?

Sachu Constantine, Vote Solar  13:06

We think there are there are three things that we want to get out of this proposal. And it's a legitimate time. Look, solar is a maturing technology, it's a legitimate time to think about restructuring the NEM proxy, right, the proxy for that value of solar's it's been a fair and reasonable price to get us here. But we know that we need to make adjustments to that. So what we want is a gradual decline to to the avoided cost. So I'll call it up, call it a ramp. Ride a glide path is another way

Host: John Engel  13:40

I was going to say that's what it's called in all of the filings.

Sachu Constantine, Vote Solar  13:43

So I think that's really important. You don't want to make some changes... You actually had a great series on the Auxin Solar tariff case. And you know, one of the things that came out of that series was uncertainty as a market killer. And so is sudden disruption, right, you don't want negative disruption you don't want, you don't want a cliff to jump off. So glide path is really important. We do want to make sure that there is protection for low income customers and you know, the the market adjustment credit that you were talking about. It's an extraordinarily complex, very difficult proposal to parse, there's easier ways to do that to ensure that low income customers continue to get enough value that they can afford to invest in solar. So we thought, for example, that you could just hold the NEM export value for income qualified customers flat, that would be an easy, simple way to make sure that they're still getting that value. That's another important factor. And then we really think that a punitive solar-only charge, a solar tax, or a per kilowatt grid access charge is inappropriate. That is not how we treat rate ratepayers. That's not how we treat the residential class. It is essentially penalizing customers for investing in technologies that policy wanted them to invest in, especially the grandfather and then one And then to customers, but even the market going forward, we think that transition to time-of-use rate, a properly calibrated time-of-use rate with good differences deltas between the peak and off peak and a proper mechanism built into the rate to collect non bypassable charges and the public benefits charges that we want to collect the to pay for the grid and our use of the grid. That's the way to do this. Not with punitive solar only charges. So we think that if you if you build the proposal on sort of those three concepts, let's have a glide path for a smooth adjustment of the market, let's make sure that we're taking care of low-income customers. And let's avoid punitive charges on solar customers and get them on to a good rate that will help encourage not only solar, but really importantly, the storage and the investments in energy efficiency and demand response that are key to our clean energy future.

Host: John Engel  15:54

And you keep you keep walking right towards the next question. So I love the synergy that we have going here right now, Sachu, because storage and solar now they move in lockstep. And it's been a fascinating piece of the maturity of solar to see that now storage is as much a part of the conversation as as the PV. And so then help me understand how this would impact storage deployment at the distributed level? Is the time-of-use structure incentivizing storage in the way that maybe our large IOUs are trying to convince us it is? Or does it not accomplish that goal?

Sachu Constantine, Vote Solar  16:37

Well, I think that it can, let me let me qualify the answer that way, it certainly can if you have a time-of-use rate, which says that electricity is particularly expensive, or particularly valuable in those in those evening peak hours, what you want to do is shift your residential customer, you want to shift your load away from those hours, as much as you can, or offset your use in those hours as much as you can with your solar energy that you if you're a solar customer, if you're if you're generating your own electricity, you want to shift your electricity into those hours, well, you can't really do that without storage. Now, in these long summer evenings, of course, some of us [for example] I have both east and west facing panels on my roof. So I actually have a long tail in my production. But by and large, we need batteries to move that electricity into those those evening peaks, when a time-of-use rate is sending the right signal to customers. And so if they're getting that strong signal, if it has a strong enough delta between the peak and off peak, and it's clear and simple enough for customers to react to, you know, not on not on sub-15 minute intervals, but on hours and you know, big chunks of time that they can they can plan their daily activities around, well, then they're going to make that shift, and they're gonna recognize the value of adding storage into their solar system, quite frankly, some of these electrification rates would actually encourage standalone storage for that matter. But we think that the combined package of solar and storage really enhances the value. Now now we've got some export capacity, my home, I have two powerwall batteries, 27 kilowatt-hours of storage, I've got five-kW solar on the roof, during the peak evening hours, during all these heat events, I'm able to actually export solar out of the grid to my neighbors, you know, relieving strain on the system, making it easier for the system to meet the needs. And by eliminating the highest cost hours, we really reduce the overall cost of service for for the grid. So solar customers, when they pair with batteries, are helping to reduce the overall revenue requirements and overall cost of service of the grid that helps drive rates down for everybody.

Host: John Engel  18:46

So then what in this proposal does not do that? Or do you think it's effective in driving those objectives that you were just laying out?

Sachu Constantine, Vote Solar  18:53

Well, certainly for solar, anyone that's considering going solar, if you're facing a punitive solar tax, you're not going to really be encouraged or incentivized to make any of these investments, right. I mean, the the solar helps [but] the battery helps manage the value of that solar to you and to the grid. So without the solar tax with a reasonable export rate, you're going to put your dollars your consumer dollars into this technology, you're going to make an investment that benefits the grid that you know could could ultimately nationwide could reduce the cost of service by over $100 billion. If everybody who could put solar on their roofs. Low income, high income doesn't matter. As long as we're locating at an operating it properly. There's cost savings to be had. We want to incent that, but with a punitive charge you lose that incentive. When you are, we we've known this from from efficiency, right, when you start to charge a customer extra money, because they put an efficient refrigerator on the grid, which helped the grid and helps them. They wouldn't pay the extra money for the efficient refrigerator. Why would they? It hurts their value proposition. The same concept is what's what we're concerned about in the in the December proposal, right. I think the the PUC is walking us down a path saying, Hey, wait, we're going to reconsider that. And they've asked, I think, at least some of the right questions that we're trying to answer about how to make the proposal better.

Host: John Engel  20:26

And that was going to be one of my questions. What what indication do we have that, that the moment now will be any different than it was in December? Because we we saw the outrage we saw it, you know, Hollywood celebrities, actors getting involved in in, you know, call the CPUC and get get active on solar, it was a strange moment for solar, it was really an unfortunate Limelight because being attached to some of these changes. What indication do we have that now is any different than a few months ago, besides the the reopening of the docket? I mean, beyond the judge saying pump the brakes and indefinite pause, that was clearly a message, but the reopening of the docket does not materially change what was proposed in December yet, right?

Sachu Constantine, Vote Solar  21:11

That is correct. That is correct. And I mean, I don't think we should discount the fact that they reopened it as a result of a high pressure inside and outside game. You know, we've been and other similar parties have been in this proceeding for years now we have a strong record in terms of the inside game. We don't feel that the original December decision actually reflected a lot of the input, a lot of the analysis that we saw that that showed the benefits, the both the direct grid benefits, and the larger societal benefits of more solar, or a lot of issues in the record, we think can be re highlighted now that they've reopened the docket, we can bring them back out and say, look, you should have considered this more, you should have considered that more. We also think that there's a there's a recognition in that reopening, not just for the public pressure, not just of the Incredible Hulks, the Incredible Hulk actors, you know, weighing in on this, and really the majority of...

Host: John Engel  22:11

You can say, you can say Mark Ruffalo, you know.

Sachu Constantine, Vote Solar  22:15

Mark Ruffalo. I mean, but actually, he wasn't the only Incredible Hulk.

Host: John Engel  22:20

Oh no. We had multiple Incredible Hulks. Okay, so that was... I think you were being more efficient with your words than I gave you credit for that you were just covering both bases.

Sachu Constantine, Vote Solar  22:30

I just wanted to get it all in there.

Host: John Engel  22:31

I appreciate that.

Sachu Constantine, Vote Solar  22:33

I wanted to see if any other you know, there have been many Hulk actors over the years. I wanted to know if any others any other Hulk actors were in thereI couldn't identify...

Host: John Engel  22:42

That would have been a hell of a press release from Vote Solar, but continue. We don't need to go down the Marvel road..

Sachu Constantine, Vote Solar  22:54

We know there's popular support for this. The Commission recognizes that they also recognize I think, in reopening it that they may have overstepped on the size of the fixed fee, on the sudden decline, you know, they basically ignored any chance at a true glide path. And I think recognize that disrupting the solar market in the way that analysis shows (up to a 60% decline is what some of the analysts are saying if the proposal went through as suggested) is really dangerous at a time when California is facing some or peak shortages of capacity in 2022 and 2023. You know, here was an industry that was installing over the last few years, about 120 megawatts a year, you take 60 or 70 megawatts off of that that's not insignificant. I mean, the PUC is dealing with a lot of problems right now. We know there's a lot of issues they have to deal with, and all credit to them for dealing with this. But this is not insignificant. I think there's a recognition of that by the PUC so that those all points are good signs, the fact that we get another chance to make our case, and that the governor is listening that the PUC and Alice Reynolds are listening. I think that has to be seen as an opportunity to get to something more reasonable.

Host: John Engel  24:13

You brought up the Auxin series, the podcast series that we did in the first four episodes. And it it goes back to a similar point that you just brought up about, you know, the 60% decline. We spent a lot of time talking about forecasts and and predictions of what will happen to the market. Solar has been incredibly resilient over the last 10, 15 years in its in its meteoric rise in the US both residential and utility scale and commercial. What what do we have to tell us that it will be that bad? Do we... has Vote Solar modeled out what the change to the ROI would be and and kind of what that impact would be near term?

Sachu Constantine, Vote Solar  24:53

So typically that kind of economic analysis we are outsourcing With with consultants we work in coalition with, like SEIA. We joint filed with SEIA, in in our comments. Tom Beach has done great analysis for us on what the what the impacts might be. And look, we have evidence from past years from our own practice here in California, that when in the early stages of the California Solar Initiative when we dropped off, so we didn't give enough notice and price, the price and value proposition suddenly changed, we saw short term drops in solar uptake, when we've done the same kind of policies in Arizona, in Nevada, we've seen the market literally evaporate overnight, when you start to impose punitive fees, or you really seriously undermine the value proposition for exports, the solar industry went away. And they had to backtrack very quickly, we saw that we have evidence in the market that this is what happens. And we know that there's, there's a certain amount of elasticity for these kinds of durable expensive goods that that customers want to install. And so if you start throwing a punitive prices and be a lot of uncertainty about what the export value is going to be over time, you know, you're going to depress the market. And at least all the evidence that we've seen suggests that a 50 60% decline is not unreasonable. Yes, it's a resilient market. But let's also remember that solar in this country is still maybe one and a half to two times more expensive than to install in Australia or Germany or many other industrialized countries because we have this incredibly difficult and complex permitting process. We have a very difficult interconnection queue. There are a number of barriers and headwinds that solar still faces, that this kind of additional burden would would really accentuate.

Host: John Engel  26:58

Tell our audience why California is so important, why this fight is not in a vacuum and only applying to California. And so when we think about the broader rooftop solar distributed energy sector,

Sachu Constantine, Vote Solar  27:10

As far as the US goes, this is ground zero especially for the distributed solar industry. This is where the vast majority, the bulk of solar installations happen. There's 10s of 1000s of solar jobs and solar expertise here in in California. We have you know, of the of the 20 to 30 gigawatts of distributed and community solar that is out there on the grid, the vast majority of it is in California, and this is still the biggest market in the country. If you undermine the market here, if you destroy the value proposition of rooftop solar here, not only will it have a significant effect on the availability of financing and capital and technical know how and the general volumes in the market, it's also going to send a signal which we already see happening, just from the proposal in December, we saw states across the country, Alabama, other places, try to impose punitive anti-solar, anti-NEM bills using the same excuses that are being tried here to impose punitive fees and and to undermine the value proposition. We just saw, for example, a bill which which went down in defeat in Florida sponsored by the utility FPL to undermine the net metering in the state. We saw that go down to a veto that was really important. We've seen the Alabama commission push back on on these proposals at least slightly, right. I mean, the shot has been fired across the bow here. And it's a very dangerous shot, because this is the flagship, but other ships in the fleet, other ships in the Navy are taking notice and we have to be very careful how California goes because it will send that signal. And that's, that's really the danger.

Host: John Engel  29:03

Well, and the way it was phrased to me a while back was that if you look at these national players on the residential installer, front, they exist in Michigan because and only because they exist in California. That if that if the California piece of their pie is removed, the the economics of being able to operate in some of these other, you know, markets with lower volumes, it just it doesn't work anymore. And so you would see that, that just shrinkage instantly.

Sachu Constantine, Vote Solar  29:35

I think that's a really important point, not only nationally, and you're absolutely right, right, we want to serve customers in Idaho, and Montana, in North Dakota, and South Dakota, and the infrastructure to deliver that is supported by the volumes in places like California or New York or Massachusetts or Colorado or other places. But we need that whole ecosystem working. But the analogy that you draw is really important. There's this idea that that is kind of embedded in the December proposal for net metering in California that, well, we don't care about the general market, you know, we can take the value away from them, we can tax them, we can put punitive charges on them. And then we'll just direct all the development to the low-income sector to income qualified families. And while that motivation is a good one, it's important to help those families, you're not going to have the ability to, to serve that low-income community, that frontline community, if you don't also have a healthy and robust general market, an open market for solar. And so we need both of these things together. And I think that we need California in there as a strong leader in the rooftop solar sector, so that Michigan and Minnesota with their DRPs and IRPs, their distribution plans and their and their carbon plans, or Illinois with the Climate and Equitable Jobs Act and the goals embodied there so that they can fulfill the policy goals of their states. Right. So California is a real driver for that. And and we have a responsibility to maintain a smooth, predictable market for rooftop solar.

Host: John Engel  31:10

And these fights are happening all across the country. You mentioned that they're even calling out Republican Governor Ron DeSantis, who was cheered for that surprise veto. I think it was around dinner time here on the East Coast. I remember I was cooking and I looked down at my phone and I thought, no way. You know, it was it was shocking to see that. Is there something about the proceedings that are carrying out in California that are just remarkably different than in other states? Or is it consistent in these reforms that we're seeing pop up elsewhere? Because I I'm based here in North Carolina, and Vote Solar and SEIA and others commended North Carolina or commended Duke and North Carolina stakeholders for coming to an agreement that most parties determined was fair. So that was one of those rare events where it seemed like a you know, the cooperation took place. But is what is it about California that seems so separated from that: a southern state that seems to have by most accounts gotten it okay.

Sachu Constantine, Vote Solar  32:16

Yeah, okay. And I, we could do a whole we could do a whole podcast on on our relationship with Duke and the glimmers of hope that we got from that agreement. Look, there's a recognition that a distributed energy portfolio, and you had I think you've just had a special episode on on, you know, grid mod and DERMS and...

Host: John Engel  32:38

You really are listening. You even listened to the special edition.

Sachu Constantine, Vote Solar  32:42

That was great, by the way. But look, there's a recognition that rooftop solar and storage and the investments that that also unlocks are really important to, as I said, bringing the cost of service down to maintaining reliability and resilience on the grid to future proofing our grid in a carbon constrained world. The California proceeding, the California PUC is dealing with an extraordinary complexity of issues. They have a history of delving deep of getting into into the minutiae and the weeds. And so it is really important what we're dealing with here. And we are, you know, slightly ahead of other states far ahead of even Florida, the Sunshine State in terms of the deployment of rooftop solar, so we're dealing with complex issues. And so so that in and of itself, sets the California proceeding aside, because it is already at very high penetrations of rooftop solar. It also does have ostensibly, very lofty climate goals. And we do need to codify those. And again, there's another podcast on on where we've gotten with just executive orders as hard targets. But let's setting that aside, the PUC is one of the most resource the most technically proficient PUCs in the country, so of course, they're going to have very complex discussions about it. We have a very complex relationship with labor and with with the unions, and we do have a robust utility scale market. We're trying to reconcile all of that here. In other states, the NEM fight boils down to a utility argument that that rooftop solar hurts, well, they might not say this, but it hurts their business model, right, that they don't they don't like it, because it might affect their bottom line. They try to argue that, again, it's somehow impactful on low income customers. But what we know and what they're starting to recognize what Duke is starting to recognize is that hey, we kind of want it so there's a little bit of ambivalence. We do see, you know, labor and and other parties coming together in places like Illinois, that's really heartening, I guess is the way to put it but seeing these coalition's recognize the advantages of having solar attached to electric school buses that are that are, you know, delivering kids to a A resilient school that can serve as a community hub if, if a storm blows through or an outage happens, keeping those kids in a safe educational environment, right, all of this is happening. And it's happening because of all the complexity in places like California and Massachusetts, even you know, the Colorado's the New York's of the world who've been pushing the envelope a little.

Host: John Engel  35:18

I want to close on this in in and I keep referencing the Auxin series, because it really was such a moment for and continues to be huge moment for the broader industry. But your voice and your approach to this issue, even though the issue is very serious, and has a very big impact on the industry, not just in California, but more broadly across the country, you are not bombastic and you seem kind of conciliatory in, in the sense of, you know, recognizing that some grid mod has to happen, and that there is some give and take and that it isn't 2007 anymore, and that we need to approach this in a in a way of extending a hand and saying, look, we get we have a role to play in what this next iteration is. Why is that your approach in this case, given what we saw with the trade petition, and the communication strategy for a lot of our groups was Biden is anti-renewables now he's turned his back on back on clean energy, we must fight we must fight, we must fight. You seem to approach it with a different tone. Why is that?

Sachu Constantine, Vote Solar  36:27

Well, listen, John, I gotta tell you that one of the most intimidating things about taking over as executive director wasn't the technical aspects of it, I understand that. There's a great team in place, we have a professional and organized staff, it was Adam's ability to bring a dad joke into almost any conversation, right, and to be the joyful warrior. Now, we're going to continue that. I think that is why we do it. We are here because we believe climate change is an existential issue. Solar is an important tool that we can use to really get us there. And we don't think that being bombastic or overly negative is going to help. We know that this is something that we all want. It's a popular issue. We know it's a popular issue. We don't need to alienate anybody. That doesn't mean we're not going to fight hard. We think that utilities should not be protecting the monopoly, they should be shrinking that monopoly down to a reasonable space around pipes and wires and being a service delivery platform. Let the private sector do its magic, and deliver solar, but we can do that with a sense of humor with it with a funny edge. We, you know, I'm not so quick with the dad jokes. I'm working on my sports jokes. I'm gonna keep working on that maybe the next podcast.

Host: John Engel  37:42

You brought in the Hulk thing. So I feel like if I'm gonna give you credit on your report card, you at least get a check in the box there.

Sachu Constantine, Vote Solar  37:48

All right, I'll bring the Marvel Universe in for sure. But listen, this is this is a very serious issue we face climate change is happening now. It's not a future issue. The grid is failing, the most complex machine we've ever built to support the economy, the lifeblood of the economy, if you want to call it that, it's failing to meet this moment, we need to invest in that. But we don't need to be doom and gloom about it, there is a pathway there is a way forward that is profitable for the utilities, that is cost saving for customers that is reliable and resilient. And we want to get to that we want to bring people into that conversation and find the path forward the mutual paths forward. I actually think you know as strident as the the the the solar sector in the energy sector has been, they're not wrong and they are putting a positive message out there look at what you know, SunPower just really refocused itself on the on the residential markets; Sunrun and its partnership with the Ford F-150 a game changing electric vehicle for us in this country anyway. These are these are positive things things that people want well let's capitalize on that. And that's I think that's my vote so it brings this attitude that it does look we also are dealing with the John Wayne movie The Quiet Man right he is he used to be a brawler, we could have been a brawler, we're strong. We have strong arguments. But because we have strong arguments we can come in and calmly put those facts on the table. Try to be friendly to these PUCs, these public utilities commission's that are really dealing with a lot of issues. We know how stressed they are. We want them to make the right decision. We're not going to hesitate to call out bad decisions doesn't mean we're going to be any less of a fighter, but we're going to be as as joyful and as funny and as accessible as we can when we do it.

Host: John Engel  39:42

Sachu Contantine. Thanks for joining us.

Sachu Constantine, Vote Solar  39:44

Thank you, John. Really appreciate it.

Host: John Engel  39:57

Thanks to Sachu Constantine the new executive director of Vote Solar. I'm John Engel from Renewable Energy World. Make sure you keep up with the California NEM 3.0 through our coverage at RenewableEnergyWorld.com That's where you'll find show notes, video interviews, and episode transcripts for every episode of factor this and you can connect with me on LinkedIn and Twitter. Please leave a rating and review a factor this wherever you get your podcasts, and we'll see you next time.