Solar Market and Cost Analysis

California Adopts Net Metering 3.0 Policy Comparison of California NEM Policies, Residential PV NEM 2.0 (2016) PV export rate Retail, $0.30- $0.40/kWh Monthly PV charge None NEM 3.0 Initial Proposal (Dec. 2021) Avoided cost, ~75% lower than retail NEM 3.0 revised/adopted rule (Dec. 2022) Avoided cost, ~75% lower than retail $30-$40 (net of 10-y transition None credit) Export adder None None $0-$0.04/kWh for 9 y for typical systems installed in next 5 y Target payback 5-7 y, 10 y, PV+storage 9 y, standalone PV period standalone PV Assumed PV $2.34/Wdc $3.30/Wdc system cost Sources: Canary Media (12/15/22); CPUC Proposed Decision (11/10/22); Solar Power World (11/10/22); Utility Dive (11/11/22, 12/16/22); Wood Mackenzie and SEIA, US Solar Market Insight, Q4 2022. . • The California Public Utilities Commission approved revised net metering rules in December 2022; they become effective April 2023. - The rules replace retail export rates with avoided- cost rates but omit a previously proposed grid- participation charge. The aim is to mitigate cost-shifting from PV to non-PV customers, compensate PV based on its value to the grid, and-in conjunction with highly differentiated time-of-use import rates- encourage electrification and use of energy storage. SEIA and Wood Mackenzie project the policy will shrink California's residential PV market by 39% in 2024 after a rush to install systems under the old rules in the first part of 2023. Commercial PV projects are expected to contract in 2025 and 2026, as projects started under the old rules are built out in 2024. California accounted for about 36% of U.S. residential PV and 19% of nonresidential (excluding utility-scale) PV installed in 2022. NREL 9

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