California AB 2143 – a critical piece of legislation within the California solar industry – is set to become operative in January 2024. This divisive bill mandates prevailing wages for all construction workers on commercial and non-residential solar projects.
Enacted in September 2022, AB 2143 introduces significant penalties for non-compliance. Most notably, it empowers California’s major Investor-Owned Utilities to withhold Net Energy Metering (NEM) benefits from systems not adhering to prevailing wage standards. The implication is clear: non-compliance could lead to considerable cost hikes for these systems, diminishing the economic feasibility of numerous projects. To guarantee adherence, contractors are required to submit payroll documentation biannually to the California Public Utilities Commission (CPUC).
As the implementation date looms just over five months away, it’s crucial to strategize effectively.
Options for Contractors
Option 1 – Adopt Higher Wages
Paying increased wages seems like a straightforward solution. However, the current economic climate, marked by rising interest rates, makes securing a reasonable return on investment challenging. Elevated wages may also constrict the scope of feasible projects. For those engaged in large-scale commercial ventures slated to extend beyond this year, it’s prudent to plan for wage inflation, barring other viable alternatives.
Option 2 – Shift Focus to Residential Installations
Pivoting to residential system sales and installations might be a viable strategy for adaptable companies. Nevertheless, this shift has its challenges. It demands more extensive warehousing, a heightened emphasis on customer service, and an expanded sales team. Moreover, a collective industry move towards residential projects could oversaturate the market. This strategy, while beneficial for some, isn’t universally applicable.
Option 3 – Explore Non-NEM Enrolled Systems
In the shadow of AB 2143 and the transition to NEM 3.0, it’s evident that the CPUC is discouraging new solar PV installations. Yet, the trajectory for renewable energy remains upward.
For insights on maximizing solar savings under NEM 3.0, our previous blog offers valuable guidance.
With these new regulations, prioritizing energy storage becomes an astute move. Given NEM 3.0’s reduced daytime credits and AB 2143’s prevailing wage mandates, systems focused on self-consumption, including immediate use or battery storage, without returning energy to the grid, stand to gain. Batteries will cater to the building’s power needs, recycling this process daily.
A forthcoming blog post will delve deeper into various energy storage strategies.
Strategizing for Success
In the current landscape, integrating storage with renewable energy emerges as the most viable pathway. At National Energy Installers, we have identified that sales strategies emphasizing both solar and storage are most effective in navigating the dynamic solar energy sector in California.
With over 13 years of experience in microgrid design, we possess deep insights into the unique engineering challenges these systems present. Our expertise lies in integrating diverse technologies such as solar PV, energy storage, electric vehicles, and hydrogen and fuel-based generators to develop sophisticated microgrids that align with client needs.
As the solar industry evolves, National Energy Installers remains committed to helping our clients adapt and prosper amidst these changes.