CPUC Votes To Change The Way California Will Compensate Rooftop Solar Energy

David Shultz

David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.

CPUC Votes To Change The Way California Will Compensate Rooftop Solar Energy

Yesterday the California Public Utility Commission (CPUC) voted unanimously to enact sweeping changes to the way the state will compensate rooftop solar energy. The decision, which came after more than three hours of public comment in which rate payers, environmental advocates, and solar industry workers voiced their near-universal opposition to the policy change, will effectively reduce how much money new solar customers can expect to recoup by 75% or more.


At a time when California is attempting to transition to clean energy, opponents argued that the change to the net energy metering program (NEM) would cripple the rooftop solar industry and hamper the state’s progress on clean energy in favor of supporting the utility company’s monopoly on energy. In comments that were occasionally emotional to the point of being vitriolic, callers attempted to shame CPUC and cast them as shills for the corporate interests of Pacific Gas & Electric and Southern California Edison.

In fact, for many Californians who called into the vote today, the conversation seemed to have far less to do with how to make the transition equitable, and instead hinged upon the perception that the decision would be an economic windfall to utility companies and harm grid resilience. Rate payers railed against the utility company’s record-setting profits and negligent business practices that have cost the state billions in fire damages in addition to human lives. For many callers, the debate hinged on reducing reliance on monopolistic corporations rather than equitable decarbonization strategies.

Still, three hours of desperate pleading for a “no” vote did not sway the Commission. And the future of rooftop solar will look considerably different in California going forward. The new plan will tie the rates that solar customers receive to the time that they sell then energy back to the grid, thereby massively incentivizing investment in battery storage to complement solar systems.

The decision was destined to be controversial no matter the specifics. Back in 2021, the CPUC announced its intent to change the NEM rates with an even more drastic plan that included rate reductions and also essentially levied a $50 monthly tax on rooftop solar users. The backlash sent CPUC back to the drawing board to craft a more modest proposal. But early versions of today’s ruling were still cast as far too drastic by the solar industry and by opponents of the program.

The debate surrounding the changes is complex, but at its heart, the controversy boils down to two problems, according to the CPUC. One, the prior structure placed the cost of rooftop solar unfairly onto lower income residents. And two, the prior structure had become outdated, and rooftop solar owners were being overpaid for the energy their panels produced.

The Inequality Issue

Under the old NEM system, residents with rooftop solar were allowed to use any energy from their system to pay for their own energy costs instead of buying from the utility companies. Any extra energy they generated could be sold back to the grid at the standard rate that the Utility Company would charge to customers–between 23 and 35 cents per kilowatt-hour. At the end of the billing period, solar customers only pay for the energy they use minus what they sell back, hence the “net” in net energy metering.

But the utility companies don’t simply eat that cost. In fact, they don’t take a financial hit at all. In California, utility companies are paid a fixed amount for the service they provide. The companies charge a fixed rate for electricity that’s multiplied by how much energy is used by a household (or company or church etc). When less electricity is used, like in the case of rooftop solar, the utility companies respond by increasing the rate to ensure they’re paid their full amount. The more rooftop solar that gets added, the higher the rate goes. (This is an oversimplification, and the Utilities Commission technically has to approve any rate hikes on the basis of whether they’re warranted or not, but it captures what’s happening here nonetheless.)

This policy heavily incentivized residents to install rooftop solar so they use less electricity from the grid. But in doing so, it left those that can’t afford solar to pay the difference. An analysis by the Public Advocates Office at the CPUC showed that residents without rooftop solar were paying an extra $67 to $128 per year due to the cost of the old NEM programs. With the average cost of rooftop solar installation hovering around $12,000-$16,000, the prior policy was criticized as a regressive cost shift that functionally taxed the poor and gave to the rich. The CPUC and the utility companies argued that today’s decision is about rectifying that inequality.

Aligning Payouts with the Value of Energy

In addition to improving the inequality for lower income residents, the CPUC also claims that their new net energy metering policy (dubbed NEM 3.0) will modernize the incentive structure to align with the needs of the grid.

As mentioned above, under the previous version of NEM, residents typically received between 25 and 35 cents per kWh of energy they sold back to the grid, because that’s what the utility companies would’ve charged. In other words, the retail price. But for utility companies, that price also includes money spent on grid hardening, infrastructure, maintenance, vegetation management, R&D, and myriad other fixed costs.

Couple that with the fact that adding energy to the grid,n the middle of the day, when the grid is ripe with solar and other renewables, the value of adding more energy to the system can drop to basically zero. “Retail net energy metering was a good way to get industry started,” says Matt Baker, the Director of the CPUC's Public Advocates Office. “It's a terrible way to try to decarbonize after we've already gotten started.”

Which is why under NEM 3.0, solar customers will be compensated based on when they export their energy to the grid, with different values assigned to each hour of the day, each month, and weekdays versus weekends. These rates also vary by utility company, but on average, solar customers can expect to receive about five to eight cents per kilowatt-hour starting in April 2023, which obviously constitutes a major reduction.

Batteries Take the Limelight

Due to the increased importance of timing in the new export rates under NEM 3.0, batteries have become a major pillar of the new policy since they let owners store their solar energy and sell it back to the grid when demand and export rates are higher. In fact, the new policy effectively makes it economically untenable to install rooftop solar without one. “So whereas before, you would get 30 cents a kilowatt-hour in the middle of the day, now that will be paid at avoided costs–five, six, seven cents, depending on where you are,” says Baker. “But in the evening, you can earn 20 times that amount. You can earn a dollar or more [per kilowatt-hour] depending on where you are.” The idea, says Baker, is to incentivize customers to sell their energy back when the grid is low on renewables and energy demand is highest. But even the CPUC admits that the proposed changes will make rooftop solar less profitable for residents overall. The goal, the Commission says, is to have solar systems pay for themselves within nine years, versus the four or five that most customers experienced under NEM 2.0.

Industry Frustrated by Short “Glide Path”

It’s important to note that all of these changes in NEM 3.0 will only affect new rooftop solar projects. Existing NEM 1.0 and 2.0 customers will retain their current rates for 20 years. NEM 3.0 also includes provisions that add extra money–a few cents per kilowatt-hour–to the rates that customers will receive for the next several years as the transition plays out.

But opponents argue that’s simply not enough and that the plan’s aggressive export pricing reductions will cripple the solar industry. “All the good innovation and progress that we want to see in California will be severely hampered if they go forward with what's on paper right now,” said Bernadette Del Chiaro Executive Director, California Solar & Storage Association (CALSSA) in the lead up to the vote this week. Del Chiaro agrees that the grid needs more batteries and that the current model unfairly places the cost of rooftop solar onto lower-income residents. But she says NEM 3.0 is too drastic, and the changes should come more gradually. “We all want to see more energy storage, but you can't get there overnight. And what the commission wants to do is make the future appear on April 15, 2023, when these new regulations would go into effect,” said Del Chiaro earlier in the week. “That simply will just throw the whole market over a cliff. It's too drastic, it's too extreme, and it runs counter to everything California wants to see.”

Del Chiaro and many other solar industry representatives have begged the Commission for a longer “glide path” towards its goals. They argue that battery technology is still too expensive–it typically increases the cost of a solar system by about a third–and regulators should wait for the technology to mature and come down in cost before essentially mandating its adoption. The CPUC points to the many government incentives at both the state and federal level that are targeted at reducing the cost of battery installation. But again, Del Chiaro and CALSSA counter that timing is the problem and many of these programs are not yet online and will likely still not be available when NEM 3.0 goes into effect in April.

The solar industry also wants to see the export rate reduction occur more gradually. Walker Wright, the Vice President of Public Policy at Sunrun, one of the nation’s largest rooftop solar providers, said he thought an initial 35% reduction in export rates would’ve been much more reasonable than the 75% that the CPUC pushed through today. “It all goes back to the timeline on how we can get there so that the industry doesn't see damage,” said Wright earlier in the week. “I just think it needs to be less drastic at the beginning.”

If NEM 3.0 does drive solar adoption downward, which seems likely, it will slow California’s progress on achieving its ambitious renewable energy goals and likely allow companies like PG&E to retain their monopoly on the energy market for longer. The CPUC is keenly aware of the tradeoffs, but their vote today seems to indicate that they consider them worthwhile.

The $260M Robot Revolution Happening in Torrance

🔦 Spotlight

Hello Los Angeles,

Forget rockets. This week, the loudest move in the defense tech scene came from a factory floor in Torrance, where Hadrian secured $260 million to fuel its robot-run revolution.

The company, which builds AI-powered, robot-run factories for America’s aerospace and defense industries, announced the massive Series C raise, led by existing investors like Lux Capital and Founders Fund, along with a factory expansion loan facility arranged by Morgan Stanley. The funding will power Hadrian’s third factory (in Arizona), unlock full product manufacturing, and accelerate its mission to bring American manufacturing roaring back faster, smarter, and more automated than ever.

And here’s what makes them fascinating: Hadrian isn’t just churning out parts. They’re reinventing what a factory is. Their facilities look more like giant humming circuit boards than the smokestacks of old, packed with robots, AI, and ambition to move at the speed of software.

It’s the kind of vision you’d expect from a founder who speaks about reshoring U.S. manufacturing as if it were a moral obligation and then backs it up with billion-dollar contracts and steel-and-silicon proof.

We’ll be watching closely to see what Hadrian assembles next. One thing’s certain: the robots are already working overtime, and if you’re smart (or a robot whisperer), you might want to join them.

🤝 Venture Deals

LA Companies

  • Boulevard, a SaaS startup that helps salons and self-care businesses manage scheduling and operations, has raised an $80M Series D led by JMI Equity at a valuation near $800M. The funding will fuel enhancements to its AI-powered scheduling tools and support continued product innovation and market expansion. - learn more
  • Rwazi has raised $12M in Series A funding to expand its AI-powered decision-making platform, which helps businesses replace gut-based decisions with real-time insights and simulations based on consumer behavior. The round was led by Bonfire Ventures and will support the growth of Rwazi’s simulation engine and data infrastructure to help companies make more precise, data-driven decisions across marketing, product, and operations. - learn more
  • Lexington Bakes, an artisan bakery known for its gluten-free, organic oat bars and luxury brownies, has raised $1M in a seed round. The investment was led by Rainfall Ventures. The funding will help the company transition to co-manufacturing, expand its retail reach from about 100 to a projected 1,000 doors in the next year, and scale up its team and operations. - learn more

LA Venture Funds

  • TCG (The Chernin Group) participated in Substack’s latest $100M funding round, joining Andreessen Horowitz, and other investors. Their investment underscores confidence in Substack’s vision to grow its subscription publishing platform and expand its tools for independent writers and creators. - learn more
  • Acre Venture Partners participated in Zucca’s $5M funding round to help the Seattle startup scale its platform, which uses AI to design and develop plant-based food products faster and more efficiently. Their investment will support Zucca’s mission to create sustainable, health-focused foods and expand its operations. - learn more
  • Sound Ventures joined XMTP’s $80M Series B to back its vision of redefining how people communicate in the web3 world. With this funding, XMTP plans to scale its decentralized, privacy-focused messaging protocol, enabling secure, wallet-to-wallet conversations across the blockchain ecosystem. - learn more
  • Morpheus Ventures and Sage Venture Partners participated in Datavations’ $17M Series A funding round, with Morpheus joining as a new investor and Sage returning as an existing backer. Datavations, an AI-driven analytics platform for the building materials and home improvement industries, uses machine learning to deliver actionable insights on pricing, inventory, assortment, and supply chains. The funds will be used to grow the team, accelerate development of its Commerce Alert Hub, and expand its presence across North America. - learn more
  • Mucker Capital led the $3.3M seed round for Bidbus, an AI-powered consumer-to-dealer used car marketplace in the U.S. The platform enables car owners to auction their vehicles online and receive competing offers from dealers, while dealers gain access to high-quality inventory more efficiently. The funding will help Bidbus enhance its AI capabilities and expand into new markets. - learn more
  • Creative Artists Agency (CAA) participated as a strategic investor in Moonvalley’s $84M funding round, signaling strong industry confidence in the company’s development of a fully licensed, AI-powered video generation platform tailored for professional filmmakers and studios. CAA’s investment reinforces Moonvalley’s commitment to ethical AI practices and provides it with a direct pipeline to top-tier creative talent and entertainment partners. - learn more
  • MANTIS Venture Capital joined Zip Security’s $13.5M Series A funding round, backing the company's mission to deliver automated, AI-driven cybersecurity and compliance solutions. Their participation supports Zip’s efforts to expand its engineering team, build deeper platform integrations, and scale into regulated industry verticals like defense, finance, and healthcare. - learn more
  • Rebel Fund participated in Apolink’s oversubscribed $4.3M seed round, joining other notable backers such as Y Combinator and 468 Capital. By investing in this 19‑year‑old–led space tech startup, Rebel Fund is supporting Apolink’s mission to deliver continuous LEO satellite connectivity and facilitate its planned demo missions and constellation build‑out. - learn more

    LA Exits
    • Retina AI is to be acquired by Onar in a deal that will enhance Onar’s AI-powered customer analytics and personalization offerings. By integrating Retina’s predictive customer lifetime value technology, Onar aims to provide businesses with deeper insights into customer behavior and more precise targeting. The acquisition highlights Onar’s commitment to delivering data-driven solutions for optimizing customer relationships. - learn more
    • Nearsure, a U.S.-based tech services company with over 600 professionals across 18 Latin American countries, has been acquired by Nortal to bolster its AI and enterprise solutions in the Americas. Known for its AI-driven transformation, custom software, and partnerships with major platforms, Nearsure will merge into Nortal’s U.S. operations and rebrand later this year. The acquisition allows Nearsure to expand into U.S. and European markets while enhancing its AI, cybersecurity, and enterprise offerings. - learn more
    • InsideOut Sports & Entertainment, the event production company behind high‑profile sports events like The Pickleball Slam, Pro Padel League, and Major League Pickleball, has been acquired by GSE Worldwide, marking GSE’s first foray into live event production. Founded by tennis legend Jim Courier and Jon Venison, who will now serve as EVP and head of the new GSE Productions division, InsideOut’s team will integrate into GSE to help scale its live-event operations into new markets. - learn more

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      From Sunset Boulevard to Outer Space: LA’s Latest

      🔦 Spotlight

      Good Morning Beliebers and Los Angeles!

      While Justin Bieber’s new album dropped last night, here’s what else is making headlines in Los Angeles this week.

      Luma has opened its Dream Lab on Sunset Boulevard, boldly positioning itself at the forefront of AI-powered creativity. Known for transforming ordinary photos into cinematic 3D scenes, Luma is combining cutting-edge research with practical tools to build a playground for artists, engineers, and anyone ready to push the boundaries of visual storytelling. In their words: “From Hollywood blockbusters to the next generation of immersive media, this is where the magic happens.”

      Meanwhile, well beyond our skyline, SpaceX reportedly hit an eye-popping $400 billion valuation in a recent share sale, making it one of the most valuable private companies ever. The milestone reflects both investors’ fervor for the commercial space race and LA’s unrivaled role as the launchpad of aerospace innovation.

      LA continues to prove it can deliver on the ground, in the cloud, and far beyond the stars. See you next week.

      🤝 Venture Deals

      LA Companies

         
      • Varda Space Industries, the El Segundo–based company manufacturing pharmaceuticals in microgravity, has raised $187M in a Series C round led by Natural Capital and Shrug Capital, bringing its total funding to approximately $329M. The funds will support an increased launch cadence of robotic drug-production capsules, expansion of its El Segundo lab for biologic drug crystallization, and broader efforts to scale commercial microgravity-driven drug formulation and hypersonic reentry testing. - learn more

      LA Venture Funds

      • Rebel Fund participated in Vellum’s $20M Series A round, which was led by Leaders Fund. The company helps businesses build and optimize LLM-powered applications. Vellum plans to grow its team and speed up product development with the new funding. - learn more
      • Bold Capital participated in a $31M Series B funding round for Aqtual, a Hayward, California based precision medicine startup developing a cutting edge cell free DNA (cfDNA) multiomics platform. The capital will help commercialize Aqtual’s flagship rheumatoid arthritis diagnostic, currently being tested in a 1,300 patient trial, and support expansion into other chronic and autoimmune diseases. - learn more
      • Strong Ventures invested in VERAMORE, a skincare brand focused on addressing early signs of aging in women. Since launching in March 2022, VERAMORE has grown over 300% annually, expanded to more than 16 products, and entered markets including Japan, Singapore, Vietnam, Taiwan, Europe, and Korea. The funding will support its D2C growth, product-driven marketing, and planned global expansion starting with Japan in 2025 and the U.S. and Europe in 2026. - learn more
      • Mucker Capital joined a $3.7M seed funding round for Velvet Capital aimed at launching its DeFAI operating system and $VELVET governance token. Velvet’s vertically integrated DeFi toolkit combines AI-powered trading, portfolio management, APIs, and a native token to streamline on-chain investment for funds, DAOs, and individual traders. The funding will accelerate platform development, the rollout of its tokenomics, and broader adoption of its intent-based DeFi suite. - learn more
      • Btech Consortium Fund participated in a $8.5M Series A funding round for Castellum.AI, a New York based financial crime compliance platform that uses in‑house risk data, AI, and screening tools to help financial institutions manage AML/KYC compliance. The funds will be used to expand their team, enhance integrations with financial institutions, and accelerate adoption of their AI‑powered compliance solutions. - learn more
      • Bold Capital Partners joined the oversubscribed $45M Series A round for Centivax, a South San Francisco biotech company dedicated to developing a universal flu vaccine using a proprietary mRNA-based immune-engineering platform. Led by Future Ventures, the funding will help Centivax advance its lead candidate into Phase I clinical trials and expand its broader universal immunity pipeline targeting pathogens like RSV, HIV, and malaria. - learn more
      • Alpha Edison participated in Honor Education’s $38M Series A funding round for the San Francisco–based learning platform. Honor uses AI‑enhanced, mobile-first courses and credentialed programs to improve engagement and leadership development. The funding will be used to scale AI capabilities, personalize learning experiences, and expand the company’s operations and customer‑success teams to meet rising demand. - learn more
      • Wasserman Ventures participated in a $7M seed round for Fantasy Life, the fantasy sports platform founded by Matthew Berry. The funding will support the launch of Fantasy Life’s revamped platform, featuring new “Guillotine Leagues,” a modernized app experience, and enhanced content and tools to scale its audience and technology offerings. - learn more

      LA Exits
      • El Segundo based Kaye Capital Management, a fee only RIA with approximately $700M in assets under management and $300M in assets under advisement, was acquired by Modern Wealth Management, marking its 17th acquisition and pushing its total AUM over $8.5B. The deal strengthens Modern Wealth’s presence in California and adds Kaye’s institutional retirement plan expertise to its suite of financial and retirement solutions for clients. - learn more
      • NIRx Medical Technologies was acquired by Gilde Healthcare’s private equity fund and combined with Artinis Medical Systems to form a world-leading neuroimaging group. Both companies will retain their brands and locations while collaborating on R&D, product development, and global expansion of their functional near-infrared spectroscopy (fNIRS) tools to advance research in mental health, neurodegenerative diseases, and stroke rehabilitation. - learn more
      • Emotive, a conversational SMS marketing platform, has been acquired by Privy to create a unified solution for e-commerce brands that combines email, SMS, pop-ups, and real-time customer conversations. The integrated platform will help over 10,000 merchants simplify their marketing, personalize customer interactions, and strengthen relationships with dedicated strategists and transparent pricing. - learn more

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      Tinder, Starlink, and Apple’s New Studio: This Week in LA

      🔦 Spotlight

      Happy Independence Day, Los Angeles! 🇺🇸

      While you're celebrating freedom, here are some electrifying updates lighting up LA’s tech, satellite, and music scenes:

      🔥 Tinder mandates Face Recognition in California

        Image Source: Tinder

      Tinder is now requiring all new users in California to complete a biometric face check, a brief video selfie processed via FaceTec, to verify profiles are genuine. The video is deleted post-verification, though an encrypted face map remains while the account is active. This West Hollywood based move could redefine trust, safety, and privacy in mainstream consumer apps.

      🌐 Starlink clears hurdle to launch in India

      Elon Musk’s SpaceX backed Starlink has cleared most regulatory and licensing hurdles with India’s Department of Telecommunications, marking a key step toward launching satellite broadband in one of the world’s fastest growing markets. Final approvals from the national space regulator are pending, and services, expected to deliver high speed connectivity to underserved regions, could launch in the coming months. This is a major milestone for Starlink’s global expansion.

      🎧 Apple Music opens Culver City creative hub

        Image Source: Apple

      Apple Music is celebrating its anniversary by launching a brand new 15,000 square foot, three story studio in Culver City. The facility, featuring a 4,000 square foot soundstage, spatial audio suites, podcast booths, and more, is designed by Eric Owen Moss and slated to open mid August. It solidifies LA’s reputation as a creative powerhouse and reaffirms Apple’s commitment to investing in and nurturing our city's cultural ecosystem.

      From dating apps to deep space to sound stages, LA isn’t just watching the future unfold, we’re building it.

      Here’s to independence, imagination, and everything this city dares to launch next. Happy Fourth, Los Angeles.

      🤝 Venture Deals

      LA Companies

      • Castelion has raised a $350M Series B round led by Lightspeed Venture Partners alongside Altimeter Capital to scale its hypersonic missile production capabilities. The El Segundo-based defense startup plans to use the funds to expand manufacturing, accelerate testing through its SpaceX-inspired rapid development model, and position itself as a cost-effective supplier of hypersonic weapons to the U.S. military and its allies. - learn more
      • Earth Sama, a Calabasas, California–based climate-tech platform that helps rural farming and Indigenous communities generate and manage carbon credits, secured investment from Omtse Ventures. The funding will support the rollout of Earth Sama’s blockchain-powered field app, climate-creator platform, and smart-contract tools to scale community-led carbon credit projects globally under the Paris Agreement’s Article 6.4 framework. - learn more

                LA Venture Funds

                • Plassa Capital participated in Metafide’s $3.275M funding round. Miami based Metafide, the creator of SURGE, a gamified trading platform that combines AI neural networks and human insight, will use the funds to scale and launch SURGE into the market. - learn more
                • BOLD Capital Partners participated as a founding investor in Syntis Bio’s $33M Series A round, with an additional $5M in NIH grants. The Boston-based biotech is developing oral therapies for obesity and rare diseases, and the funding will help advance its SYNT platform, moving its lead obesity treatment, SYNT-101, into Phase 1 trials and supporting development of SYNT-202 for homocystinuria. - learn more
                • BAM Ventures participated in Cred’s $15M seed round for its predictive intelligence startup. San Francisco based Cred uses AI to unify company data with real time market signals and deliver actionable insights for sales and operations. The funding, led by defy.vc, will be used to scale Cred’s platform, expand its customer base, and grow team and product capabilities. - learn more
                • BOLD Capital Partners participated in Gallant’s $18M Series B round to advance its ready-to-use stem cell therapies for pets. The funding, led by Digitalis Ventures with additional support from NovaQuest Capital, will help Gallant bring its off-the-shelf regenerative treatments to market. - learn more
                • Rebel Fund joined the seed round for Rocketable, contributing to the $6.5M raised to build a portfolio of fully automated SaaS companies. San Francisco-based Rocketable, backed by True Ventures and others, uses AI agents to operate acquired software products, and Rebel’s support will help scale both the platform and acquisitions. - learn more 
                        LA Exits
                        • Leasepath, a cloud-first provider of equipment lease and loan management software, has been acquired by Solifi to enhance its mid-market offerings. The deal allows Solifi to expand Leasepath’s Microsoft Dynamics-based platform into new global markets while keeping Leasepath’s team and leadership in place. - learn more

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