Avoiding Regulatory Pitfalls: Protecting Your College’s Solar Investment Under California’s Net Energy Metering Rules

Avoiding Regulatory Pitfalls: Protecting Your College’s Solar Investment Under California’s Net Energy Metering Rules

Part of our content series on unlocking more value from existing solar investments at California Community College Districts. 

Over the past decade, many California Community Colleges have invested in on-site solar energy systems to reduce utility costs and demonstrate sustainability leadership. But beyond performance and maintenance concerns, another critical—yet often overlooked—risk lies in how these systems are regulated: Net Energy Metering (NEM). 

NEM has historically been a favorable policy for colleges, allowing solar systems to export excess electricity back to the grid and receive nearly full retail credit on their utility bills. But these benefits are not guaranteed forever—and your college could lose them if you’re not careful.

Key Regulatory Considerations for NEM-Protected Solar Systems

Here are a few regulatory risks every California community college should be aware of: 

1. Size Increase Limitations: 

Under current NEM rules, increasing the system size by more than 10%—even for justified reasons like adding EV chargers or expanding campus infrastructure—can trigger a termination of your existing NEM agreement. That means your project could be forced into a less favorable tariff, dramatically reducing bill savings. 

2. Interconnection Agreements Are Tied to Specific Service Accounts: 

NEM participation is linked to the Service Agreement ID (SAID) associated with your facility’s utility meter. If your college undergoes major electrical upgrades—such as switchgear replacements or service reconfigurations—those changes can result in a new SAID, which may invalidate your interconnection agreement unless a specific exception is granted by the utility. 

We’ve seen this happen firsthand: 
A District replaced switchgear across several campuses as part of a wider infrastructure improvement effort. Unknowingly, this change exposed their NEM agreements to cancellation. Fortunately, in this case, the utility granted a one-time exception—but it was a risky and nearly costly oversight. 

3. 20-Year Clock Is Ticking: 

NEM protections last 20 years from the original interconnection date. That means colleges with systems installed 8–10 years ago are now halfway through their protected period. Upcoming capital costs (such as major inverter replacements) or long-term energy planning should account for what happens when that 20-year term expires and less favorable tariffs may apply. 

Why This Matters 

Losing NEM status can mean millions of dollars in forfeited savings over the remaining life of your solar assets. Yet these regulatory pitfalls are rarely front-of-mind during capital planning, energy audits, or facility upgrades. 

That’s where our Asset Management program can help. 
 

We work with teams across California to monitor not just system performance, but regulatory compliance and risk exposure. Our team proactively identifies and navigates issues like NEM eligibility, tariff transitions, and interconnection impacts to preserve the financial value of your investment. 

Visit transformenergy.com/asset-management or contact David Burdick at david.burdick@transformenergy.com.