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SEER 2 Ratings Went into Effect on January 1

The Department of Energy (DOE) is changing the testing protocols for its Seasonal Energy Efficiency Rating, better known as SEER. The SEER standard rates the efficiency of air conditioning equipment, specifically the ability to remove heat from a building during the cooling season.

The DOE has revised its testing procedures to more closely represent actual conditions in the field versus strictly controlled laboratory conditions. The new testing intends to improve real-world energy efficiency. Exiting units tested to the new standard are effectively derated, as you might imagine. The new testing procedure will also apply to heat pumps' Heating Seasonal Performance Factor (HSPF) rating.

The DOE divided the country into regions, each with different requirements regarding exiting inventory and the new standards. California is part of the southwest region. Each region, defined by the DOE, has slightly different requirements for existing SEER 1 Equipment.

In the southwest region:

  1. A/C - You cannot install Air Conditioning equipment that does not meet the new SEER 2 standards.
  2. Package Units – The current requirements are SEER 14 and HSPF of 8.0. Existing units will have to meet 13.4 SEER2 and 6.7 HSPF2. The lower ratings are the result of the new testing protocols.
  3. Heat Pumps – Existing units may be sold if they meet the new derated protocol of 14.3 SEER2 (vs. 15 SEER) and 7.5 HSPF2 (vs. 8.8 HSPF)

Johnstone Supply has created a comprehensive website that outlines the SEER2 regions and the changes required by region. I suggest you check out their site if you have concerns about installing existing equipment after Jan. 1, 2023.

California changes Net Metering regulations.

Part of the success of photovoltaics (solar panels) has been the ability to “sell” excess capacity back to the supporting utility to offset some of the cost of ownership. The process is known as Net Energy Metering or NEM. Homeowners are compensated for the energy they contribute to the grid through energy credits. In effect, this allows a homeowner to use the electrical grid as a form of storage and receive compensation for energy that would otherwise provide no benefit. As you might imagine, the value of the credits is less than the utility charges its retail customers.

One of the downsides is that as more solar comes online during sunny afternoons, the capacity added by residential net metering can lead to the utility having to curtail (shut off) some of its own solar production.

NEM rates significantly impact the return on investment for homeowners who purchase solar systems. If NEM rates go down, their payback will take longer, something the solar industry would like to avoid.

On Dec. 15, 2022, The California Public Utilities Commission passed changes to NEM rates. The new regulations are known as NEM 3.0 and provide reduced credits for rooftop solar production. Solar installers and homeowners were very vocal in opposing these new regulations. Some claimed it would be the death of the rooftop solar industry.

The new changes reduce credits for homeowners but provide considerable incentives for low-income projects creating equitable access to clean, carbon-free energy produced by the sun.

Industry subsidies promote a specific behavior, such as investing in rooftop solar. The California Solar Initiative(CSI) successfully transformed the rooftop solar industry. The program was closed in 2016 and led to the creation of net energy metering.

For the CPUC, the tricky part is understanding when to reduce or redirect the incentives to a different objective. The CPUC realized changes to NEM rates would be difficult. It was clear there would be winners and losers.

Ultimately, the solar industry and the utilities were forced to make concessions. Neither entity got everything that it wanted. It will be interesting to see how it plays out long-term.