Save A Lot Solar contractors install LG Electronics solar panels on a home in Hayward, California, US, on Tuesday, February 8, 2022.
David Paul Morris | Bloomberg | Getty Images
The California Public Utilities Commission passed a proposal last Thursday that would reduce the amount of compensation paid to households for excess electricity.
Utilities and consumer groups have argued that the incentive fees unfairly favor wealthy consumers and hurt poor and low-income families. But solar companies and renewables advocates say cutting the offset would slow down solar installations and hinder the state’s goals to tackle climate change.
California utility regulators announced the proposal last month Change the net metering policy by paying solar owners a lower price for additional energy that is based on the utility’s cost of purchasing clean energy from an alternative. The solar industry says the plan will reduce the average bill for customers by 75%.
Today’s unanimous vote by the five-member commission was followed across the country, as California is seen as a leader in renewable energy deployment. The impact of today’s decision extends beyond the state and will have national implications for the solar industry, particularly companies in the residential solar space. Sunrun, SunPower, SunnovaAnd Tesla.
More than 1.5 million homes, businesses and other utility customers in California have rooftop solar panels. The utility commission estimates that these plants can collectively produce 12 gigawatts of electricity.
The commission said the proposal would have no impact on existing rooftop solar customers and would maintain their current compensation rates.
Affordable Clean Energy for All, a nonprofit funded by California utilities, has argued that the rooftop solar program is outdated and that utilities should shift to subsidized costs, which would create higher bills for millions of customers who don’t install solar. You can’t pay for electricity costs.
However, solar companies have argued that the current net metering system is necessary to motivate people to choose rooftop solar.
Changes to the state’s solar incentive program could cut California’s solar market in half by 2024, according to a report released earlier this year from energy research firm Wood Mackenzie.
“This ill-advised decision, which undervalues the many benefits of solar for all Californians, dims the spotlight on solar growth in the Golden State,” California Environmental Protection Director Laura DeHaan said following the vote.
Roger Lynn, an attorney with the Biodiversity Energy Justice Program, said in a statement that the commission “is a step backwards by widening the gap between those who can afford solar and those who can’t.”
“This is an attack on low-income communities that have been hit first and hardest by the climate crisis, and we will do everything we can to convince the commission to fix the deep flaws in its proposal,” Lynn said.
California, which is struggling with wildfires and droughts due to climate change, has a goal of transitioning to 100% renewable energy by 2045.