.Here Comes the Sun: California’s attempt to transition to solar energy is more fraught than one would expect

As increasing wildfires, floods and droughts continue to convince most people of the need to transition to renewable energy, the California Public Utilities Commission is considering a policy that some say would halt the growth of rooftop solar energy in the state—a “local solar killer,” says Jessica Tovar of the Local Clean Energy Alliance.

The CPUC will soon issue draft rules that could change the terms of the financial deal between utility companies like PG&E and customers with solar panels. The utility companies want to slash the prices they pay solar customers for the extra electricity they upload to the grid and charge them a substantial monthly “connection” fee. The utilities—and some community organizations—say the current arrangements shift costs from owners of rooftop solar to other customers, and that rooftop-solar customers aren’t paying their share of the cost of maintaining the grid.

Solar advocates like El Cerrito–resident Summer Rogers Mathur, who installed solar panels on her home four years ago, say the utilities’ motive is not equity but greed. They say increasing local electricity generation benefits everybody—saving all customers money as well as helping cut pollution and the risks of climate disaster.

Mathur’s duplex has been in the family for 22 years. She and her son live in one unit, her mother in the other. She refinanced the house to pay for the solar panels, but said it was worth it. “Utility bills were crazy expensive,” she said. Now that she has solar, she has replaced the inefficient gas heating and hot water systems with electric heat pumps and bought a Chevy Bolt electric car. She said the incentives for installing solar were important supports for making the switch.

One of those incentives was “net energy metering,” or NEM—payment for extra energy her solar panels generate and upload to the grid. Under the proposal by PG&E, SoCal Edison and San Diego Gas and Electric, which the CPUC is now considering, these payments would be cut 77%. And, Mathur and other residential solar customers would pay a new “solar connection” fee, between $57 and $91 a month, no matter how little electricity they buy. Schools, churches and other public buildings would pay between $950 and $3,400 a month.

According to one estimate, with this new rate structure, it would take homeowners like Mathur 21 years for their investment to pay off. The California Solar and Storage Association, an industry organization, says, “Experience shows that customers will not make energy investments if they do not get to a break-even point in 7 to 9 years.” And if people don’t install solar panels, they are less likely to switch to electric cars and appliances, further slowing progress in getting off fossil fuels, says the Solar Rights Alliance, a coalition formed in 2018 as “an organized voice for solar owners and others who might want solar someday.” The Solar Rights Alliance has launched a Save California Solar campaign, endorsed by hundreds of business, environmental, social justice and community groups, as well as cities including Berkeley and Richmond.

Rooftop solar advocates argue that slowing the growth of locally generated electricity would make it impossible for California to meet its official target: 100%-renewable electricity by 2045, 60% by 2030. Especially since, at the same time, demand will soar, as electricity replaces fossil fuel in transportation, buildings and elsewhere.

According to a joint state agency report, in order to meet the clean power target, “Construction of clean electricity generation and storage facilities must be sustained at record-setting rates.” The report calls for tripling the amount of electricity generated by customers and an even greater increase in “utility-scale” generation, noting that “Diversity in energy resources and technologies lowers overall costs.”

The Cost Shift Argument

But utility companies are not the only ones advocating a big cut in net metering rates. Some community organizations have signed on to a utility-sponsored campaign, Affordable Clean Energy for All, which argues that current net energy metering rates are “so large that electricity customers with rooftop solar are not paying their fair share for electric grid maintenance or state-mandated … programs like energy efficiency and low-income assistance.”

The result, they say, is an unfair “cost shift” to customers without solar panels—who tend to be less privileged. According to a study released by the CPUC, “as compared to the general California population, NEM customers are disproportionately older, located in high-income areas, likely to own their home and less likely to live in a disadvantaged community. Consequently, the costs of NEM are disproportionately paid by younger, less wealthy and more disadvantaged ratepayers, renters.”

The Utility Reform Network represents “the voices of the ratepayers who pay monthly bills,” said Executive Director Mark Toney. He said those voices have not been heard much in the debate over net metering, but they have been hit with skyrocketing electric bills. PG&E customers’ bills have gone up 37% since 2012, and Toney says “part of the reason is that customers are paying too much”—the full retail rate—for electricity that solar owners upload to the grid.

Toney said his organization supports the continued growth of local energy, so they don’t want to slash payments as far as the utilities propose. They aim to find a middle ground that promotes “a transition that’s both sustainable and equitable,” or “the most green for the least green.”

High-priced power lines

Rooftop-solar advocates say it’s not solar owners, but the utility companies themselves, that drive up electric bills. They point to a CPUC study that blames the recent surge in electricity bills on “increases in capital additions driven by rising investments in transmission.” The study says a secondary factor is high profits: PG&E enjoys “higher than average returns on investment” and their bills are higher than most utility companies.

“This is the utilities’ business model,” said Dave Rosenfeld of the Solar Rights Alliance. “They don’t make much money selling electricity, but they get a guaranteed rate of return based on what they spend on infrastructure. Long-distance power lines are the biggest expense.”

The Save California Solar campaign says rooftop solar is already saving all customers money—and cutting wildfire risks—by reducing the need to build more power lines. For example, in 2018, the California Independent Systems Operator, which oversees the grid, cancelled or modified 28 previously approved long-distance transmission line projects, avoiding $2.6 billion in future costs. 

Batteries not only provide security against power outages but also save solar customers money, said Brad Heavner of the California Solar and Storage Association. Electricity prices vary during the day. They’re cheaper when the sun is shining and solar energy is plentiful, but more expensive in the evening—when many customers with solar panels use energy from the grid. Those with their own batteries can store energy they generate during the day, avoiding higher evening rates.

Who gets the benefits?

The proposed changes would “make solar unaffordable for most people, right when just under half of all new solar is going into working- and middle-class neighborhoods,” according to the Save California Solar coalition. “Solar adoption has been gradually migrating toward lower income ranges over time,” according to a study by Berkeley Lab. Of households that installed solar panels in 2018, almost half had incomes under $100,000 a year, and 15% had incomes under $50,000.

Some renters also receive the benefit of solar panels. Through a state program, Solar on Multi-Unit Affordable Housing, affordable-housing developers have been installing solar panels and sharing the financial benefits with tenants. Rosenfeld said he received a letter from an affordable-housing developer saying the program had helped build more affordable units.

Among the supporters of the Save California Solar coalition are many school districts that have benefitted by installing solar panels, as well as Green the Church, an environmental organization led by Black churches. Rev. Ambrose Carroll, of Green the Church, said some East Bay churches have already installed solar panels. One, Glad Tidings, in Hayward, is in the process of installing solar panels that will not only provide electricity for the church but also provide benefits like solar car charging and community broadband.

Carroll said he favors continuing the current net metering rates as an “opportunity for us all to decrease our carbon footprint. My son has asthma. Bad air quality [from burning fossil fuel] puts Black and Brown bodies at risk.” He said he’s in favor of “anything that anybody does to alleviate that.”

As regulated monopolies, utility companies have to set rates according to state regulations. Rather than making it more difficult to install solar panels, Carroll said, “policies should be put forth so they don’t shift the costs to poor people.” For example, the state could expand current programs that require electric utilities to offer discounted rates to lower-income customers.

Tovar’s organization, the Local Clean Energy Alliance, is fighting to continue net metering rates that provide incentives for more customers to install local solar projects. And to go beyond that—to create new models of locally generated electricity. 

Reclaim Our Power, a coalition of environmental justice organizations including LCEA, has submitted proposals to the CPUC to create “policies that enable communities to build microgrids with solar-plus-battery infrastructure,” Tovar said. Community-owned, decentralized energy systems, she said, could provide electricity during PG&E power shutoffs or other crises and extend the benefits of solar ownership to environmental justice communities. Reclaim Our Power promotes “a vision of a new, decentralized, democratized energy system” that “can meet the environmental, economic, and racial justice needs of our communities.”

The CPUC is scheduled to release a draft “Net Energy Metering 3.0” policy on Dec. 10, followed by a public comment period. The Save California Solar coalition is mobilizing supporters to submit public comments in favor of policies that continue to support the growth of local solar energy.

UPDATE:

On December 13 the CPUC issued its draft proposal for the new Net Energy Metering system, NEM 3. As expected, it was “almost identical” to the proposal by the utility companies, in the words of Dave Rosenfeld of Solar Rights Alliance: cutting the amount the utility companies pay solar owners for electricity they sell to the system and imposing a hefty monthly fee.

The proposal includes several provisions to sweeten the deal: an incentive payment for current solar owners to install batteries (but only if they agree to the new terms and give up their right to continue their current plan), a payment to soften the “market transition” for people who adopt solar in the next four years (which would reduce, but not eliminate, the monthly charge – and still impose the drastically reduced NEM rate), and the creation of an Equity Fund to help low-income people get the benefits of solar (no specifics or funding source).

Solar advocates are still campaigning to reject this plan, now focusing their attention on Governor Newsom, whose new appointee to be CPUC head, Alice Reynolds, is a longtime energy advisor to him and other governors. Newsom will also appoint the replacement for CPUC Commissioner Guzman Aceves, who is leaving to join the federal EPA. This is “an amazing hero opportunity” for Newsom, said Reynolds. “We’re calling on him to save California solar.”

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