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PUC Decisions Cripple California's Solar Industry, Jeopardize Clean Energy Goals
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Published 5 months ago on
December 1, 2023

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Recent decisions by the California Public Utilities Commission to reduce what utility companies pay Californians for electricity generated by rooftop solar are endangering the solar industry. In addition, those decisions could prevent the state from meeting its clean-energy goals, industry officials and an environmental advocate said Thursday morning.

They were on a webinar panel organized by the California Solar & Storage Association to discuss the impacts of the PUC verdicts. The impacts include reducing payments to solar households for their generated power and denying customers direct access to solar power generated at schools, small businesses, farms, and portions of multifamily housing. Instead, the power goes directly to the utility companies to sell back to the customers at retail prices.

At a time when the solar industry in California should be expanding to meet the state’s goal of zero greenhouse gas emissions by 2045, the PUC’s actions are putting solar systems out of the reach of many Californians, the panel warned.

And, the sharp decrease in the number of systems sold and installed — the association’s survey of installers showed huge drops in sales since April, when the new metering tariff known as Net Energy Metering 3.0 took effect for new systems installed at single-family homes.

A vote last month by the PUC approved a similar tariff change for multi-family housing, although Virtual Net Energy Metering 3.0 went a step further and decreed that power produced at solar systems at farms, schools, and small businesses would be funneled to utility companies instead of being directly available to the solar system owners.

Data shows the impact of the change in how solar customers are compensated for electricity sold to utility companies. (California Solar & Storage Association)

‘Launching into Future’

The PUC, in announcing the decision in December 2022 that slashed the amount that utilities pay homeowners with solar systems from retail to wholesale rate, had said Net Energy Metering 3.0 would be “launching the solar and storage industry into the future so that it can support the modern grid.

The commission also said that the “new tariff promotes solar systems and battery storage with a focus on equity and advances the new clear energy technologies we need to meet our climate goals and help insure grid reliability.”

Carlos Beccar, marketing director with Energy Concepts in Fresno, recalled thinking that the PUC should fire its PR team for issuing such a ludicrous statement.

“It’s so patently absurd to even make that statement,” he said. “There is no way you’re going to launch an industry forward by reducing the money that a consumer gets for a product.”

Energy Concepts, a family-owned business that was founded 32 years ago, had to halve its workforce from 70 last November to 35 this month because of the decline in sales that resulted from NEM 3.0, Beccar said.

Data shows the impact of NEM 3.0 on solar industry jobs in California. (California Solar & Storage Association)

Solar Companies Exit California

Some businesses are leaving the state altogether. Thomas Devine, executive vice president of operations for Construct Sun, said his company moved its headquarters from Arcadia in Southern California to Reno and now is focusing on Florida, Nevada, the Carolinas, and the Midwest.

Nevada went through a similar downturn in the solar energy industry after its Public Utilities Commission implemented a net metering change similar to California’s NEM 3.0 that led to a loss of jobs and slowed that state from meeting its clean energy goals, Devine said. But the state subsequently revised the net metering rules to pay solar producers 70% of retail rates, which “pencils (out), the economics still work” for solar systems to be affordable, Devine said.

Laura Deehan, director of the advocacy nonprofit Environment California, said the PUC’s recent decisions will shift the state from being a leader in the country and the world in curbing greenhouse gas emissions and battling global warming. Deehan, who said she’s heading to the Global Climate Conference in Dubai, said the data presented by the solar association about plummeting sales of solar systems and huge cuts in the workforce is worse than she had expected to see, and doesn’t bode well for California to meet its goals.

Utility interconnection data shows that solar sales are down between 66% and 83% since last year because of NEM 3.0, according to the association.

Data shows the drop in sales this year due to NEM 3.0. (California Solar & Storage Association)

Solar Battery Initiative Needed

The state had made great headway in expanding solar systems through its Million Rooftops Initiative, and now is the time for a similar initiative for storage batteries, said Bernadette Del Chiaro, the association’s executive director.

“Let’s put the same amount of energy and money and muscle and focus and prioritization that we did for over 20 years ago. And let’s do a million solar batteries initiative for California,” she said. “Let’s build a million of these systems. We have 100,000 so far.”

But the high cost of batteries — they can double the cost of a solar system purchase — has deterred many customers.

Tesla vehicles, which initially were too expensive for all but the wealthiest customer, became more affordable over time, and the same happened for solar panels and can happen for storage batteries, the industry officials said.

But solar panel manufacturers also were guaranteed a big market in California because of the state’s Million Rooftop Initiative, Del Chiaro said.

Given the recent PUC decisions, solar battery manufacturers won’t have the same incentive, she said.

“Nobody is going to ramp up production for California’s distributed market if it is so uncertain. There is no certainty in our market right now,” Del Chiaro said. We have gone from being the surest place in the world and the leader in the beacon of progress and innovation to now being the opposite of that.”

Thursday morning’s webinar with news reporters was the first step in an evolving campaign to convince state policymakers and legislators to reverse direction soon enough to keep the state’s solar industry from collapsing, she said.

And, Deehan said, California Environment will be throwing its weight behind efforts to reverse the net energy metering decisions, working with its members and a large coalition of other organizations that are similarly invested in tackling the climate crisis.

“Environment California’s top priority is our campaign to get California to go solar,” she said.

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