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Climate and Environment

Rooftop Solar In California Has Successfully Expanded, But It Might Lose Incentives Soon

Three men wearing masks and hard hats hold a blue sign with white and orange lettering that says "Save Green Jobs, Stop the Solar Tax!"
Solar workers rally in downtown L.A. on Jan. 13, 2022 to protest the California Public Utilities Commission's proposal to increase the cost of rooftop solar.
(Erin Stone
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In the fight against climate change, California’s rooftop solar incentive program has been a success. It’s gotten panels on more than a million roofs and cut costs for consumers. But now, the state is likely to cut those incentives.

Several hundred solar workers and their supporters held a rally in downtown L.A. on Thursday to protest the changes. Most wore yellow shirts with the words “Save Our Solar Jobs!” They say the state’s proposal to increase the cost of rooftop solar puts their jobs at risk because fewer people will opt into the program.

“Not only are we out here trying to maintain the jobs that we have that are good for the environment, but we are also trying to have people spend less on their utility costs,” said Carlos Morataya, a solar panel installer who attended the rally.

A man in a yellow shirt and black jacket stands in a parking lot beside a sidewalk holding a sign in one hand that reads "Gov. Newsom Save our solar jobs."
Solar installer Carlos Morataya joined the rally in downtown L.A. on Thursday. Several hundred solar workers and their supports rallied to protest the state's proposal to increase the cost of rooftop solar.
(Erin Stone
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On one side, the solar industry and environmental justice advocates say that cutting the incentives, called net energy metering, will hurt the booming solar industry. They say it might make solar even less accessible for those who need it most — for example, people with low incomes who are less likely to have cost-saving solar and also shell out a larger-than-average chunk of their income to pay their power bills.

On the other side, the state’s utility commission and the utility companies —Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric — say it’s time for the change since solar has grown so much and gotten a lot cheaper in the last 15 years. They say the current program worsens inequality by pushing costs such as maintaining the grid onto non-solar customers. Some respected environmental organizations and utility reform groups partially agree with this assessment.

As the climate crisis worsens and increasingly threatens the power grid, the state will need to use all the tools in its arsenal to keep us hooked up to reliable power. The path forward will likely encompass a variety of strategies, from solar fields in the desert to solar panels on rooftops, as well as the things in between.

A crowd of people in yellow shirts with signs and yellow balloons cheer with hands up in a grass field in Grand Park in downtown L.A. as buildings loom in the background.
Solar workers and their supporters rally in downtown L.A. on Jan. 13 to protest the state's proposal to increase the cost of rooftop solar. They say it will devastate the booming solar industry.
(Erin Stone

What Even Is Net Energy Metering?

Also called net metering or NEM, it’s a rate program that requires your electric company to buy the solar energy you don’t use at the same rate that you pay for your electricity (the retail rate). That’s been the huge payoff of rooftop solar thus far–it can drastically reduce monthly bills since most solar homes produce more energy than they use.

You can read more details on California’s program here.

What Does The Proposed Decision Call For?

  • Instead of being compensated at the retail rate, new customers would instead be paid at a much lower rate — as much as an 80% decrease and 75% for those on income-based assistance programs, according to the trade group California Solar and Storage Association.
  • Solar customers would have an additional monthly charge for each kilowatt of solar energy they produce. Tribes and low-income homes would be exempt. 
  • It would create a $600 million dollar “equity fund” that would be invested in neighborhoods overburdened by pollution. 
  • There’s more in there, but those are the big changes. You can read the full text of the proposed decision here, read a fact sheet from the utilities commission here and get some more context here.

What’s The Argument For Keeping Net Metering As It Is?

Critics of the proposed changes say that getting rid of incentives now will prevent new customers, particularly lower-income Black and Brown communities who are only just gaining more access to solar, from buying into the program.

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Save California Solar, a diverse coalition of hundreds of organizations, estimates that lower-income households going solar with PG&E would pay $24 to $50 per month more than under the current program.

They also say slashing incentives will gut solar job growth and hurt smaller, local solar companies and that expanding rooftop solar drives down prices for everyone.

They argue that the utilities are more concerned about their bottom line than clean energy equity and would rather just replace fossil fuel power plants with massive solar farms so they can maintain their monopolies over the grid. Utility companies don’t profit from the amount of energy they provide, but they do get returns from building and maintaining infrastructure.

What’s The Argument For The Proposed Changes?

Because solar customers are generally wealthier and whiter than the average person, critics of net metering say they’re getting outsized benefits while non-solar customers pay the difference, worsening inequality.

For example, when utilities have to do things such as maintaining the grid (which is increasingly becoming an issue with wildfires), they raise the rates for everyone, but solar customers save more than most. They say that “cost shift” widens the clean energy equity gap.

The utilities say that exemptions for low-income households and the $600 million equity fund will help grow solar projects and battery storage in the hardest-hit communities.

You can read the utility commission’s reasoning here and the Natural Resources Defense Council’s argument here. All proposals submitted by other groups are listed here.

Is There Something In Between?

Others say we’re missing an opportunity by focusing primarily on rooftop solar. Options like community solar–solar power that’s shared by community members in a neighborhood–should be incentivized as well, said Anna Brockway, a UC Berkeley Phd candidate who did a study about energy equity. She said California lags behind other states when it comes to incentivizing these slightly larger solar programs.

Brockway explained that different communities need different clean energy solutions. For example, many low-income homes and multi-family units may require upgrades for rooftop solar that cancel out or significantly reduce the cost benefits, she said.

In the end, it’s a complicated issue with a lot at stake and a lot of voices that need a seat at the table as we shape the future of clean and reliable energy.

What Can I Do About It?

The utilities commission is expected to make a final decision as soon as Jan. 27. You can add your voice by submitting a public comment (the proceeding number is R.20-08-020) or you can contact Gov. Gavin Newsom’s office to share your thoughts.

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