HomeNewsChanges to solar compensation put California's clean energy goals at risk

Changes to solar compensation put California’s clean energy goals at risk

A new report released by the Environment California Research & Policy Center, CALPIRG Education Fund, and Frontier Group highlights the impacts of changes to the current net metering setup could have on solar energy rollout in California.

The report Rooftop Solar at Risk states that a sharp reduction in net metering payments and imposing high fixed charges could slow down solar installations and delay the state’s progress towards achieving 60% renewable electricity by 2030 and 100% clean, zero-carbon electricity by 2045. In most extreme cases, changes being proposed by the California Public Utilities Commission could cause solar installations to plummet.

The report highlights multiple cases showing that reducing compensation can put the brakes on solar power deployment. For example, in Arizona, the Salt River Project adopted new fees and policies for rooftop solar that nearly doubled the payback time of solar projects. Solar adoption declined between 50% and 95% after the changes were made.

With the increased pace of solar installations in California heavily dependent on the level of compensation provided to solar panel owners through net metering, changing the setup will have a negative impact on the state’s renewable energy journey.

Laura Deehan, state director at Environment California Research & Policy Center, said: “California needs continued growth in rooftop solar to reach its clean energy goals.” The state requires up to 28.5 GWh of consumer onsite solar (which is more than triple the current capacity) to achieve its 2045 clean energy target, which can only be achieved partly with the continued assistance the net metering policy provides.

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Deehan, added: “Our leadership on rooftop solar to date has been intentional, driven by our commitment to smart policies like net metering. The drastic changes to solar compensation that the CPUC is considering threaten to throw California’s rooftop solar leadership off a cliff.” 

Whilst up to $2.6 billion is required in the near future to prepare utilities’ transmission and distribution infrastructure for increased deployment of utility-scale renewable energy projects, consumer onsite projects have the ability to avoid the massive investments required. However, if changes to the net metering policies are enacted there is a high probability that the investments will need to be made. The worse part is that the majority of the investments will be sourced from consumer energy bills, states the report.

In addition to avoiding the massive investments required in grid infrastructure, onsite solar is helping California to reduce conflicts between land preservation and renewable energy production and helping to build an electricity system more resilient to wildfires and other climate-related disasters.

Jenn Engstrom, CALPIRG Education Fund state director, adds: “Rooftop solar is cheaper, more efficient and within the reach of more Californians than ever before.

“California has so much to gain from investing in rooftop solar on our homes, schools and businesses, but the utility proposal to gut net metering effectively pushes rooftop solar out of the market.” Utilities pushing for the net metering policy to be changed include Pacific Gas and Electric (PG&E), Southern California Edison (SoCal Edison) and San Diego Gas & Electric (SDG&E). 

The California Public Utilities Commission is expected to make a decision on the future of the state’s net metering program by the end of 2021. 

The net metering policy allows customers who generate their own energy to serve their energy needs directly on site and to receive a financial credit on their electric bills for any surplus energy fed back to their utility.