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California Considers Dropping Some Rooftop Solar Subsidies: What it Means for the Planet and Your Wallet

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Shalimar Street was dark and, for a moment, quiet. Christmas lights hung sporadically from apartment buildings. A man walked down the sidewalk. A woman pushed a child in a stroller. Not a single solar panel was visible on any of the roofs.

Shalimar was previously a particularly violent street in Costa Mesa. Enough people were affected that authorities permanently blocked the ends of the street so cars could not pull directly in.  

“No, nobody [has rooftop solar] in this area because they are renters. They don’t allow it,” a resident who was working on a car outside said.

A gentleman in a sweater who lived nearby said he was not sure about anyone owning solar panels in the neighborhood. A delivery driver who was making several stops along the street said he hadn’t seen any solar panels either.

California is currently in the process of changing its net metering program. The California Public Utilities Commission (CPUC), the regulatory agency overseeing the program, proposed a revision and a new tariff on Dec. 13. Commissioners will vote on the proposal during a Jan. 27, 2022 meeting. 

Net energy metering is a program that provides people an incentive to produce their own renewable electricity supply. The electricity generated through solar panels can be used to power homes and businesses. Any excess electricity that is generated can be circulated in the power grid in exchange for financial credits.

So, what’s at stake?

Utility industries argue that the current net metering program makes rooftop solar less accessible for lower-income people. They also argue the current net metering program increases electricity bills for non-solar owners.

However, solar industries argue that utility companies are making rooftop solar more expensive for consumers in a power grab. This would, arguably, disincentivize people from producing their own clean energy, causing them to rely on energy from utility companies.

Both sides agree that far more renewable energy sources will be needed to meet the state’s zero-carbon energy goals by 2045, which are in place to combat climate change.

Southern California Edison (SCE), who provides power to much of Orange County, estimated that only 43% of its power was generated by renewable energy in 2020. Meanwhile, 16% of its power was generated by gas and 42% was generated by unknown sources. 

However, utility-scale solar facilities occupy large swaths of land, which may harm wildlife such as birds and threatened desert tortoises. More rooftop solar means less natural land disturbance. Advocates for rooftop solar also argue it requires shorter transmission lines since the power is generated closer to home.

Utility transmission lines have become notorious for sparking wildfires in California. A solar owner in Costa Mesa said he likes rooftop solar partially because “you have utility transmission lines starting forest fires left, right and center.”

In addition, advocates claim the “local solar industry” has created “tens of thousands” of jobs in California — and altering the program too much could threaten those jobs.

However, a lot of power will be needed in the future due to population increases and the shift from fossil fuels to clean energy.

“Achieving 100% of utility retail sales with carbon-free electricity by 2045 will require eighty gigawatts (GW) of new utility-scale clean generation — wind and solar — and 30 GW of utility-scale energy storage,” Southern California Edison spokesperson Ron Gales said to the New University.

California Solar & Storage Association Executive Director Bernadette Del Chiaro expressed concerns because utility investors receive “absolute profit based on every time they build infrastructure.”

“We don’t need to invest in additional wires and poles,” Del Chiaro said to the New University.

Either way, Southern California Edison expects rooftop solar to continue growing.

“Edison’s analysis for achieving carbon neutrality in California assumes up to 50% of single-family homes in California projected to have customer-sited solar by 2045,” Gales said to the New University.

So, why is the net metering program being revised?

Essentially, it comes down to the concept of cost shift, which claims that when people install rooftop solar, they receive so many subsidies that utility companies lose money and have to charge non-solar owners more. The remaining customers who purchase utility-generated power are the ones paying for the infrastructure.

Three utility companies in California are lobbying to revise the net energy metering program. The companies include Southern California Edison, Pacific Gas and Electric Company, and San Diego Gas and Electric (SDG&E). 

The current net metering program “results in a $3.0 billion and growing cost shift each year from participants to non-participants, resulting in an average bill increase of over $200 each year for non-participating customers in SDG&E’s territory,” according to the three companies’ joint proposal.

However, not everyone believes in the cost shift, and many want to safeguard net metering.  

Save California Solar, a coalition founded by Solar Rights Alliance, is a major player who wants to “protect net metering.” They are lobbying against the utility companies for this cause.

A list of over 500 organizations and community leaders support Save California Solar, including the City of San Diego, Los Angeles Unified School District and environmental groups. They also have accumulated over 112,000 individual supporters.

“The utilities have manufactured a ‘problem’ with rooftop solar because rooftop solar helps reduce the cost of long-distance power lines. That’s good for ratepayers, but it also cuts into utility profits. But it doesn’t eliminate utility profits by any means,” Solar Rights Alliance Executive Director Dave Rosenfeld said to the New University.

Del Chiaro also told the New University that she sees the cost shift as a farce. She compared it to a previous “fiction that the Edison Electric Institute concocted years ago” called the death spiral, which predicted that rooftop solar and similar technologies would completely undermine utility industries.

“Utility companies are not being very honest about the cost of electricity,” Del Chiaro said. 

Several third-party economic and environmental groups have also submitted proposals for the net metering policy.

For instance, while the Natural Resource and Defense Council (NRDC) — which helped pass the Clean Air Act in 1971 — agrees there is a cost shift, they submitted their own separate proposal to the CPUC.

In addition, the Utility Reform Committee (TURN) holds “utility corporations accountable by demanding fair rates, cleaner energy and strong consumer protections.” TURN also agrees there is a cost shift, but they, too, submitted their own proposal.

“We need to make sure the price of electricity doesn’t go so high that nobody wants to switch to get to the electric vehicles, to get to the electric appliances: heating and hot water, cooking, which we’re going to need people to switch to,” TURN Executive Director Mark Toney said to the New University.

According to Toney, the price of rooftop solar installation has gone down over the years, and subsidies for future users should reflect that.

What are the proposals for a new net metering program?

Before the CPUC submitted their own proposal, various stakeholders had time to submit proposals and respond to one another.

The California Low-Income Consumer Coalition (CLICC) seeks to “ensure that all consumers in California have their voices heard, and their needs recognized, by the Legislature.”

CLICC criticized some components of the joint utility proposal, which calls to end certain net-metering subsidies for higher-income customers. The utility proposal also calls for “discounted fixed charges for income-qualified customers” as well as “better incentives for storage technologies for participating customers.”

The three utility companies — according to their joint proposal — want to make rooftop solar more affordable for lower-income people. 

“The monthly true-up proposed by the Joint Utilities essentially guarantees that solar customers will face high bills in the winter months when their production is low, and be under-compensated for their production in the summer months, when their production is high,” CLICC said.

The three utility companies also propose flat fees for solar users. However, not everyone agrees.

“Flat fees tend to be regressive, penalizing small users disproportionately and giving a break to those with excessive electric consumption or oversized systems,” CLICC said.

The NRDC proposed a charge that would collect money for an equity fund and provide clean electricity to low-income residents. 

“This fund would be developed by levying a modest charge to rooftop solar owners on existing [net metering] rates who have already recouped their initial investment and stand to make a substantial return on it,” the NRDC said in their proposal.  

The CPUC proposal aims to address the cost shift. It also aims to incentivize more electrical storage systems that can be charged by rooftop solar during the day when energy demand is low and used after the sun sets when energy demand is high. 

“The proposal also creates an Equity Fund with up to $600 million to improve low-income customer access to distributed clean energy programs with strong consumer protections,” the CPUC stated

The CPUC proposes a bill credit that ensures solar systems could be paid for within 10 years through electricity savings. The proposal also incorporates time-of-use rates and requires that higher-income customers pay a tariff after being connected to the electric grid for 15 years.  

According to Toney, TURN thinks the CPUC proposal is heading in the right direction to make solar energy equitable for everyone; however, they disagree with the proposed $50 monthly fixed grid charges for new customers. 

“If you’re putting more into the grid, it’s a benefit to everybody, not just yourself,” Toney said to the New University. “A customer that is putting excess solar into the grid should be rewarded for that.”

The CPUC will likely take responses into account before making a decision during their January meeting. 

“I can tell you our proceedings are open and transparent, including opportunities for comment by parties to proceedings and the public,” CPUC Director Terrie Prosper said.

Kallen Hittner is a City News Staff Writer for the fall 2021 quarter. He can be reached at khittner@uci.edu.