The California Public Utilities Commission moved one step closer to reshaping how Californians pay for and benefit from residential rooftop solar power Thursday, issuing a revision of a wonky but closely watched policy called net energy metering — a billing mechanism that allows residents who generate power to receive financial credit for any surplus energy they send to the grid.
The long-anticipated proposal comes after an earlier version, released last year, was met with fierce criticism over its move to slash those credits and require additional fees to maintain the power grid — provisions that critics claimed would kill the rooftop solar industry.
But this week’s release has given the solar industry new life. The latest version will have no impact on existing rooftop solar customers, the proposal said, meaning that the rate of return for energy shared with the grid remains the same, and no monthly fees will be levied.
However, starting in April, the proposal would cut the return benefit by about 75% for new rooftop solar customers, a decision that has left solar rights advocates outraged.
“Slashing solar credits by 75% on average for most consumers and even more for churches, schools and businesses will inevitably slow down the growth of rooftop solar in California,” said David Rosenfeld, executive director of Solar Rights Alliance, an association of California solar users. “This proposal cuts against the state’s clean energy goals while also cheating working families out of the best tool out there to control their energy bills.”
Despite this, shares of rooftop solar companies surged on Thursday following the report’s release, with Sunrun Inc. gaining as much as 31% and SunPower Corp. jumping by 21%.
The decision has also left advocacy groups and energy experts that have long pushed policy reforms reeling. “This is basically all about making sure that these solar companies can still sell their product, which is just not, I believe, the correct purview of the CPUC or the state legislature,” said Severin Borenstein, an energy economist at UC Berkeley.
Two decades ago, net metering was introduced as a way to incentivize rooftop solar panels — which, at the time, were prohibitively expensive — and jump start a market that didn’t exist.
It worked: Today, 1.5 million California rooftops boast shiny blue panels, resulting collectively in over 12 gigawatts of clean, sun-powered energy, or the equivalent of 12 nuclear power plants.
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Much of that growth has Bay Area roots. Many major players, including Sunrun, SunPower and Tesla, are headquartered here, and local programs such as GoSolarSF have brought 5,800 rooftop solar systems to San Francisco homes and businesses.
But net metering has also had a lopsided effect. At issue is something called the cost shift, which places a greater burden on middle- and lower-income residents who are often unable to install solar panels on their homes to reduce their energy costs.
Basically, explained Borenstein, those who have solar panels tend to be wealthy homeowners, who use the credits to shave their electricity bills down, sometimes to less than zero, while continuing to use the grid at night. That makes energy more expensive for everyone else — especially given the rising costs of maintaining grid infrastructure amid climate effects like higher temperatures and increasing wildfires.
“Somebody still has to pay for the grid — somebody still has to pay for wildfire management, for energy efficiency programs, for the low-income programs,” he said. “All of that stuff is paid for through rates.”
But solar rights advocates call this notion of a cost shift a fallacy. “If you’re taking away the very policies that incentivize (increasing access to affordable solar), you’re actually rolling back that future we’re fighting for,” said Jessica Tovar of the Local Clean Energy Alliance, which advocates for community solar projects that operate independently of investor-owned utilities like PG&E.
Still, even the CPUC has recognized the cost shift problem and introduced more rebates for low-income communities in its latest proposal to narrow the gap. But its efforts were met with swift rebukes from energy groups.
The revision “continues to drive up electricity bills for the 90% of residential customers that don’t own solar,” said Matthew Freedman, an attorney at the Utility Reform Network, TURN. “The wealth and race gap between renters and homeowners would be further exacerbated by the overpayments to homeowners who choose to install solar systems.”
The proposal also places new emphasis on battery storage, a tactic aimed at alleviating strains on the grid. It does so by encouraging residents to store excess energy generated during the day for nighttime use, when demand for energy peaks. While batteries may be an essential part of the state’s future, Borenstein said, the rollout of batteries in the new proposal remains an inadequate solution to the larger issue of energy equity in a rapidly warming state.
More batteries are not inherently bad, he said, “But it’s not good if it’s not operated as part of the grid because it will be operated in the interests of the household — and that is just not efficient for the grid. It’s pretending that you’re not part of the grid ... and the grid is what makes your power reliable.”
