Solar power advocates slam new California proposal to reduce subsidies
A crew of construction workers installs solar panels in a house
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California regulators: Monday proposed significant changesThe state’s solar incentive program was vehemently resisted by the industry.
The new policy would reduce payments granted to solar customers for the excess power they generate — a policy known as net-energy metering — and also add monthly charges for customers. The new policy will apply to all customers.
California Public Utilities Commission announced that NEM 3.0 is a proposed change to encourage solar panel owners to add battery storage to their solar systems. This will allow them to store solar energy and return it to the grid whenever it’s needed.
Because of the large upfront cost to install a solar system and state-owned utility companies’ longstanding argument that customers subsidizing the grid costs of these customers, solar users have historically been more financially savvy. The regulatory body stated in a 204-page report that current net-energy-metering policies “disproportionately hurt low-income ratepayers.”
These proposed modifications would create an $600 million fund that will help customers with low income gain access to clean, distributed energy.
Southern California Edison is one of California’s biggest utility companies and said that the decision was a significant step towards modernizing California’s rooftop-solar program.
Solar companies and advocacy organizations were quick to raise the alarm. California has the highest number of residential solar customers across the U.S. — more than 1.3 million — and the incentive program has been a key driver of that growth.
Solar executives said that the elevated costs under the new proposal will significantly dampen growth since the policies will increase the payback period — that is, how long it takes for a customer to make back their initial investment due to lower electric bills.
Although solar systems are different, the payback time for current solar systems is approximately four to five years. According to research by a firm. E3. The CPUC stated that the proposal will result in a 10 year payback period for both solar and storage systems. Solar Energy Industries Association stated that it was calculating the payback period using the new policy. It argued that the proposal would result in the most expensive solar tax and ruin the state’s clean energy legacy.
Abigail Ross Hopper was president and CEO at SEIA. She stated that the last thing she needs is to reverse course on climate goals. She added that utilities are today’s only losers, as they will profit more at the expense ratepayers. California is on the wrong track.
The California Solar & Storage Association echoed this statement, saying “CPUC proposed a giveaway to investor-owned utilities that would boost utility profits at the expense of energy consumers, family-supporting jobs, and California’s clean energy future.”
Sunrun’s vice President of Public Policy Walker Write stated that Sunrun will “impose the most discriminatory charges to solar and storage customers in the U.S.A., putting roof solar and batteries out reach for countless California families as more households demand that the state does more to fight climate change and provide reliable, sustainable energy.”
This proposal decision is still in draft. There will be a period of comment, followed by a vote by the entire commission on if they want to make a decision. The final decision should not come before January 27, 2022. It is possible that the final decision will not look like Monday’s proposal.
Complicating matters further, the CPUC’s president — one of the five commissioners — is set to step down at the end of this year.
This decision was made Monday after months-long process. A number of parties, including SEIA and the California Solar & Storage Association, submitted proposals for the committee to review in March. California’s three largest utility companies — PG&E, SoCal Edison and San Diego Gas & Electric — submitted a joint proposal. The Utility Reform Network (Norwegian Resources Defense Council) also made proposals about how California’s new solar policy should be developed. Many of these proposals were varied.