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California isn鈥檛 short on lofty goals: Lawmakers have vowed to , by the end of the decade and in 7 million homes over the next 12 years.

Now California鈥檚 chief utility regulator is considering a new rooftop solar policy that a chorus of critics say will make it harder for the state to meet any of those ambitious targets.

On Oct. 12, the California Public Utilities Commission will vote on whether to reduce the payments that owners of solar panel-equipped apartment buildings receive for the electricity they generate on their rooftops. The decision could mirror an overhaul that the commission adopted late last year for and is part of a larger battle among environmentalists and energy policymakers over the role that individually-owned solar panels should play in the state鈥檚 planned divorce from fossil fuel-derived energy.

In both cases, the new rules only apply to new customers.

Supporters of the rule change 鈥� the state鈥檚 major electric utilities chief among them 鈥� argue that the new proposed , better reflect the actual value that rooftop solar panels provide to the electrical grid while offering a fairer shake to customers who don鈥檛 have the luxury of living beneath solar panels.

The new pricing system is also designed to encourage property owners to pair solar panels with batteries, which can store up solar energy in the middle of the day when it鈥檚 abundant and cheap and dispatch it when the after the sun sets and when the CPUC鈥檚 proposed adjusted rates are higher.

But a notably diverse coalition of California interest groups have banded together to argue otherwise. Landlords, tenant rights organizations, affordable housing advocates, environmental nonprofits and the building industry 鈥� which rarely all agree 鈥� now say that the policy would only 鈥溾�� the multifamily solar market.

What鈥檚 more, they argue, the proposed change runs counter to a host of ambitious policy goals that California lawmakers have set out to combat climate change, air pollution and the affordable housing crisis.

鈥淭his proposed decision seems to go right in the opposite direction,鈥� said Bob Raymer, technical director at the California Building Industry Association, a lobbying group that opposes the regulatory overhaul. 鈥淚t鈥檚 nuts. I鈥檝e been doing this stuff for over 40 years and this one is just baffling.鈥�

Solar policy d茅j脿 vu

If this argument sounds familiar, a version has played out in public once before.

In December, the commission cut the payments that homeowners with rooftop solar arrays receive by roughly 75%. The decision came after months of debate, with both sides claiming to speak in the interest of clean energy and economic justice.

Previously, utilities were required to pay homeowners roughly the retail rate for electricity produced by a photovoltaic array and exported back to the grid. Utilities have long chafed at that arrangement, joining , in arguing that the more cost-effective way to supercharge clean energy production is to focus on utility-scale (read: big) projects. That鈥檚 opposed to the disaggregated fleet of photovoltaic arrays, found disproportionately on the homes of the well-to-do, who were able to skimp on the costs of grid maintenance and upgrades, effectively shunting that onto everyone else鈥檚 monthly bills.

The CPUC agreed with that argument and replaced that retail tariff with a much lower, adjustable fee.

That鈥檚 more or less what is being considered this time around for apartment building owners, but with one highly contested difference.

Even with these lower payments, single-family homeowners with solar can still boost the benefit of their array by using the electricity they generate on site. Every kilowatt hour 鈥渟elf-consumed鈥� is a kilowatt hour that the homeowner doesn鈥檛 have to pay in high retail prices. That can add up to significant savings.

But under the proposed overhaul for apartment dwellers, no such savings would be allowed. All of the electricity generated would count as an 鈥渆xport鈥� to the grid and get compensated at the lower wholesale rate. Likewise, all electricity used by the residents of that apartment building would need to be purchased from the utility at retail. For accounting purposes, there would be no鈥渟elf-consumption鈥� allowed.

For rooftop solar companies, the lack of a 鈥渟elf-consumption鈥� provision for apartment buildings amounts to an existential threat.

Ivy Energy, a San Diego company that sells software to multifamily landlords hoping to offer their tenants solar power, argued to the CPUC that the rule, if adopted as proposed in August, 鈥渨ould eviscerate the economic value proposition鈥� for multifamily solar 鈥渞endering all new projects infeasible and unfinanceable, and effectively result in a collapse of the multifamily solar market.鈥�

Both the state鈥檚 major investor-owned utilities and the CPUC say that coming up with a way to account for self-consumption to apartment buildings, where different residents are using different amounts of electricity at different times and would require different levels of compensation, would be a technical nightmare to administer. They argue that it would be costly to build out, raises potential privacy concerns between renters and their landlords and would result in billing so convoluted that no resident could possibly use it to predict the cheapest time to run their dishwasher.

鈥淚llogical and convoluted鈥� is the term used in a joint letter to the CPUC by .

But just because such a system would be hard to implement doesn鈥檛 warrant upending the entire industry that has built itself up around the old system, said Bernadette Del Chiaro, executive director of the California Solar & Storage Association.

She pointed to the single-family solar market as a telling example. Since the , she said, the number of residential solar projects in the pipeline has dropped at least 40%.

鈥淏ut we鈥檝e gotten ourselves in this situation where we鈥檙e almost touting the single family version鈥� of the policy, she said. 鈥淚t鈥檚 still not going to be a great thing, but at least it鈥檚 not sudden death. Which is what this is.鈥�

In opposition: A big tent

As the CPUC mulled the decision over the summer, a disparate collection of interest groups flocked to the rooftop solar industry鈥檚 defense, but for different reasons.

Builders oppose anything that makes solar less financially attractive because the , another state agency, now requires virtually all new residential construction to come equipped with solar panels.

Throwing a wrench into the economics of rooftop solar also complicates the statewide push to go electric, to the chagrin of property owners and the entire electrification industry.

鈥淪olar is one of the biggest revenue streams for a landlord asking 鈥榃hy should I invest all this money in a heat hump, a new hot water system?鈥欌�� said David Chanin, co-founder of FutureFit Partners, a company that helps house and apartment owners make those investments. 鈥淯nder these new rules I have pretty serious concerns that entire building electrification projects just won鈥檛 pencil out anymore.鈥�

And while the overhaul for single-family solar users mostly directly affected homeowners, it鈥檚 apartment-dwelling renters who are likely to be most affected by the current decision.

The current system 鈥渞eally is the only mechanism we have for a lot of low-income people living in multifamily housing to get solar and clean energy,鈥� said Andrew Dawson, a lobbyist with the California Housing Partnership, a nonprofit that advocates for affordable housing. 鈥淔or electrification purposes, solar is really important to make sure that people鈥檚 bills don鈥檛 increase significantly.鈥�

Other programs do exist to help lower income Californians go green. The state鈥檚 Solar on Multifamily Affordable Housing program provides financial incentives for property owners to invest in new panels and is funded under a different formula. But that program鈥檚 coverage is patchy across the state, said Dawsom.

Andrea Barnier with Self-Help Enterprises, a low-income housing provider in Visalia, said only 15 of the organization鈥檚 40 multifamily projects will be insulated from the policy change through that state program. For the remaining sites, and all future apartment projects, she called the new rule a potential 鈥渄eterrent to all-electric design.鈥�

In a filing with the CPUC, the state鈥檚 three investor-owned utilities note that multifamily solar is still a relatively rare phenomenon in California. At last count, just 217 residential facilities across the state make use of the program, along with 513 other mixed residential and commercial sites.

But with the state vowing to simultaneously turbocharge apartment construction, electrical vehicle purchases and the jettisoning of gas stoves and hot water heaters, critics say that while supporting distributed solar may not be vital now, it will be in the near-future.

鈥淎s climate impacts like rising heat continue to increase, there is an ongoing need for grid independence and alternate energy solutions from batteries during rolling blackouts and emergencies, so this also impacts our ability to develop resilient communities,鈥� said Barnier.

A coming political dust-up?

It may only be a matter of time before this argument gets dragged out of the highly-technical and mostly overlooked corridors of the CPUC and into the broader realm of partisan politics.

In July, the California Democratic Renters Council, a coalition of tenant rights, pro-housing and environmental justice advocacy groups, sent a letter to the CPUC鈥檚 five commissioners. It decried the proposed regulatory change that 鈥渨ould force renters to buy all of their power from the utility even when it is generated on their own rooftop鈥� and 鈥渄iscriminate against renters by not giving them the same fair treatment as single-family homeowners.鈥�

Though many observers expect the CPUC to ultimately vote for the overhaul next week, the breadth of the coalition that has mobilized against it might be difficult for other state lawmakers to overlook, said Raymer with the building industry.

鈥淔rom a political standpoint, if this gets passed the way it鈥檚 proposed, I think the Legislature will be right back in 2024 addressing this,鈥� he said.

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