California鈥檚 utilities regulator Thursday adopted new rules for community solar projects, despite warnings from clean energy advocates that the move will actually undercut efforts to expand solar power options for low-income customers.
The state鈥檚 biggest utility companies advocated for the new rules.
Community solar projects are generally small-scale, local solar arrays that can serve renters and homeowners who can鈥檛 afford to install their own rooftop solar panels. They are one part of the state鈥檚 overall strategy to eventually run the power grid entirely by renewable energy.
The California Public Utilities Commission鈥檚 3-1 ruling preserves and expands programs that will allow any ratepayer to subscribe to a pool of projects and receive a 20% rate reduction, said Commission President Alice Reynolds. But it also reduces future compensation for solar providers and residents.
The commission calculates the benefits derived from distributed, small-scale solar power projects, which provide a 鈥渟ervice鈥� by sending clean energy to the power grid and reducing transmission costs by serving nearby communities. Solar developers are compensated for the value of the benefit their project provides.
The newly-adopted formula essentially reduces the value of distributed small scale renewable energy in the future, providing less of an incentive for new community solar projects to be built.
In the near term, the subsidies and incentives that help promote community solar installation will remain in place, paid for by a recent $250 million grant California received under the federal Solar For All program.
One of the concerns for solar advocates is what happens after that pot of funding runs out and the financial incentive to develop solar evaporates.
鈥淭he foundations of a sustainable program should not be built on one-time money,鈥� said Derek Chernow, Western Regional Director for the Coalition for Community Solar Access.
While California has been a leader in promoting solar energy and advocating for an electric grid running carbon-free, the state鈥檚 efforts to encourage smaller solar projects has been lackluster. One example of a missed opportunity that critics point to is not requiring community solar projects to have battery storage systems that would allow power to flow after the sun sets.
鈥淲e are not done here today, 鈥� Reynolds said, adding the programs can be modified and improved in the future.
With electric bills soaring for many Californians, she also was critical of the impact of 鈥渃ost shift,鈥� the idea that the subsidies provided to community solar projects are costs borne by all ratepayers. It鈥檚 a fundamental fairness argument that the commission has applied in other proceedings, to justify reducing subsidies.
But changing or reducing the subsidies and other incentives to a still-maturing industry, advocates argue, will result in fewer solar installations, ultimately cutting out low-income ratepayers from the benefit of renewable energy. Community access solar programs are supposed to ensure that at least 51% of the energy derived from the projects serve disadvantaged customers.
Late last year the for owners of apartment buildings, schools and businesses that install solar panels. Those regulations were another in a string of recent decisions the commission has taken to reduce financial incentives for rooftop solar. In late 2022, the commission who sell excess power from newly installed solar panels on single-family homes.
Advocates have been bemoaning what they say is California鈥檚 lagging clean energy leadership and criticizing Gov. Gavin Newsom, who last week delivered a keynote speech at the Vatican Climate Summit, for not holding the state鈥檚 powerful utilities and oil companies to account.
The commission鈥檚 community solar decision was quickly added to the list of what critics say is a concerning pattern of backtracking on critical renewable energy policies.
鈥淭he CPUC鈥檚 recent series of decisions threatens to unravel California鈥檚 clean energy progress,鈥� said the Solar Energy Industries Association in a statement. 鈥淚t鈥檚 past time for Governor Newsom and state leaders to reign in the commission before it inflicts more damage on customers and the state鈥檚 clean energy economy.鈥�
As it had in earlier closely-watched decisions, the commission heard from a myriad of organizations, including the solar industry and environmental justice groups, advocating for programs that would expand access to clean energy and reduce power bills.
There was scant public comment during the morning hearing but at least two state legislators voiced their opposition to the proposal. Assemblymember Christopher Ward noted that the updated proposal had only been released this week and decried it as 鈥渇atally flawed.鈥�
鈥淭his does not reflect the intent of the bill,鈥� Ward, a Democrat from San Diego, told commissioners, referring to legislation he authored that required the commission to review its rules. The unintended result of today鈥檚 decision, he said, would be to discourage new projects.
An aide to Sen. Josh Becker, a Menlo Park Democrat, read a letter from the lawmaker saying that experts doubt the policies will expand access to clean energy.
In extensive remarks, Commissioner Darcie Houck outlined several concerns about the decision, including her view that it didn鈥檛 go far enough to benefit ratepayers in low-income communities. Much of the commissioner鈥檚 dissent centered on provisions that she said will disincentive adoption of solar and won鈥檛 allow for a 鈥� just and equitable energy transition.鈥�
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