California cuts solar benefits for homeowners

Save a lot Solar contractors install LG Electronics solar panels at a home in Hayward, California, USA on Tuesday, February 8, 2022.

David Paul Morris | Bloomberg | Getty Images

The California Public Utilities Commission on Thursday passed a proposal that would reduce the compensation given to households for the excess electricity their rooftop solar panels contribute to the electrical grid.

Utilities and consumer groups argue that incentive payments have unfairly favored wealthier consumers and harmed poor and low-income households. But solar companies and renewable energy advocates have said the offset cuts will slow down the installation of solar panels and hinder the state’s climate change goals.

The proposal, which California regulators unveiled last month, change the net metering policy by paying solar owners for additional energy at a lower rate, which is determined by the cost that the utility would have to spend to purchase clean energy from an alternative source. The solar industry said the plan would mean a 75% reduction in average customer payment rates.

Today’s five-member panel unanimous vote was seen nationwide as California is widely seen as a leader in renewable energy development. The impact of today’s decision is likely to reach out of state and affect the solar industry across the country, especially solar energy companies such as Sanran, solar power, Sunnovaas well as Tesla.

More than 1.5 million homes, businesses, and other utility customers in California have rooftop solar panels. The Public Utilities Commission estimates that these units could collectively produce 12 gigawatts of electricity.

The commission said the proposal would not affect existing rooftop solar customers and keep their current compensation rates, as well as encourage consumers to install batteries with their solar panels.

Affordable Clean Energy for All, a California utility-funded nonprofit, argues that the rooftop solar program is outdated and that utilities must pay subsidy costs, leading to higher bills for millions of customers who don’t install solar. including those least able to pay for electricity.

However, solar companies argue that the current net metering system is needed to encourage people to opt for rooftop solar.

Changes to the government’s solar incentive program could cut California’s solar market in half by 2024, according to a report released earlier this year by energy research firm Wood Mackenzie.

“This misguided decision, which underestimates the many benefits of solar energy for all Californians, will dim the light on solar development in the Golden State,” Laura Deehan, California’s director of environmental protection, said after the vote.

Roger Lin, an attorney for the Center for Biological Diversity’s energy justice program, said in a statement that the commission “has taken a step back by widening the gap between those who can afford solar and those who can’t.”

“This is an insult to the underprivileged, who are the first to be hit by the climate crisis, and we will do our best to convince the commission to correct serious flaws in its proposal,” Lin said.

California, which is battling wildfires and climate change-driven drought, has set a goal of being completely renewable by 2045.

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