California regulators voted unanimously on Thursday to sharply reduce the electricity rates utilities must pay homeowners with rooftop solar panels to pay for the power they supply to the grid – a decision that could hurt growing renewable energy business.
Existing payments to homeowners through a program known as net metering amount to an overly generous subsidy that no longer needs to encourage the use of solar panels, five members of the California Public Utilities Commission said. Under the proposal passed Thursday, for new rooftop solar homes starting in April, compensation for the energy delivered to the grid by roof panels would be reduced by about 75%.
The move could have national ramifications, as regulators in other states typically follow California’s lead. A debate has been brewing across the country about how far states should go to encourage the use of renewable energy. Many utilities have long opposed net metering, arguing that it does not adequately account for the cost of maintaining the grid and overvalues the power delivered by rooftop panels.
“This decision is much fairer than the status quo,” said Alice Busching Reynolds, chairwoman of the California Public Utilities Commission. She added that the solar industry has brought many benefits to California, but it is subsidized by residents who don’t have solar panels. “We need to be very careful about designing subsidies for the industry when we use taxpayer money,” she said.
The California Solar and Energy Storage Association said the decision would limit the growth of rooftop solar even as the state tries to increase the use of clean energy and reduce the burning of fossil fuels, a major cause of climate change.
Consumer and environmental groups critical of the proposal point to California experiencing some of the most devastating effects of climate change, including deadly wildfires, extreme heat and severe drought.
“This decision runs counter to everything California stands for: clean energy leadership, climate solutions and fairness,” said Bernadette Del Chiaro, executive director of the California Solar and Energy Storage Association. The opposite. This decision will result in job losses and business closures, especially small businesses, which make up the majority of California’s installers.”
Beginning in the early 2000s, under the leadership of Republican Governor Arnold Schwarzenegger, California began to strongly encourage the use of solar energy. It quickly became a national leader in the use of rooftop solar. About 1.5 million home and business rooftop solar systems are installed in the state.small systems About 10% of California’s electricity generation last yearmore than nuclear power plants or hydroelectric dams, according to the federal agency Energy Information Administration.
By reducing subsidies for owners of rooftop solar, the commission aims to create what it says is a more equitable system, agreeing with arguments made by utilities and some consumer and environmental groups such as the Utility Reform Network and the Natural Resources Defense Council . The groups claim that wealthier homeowners are more likely to install rooftop solar systems, leaving low-income residents with more of the cost of grid support.
The average residential customer who installs solar panels from Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric will save $100 a month on their electric bill under the new net metering program, while the average residential customer who installs solar and battery storage will save $100 a month. Residential customers can save $100 per month. Save at least $136 per month, according to the commission.
Because of these savings, the average household installing a new solar or solar and battery system will be able to fully pay off the system in nine years or less, it said. For homeowners who already have rooftop solar panels, the offset will not change for at least 20 years from the date the system was installed.
The committee has taken a softer approach than it proposed a year ago. In addition to reducing charges for excess electricity sent to the grid, the earlier proposal would have imposed a new monthly fee on utility bills for rooftop solar homes.
