California could cut rooftop solar incentives as market explodes

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SACRAMENTO, Calif. (AP) – California’s 26-year-old program to get more people to install solar panels in their homes has been very successful, but state regulators could reduce incentives for people are opting for solar power in an effort to reduce electricity bills. for the rest of the residents of the most populous US state.

Current incentives allow residential solar customers to resell any energy they are not using to utilities for the retail price of electricity, typically resulting in a significant discount on their energy bills. But power companies say the savings are now so large that solar customers are no longer paying their fair share for the operation of the global energy grid.

The future of the program, known as “net energy metering,” has sparked heated debate between the state’s major utilities and the solar industry. Regulators at the California Public Utilities Commission, which oversees the state’s main utilities and the rates they can set, are expected to release reform proposals on Monday. It comes as California strives to meet its ambitious clean energy goals.

California’s net metering program was started in 1995 with the goal of boosting the adoption of solar power in the famed sunny state. California now has more than 1.3 million residential solar installations, more than any other state, according to the solar industry. This number will only increase because since 2020 all newly built homes in California must be fitted with solar panels.

But as solar panels proliferated, criticism of the program mounted. Major utility companies – Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Edison – say the current setup allows solar customers to sell their power back to the grid for more than it’s worth. They say more needs to be done to make sure solar customers – most of whom still rely on utility power at night – pay for whatever parts of the energy grid they use.

Electricity tariffs include many costs unrelated to power generation, such as transmission, distribution and even forest fire prevention work. When solar households pay significantly lower electricity bills – or no bills at all – they are contributing less to these things. This means that a greater part of the costs are borne by other customers. Utilities cost $ 3 billion, although the solar industry disputes that figure.

Last year, the California Public Utilities Commission began a process of reforming the program with the goal of ensuring a fair distribution of the costs of maintaining the energy grid and making the purchase of solar panels easier for residents of all walks of life. Currently, high income households are more likely to have solar panels than low income households because solar costs a lot of money to start with.

There is a wide range of views on potential reforms – 18 groups including the solar industry, utilities, taxpayer advocates and environmental groups have submitted proposals to state regulators. A five-member committee will vote on the final PUC reform proposal, likely in January.

The solar industry warns that a dramatic decrease in financial incentives would cause fewer people to add solar panels to their homes, jeopardizing the market and hurting the state’s ability to meet its clean energy goals. California is working to power all retail electricity with renewable or carbon-free energy by 2045.

Solar panels cost an average of $ 20,000 to $ 25,000 to install in a California home, said Bernadette Del Chiaro, executive director of the California Solar and Storage Association, which represents 700 companies involved in the solar market. According to companies, it now takes about three to four years for homeowners to recoup installation costs by selling additional energy to utilities.

Utilities have proposed reducing the amount of money solar customers get back, meaning it would take more time – 11 to 15 years – for homeowners to recoup their costs. All residential solar customers would also have “grid benefit fees” and “customer fees” added to their bills that could amount to more than $ 70 per month.

The changes that utilities want would not apply to people who already have solar panels in their homes, but only to those who choose to install solar panels in the future. Low-income customers who install them within three years would pay a lower fee.

The Utility Reform Network, a consumer advocacy group that often wrestles with utilities over tariffs, also wants to reduce what households with solar panels are reimbursed for excess energy. The group suggested setting a price over 10 years so homeowners know how much they will be paid for excess power before installing solar power. They also want to increase financial incentives for low-income households to participate.

“We are focused on affordability for everyone,” said Matt Freedman, counsel for the group.

The solar industry and its allies, including some environmental justice and clean energy organizations, say regulators should look for ways to get California residents to buy solar panels, not downsize them.

Del Chiaro said the state should also make it easier for people to buy solar storage systems alongside the panels. Such systems, costing around $ 15,000 to install, allow people with solar panels to store their own energy for use after dark, making them less dependent on the electricity grid.

As more people build storage systems, utilities will have to spend less on new power plants or transmission lines, she said. But it also means that they will have fewer customers who depend on them for their energy.

“Utilities are really threatened now by the batteries,” said Del Chiaro. “They are really fighting to try to slow this market down.”


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