California might reduce financial benefits of rooftop solar systems

But Giustino, project manager at A1 Sun, fears the tide may turn decisively in the other direction next year if California regulators overhaul a key program that has fueled the growth of the rooftop solar industry since the mid-1990s.

Known as net energy metering, the program compensates homeowners for the extra power their solar panels share with the electric grid. The California Public Utilities Commission has been contemplating changes, and it’s expected to release a proposal in the coming weeks ahead of a vote early next year by the agency’s governing body.

Specific changes being considered by regulators vary, but they include possible reductions in monthly bill credits and a new fee that’s intended to make up for electric grid costs, for which utilities and other groups say solar-powered homes are not paying their fair share.

Giustino and other advocates for rooftop solar say such steps, if taken too far, could stifle the industry’s growth — and spell financial trouble for companies like A1 Sun.

“As a business, we have to pivot really hard as soon as this comes out to be able to adapt to whatever the changes are,” Giustino said. But “it’s quite possible that we’d have to lay off employees and potentially shut our doors if it’s really bad.”

The CPUC’s impending action comes several months after the failure of a state bill, AB1139, that would have imposed new charges and lower credits for solar energy that homeowners share with the grid. That legislation failed in the state Assembly in June, but CPUC officials were already considering their own changes and have continued to do so.

Advocates for rooftop solar have been sounding the alarm consistently this year, warning that the CPUC’s action threatens to disrupt the industry and impede the state’s ability to meet its goals for fighting climate change. At stake, they say, are not only numerous jobs — including Giustino’s employees — but also a crucial tool the state needs to reduce greenhouse gas emissions. Rooftop solar industry leaders warn that the CPUC’s proceeding could make the state too reliant on huge solar farms that will be slower to build and costlier than clean energy distributed across neighborhoods.

“Our message has always been: We’ve got a good thing, let’s make it even better,” said Bernadette Del Chiaro, executive director of the California Solar and Storage Association. “What the other guys who are against us are saying is: Let’s obliterate it. Let’s put all our eggs in the utility-scale basket.”

Critics of the rooftop solar program believe it is outdated and badly in need of reform. As the cost of solar power technology has declined and California’s electricity prices have become some of the highest in the nation, the current benefits provided to homeowners with panels on their roofs no longer make sense, critics say. And they contend that the current program allow homes with rooftop solar to avoid paying for billions of dollars in grid maintenance costs that then get shifted onto everyone else — including low-income people who have the least ability to pay.

A May report on rates released by the CPUC made a similar observation. Rising electric rates have been partially offset for net-metered customers, “who are disproportionately older homeowners in high-income areas,” the study said, adding that customers without rooftop panels are disproportionately younger and more disadvantaged ratepayers who have shouldered some of the cost of maintaining the grid.

The critics include not only major utilities such as Pacific Gas and Electric Co. but also groups like The Utility Reform Network, a consumer advocacy organization and utility watchdog. Matthew Freedman, a staff attorney for the group, noted that the CPUC allows PG&E and its counterparts to collect a certain amount of money each year through electric rates — regardless of how many customers choose to get solar panels installed.

Groups urging for the state to overhaul its net energy metering program have aligned themselves under a campaign called Affordable Clean Energy for All. The campaign includes PG&E, Southern California Edison, San Diego Gas & Electric and dozens of other organizations.

Kathy Fairbanks, a spokesperson for the campaign, said the affiliated organizations are motivated by a genuine desire to make net energy metering work for more Californians.

“The only question is not whether people will continue to put solar panels on their homes. It’s how much is it going to cost and who’s going to pay?” Fairbanks said.

About 500 supporters have signed on to an alternative campaign to fight the net metering overhaul, including advocates of rooftop panels and various other organizations, banding together under the moniker Save California Solar.

Rooftop solar-affiliated groups including Environment California and Vibrant Clean Energy have touted their own research on the benefits of rooftop solar and storage, contending that it’s critical to saving customers’ money and keeping the state’s clean energy progress on track.

Del Chiaro, from the solar and storage association, is frank about what could happen if the credits are slashed and the state imposes a fee on rooftop solar panels.

“We’ll see hundreds of businesses, tens of thousands of jobs in clean energy lost, and California will fall short of its goals of getting off of fossil fuels,” she said.

If the commission upends net metering in a way that could devastate the state’s rooftop solar market, the industry may try to reverse the move through the courts or by putting a ballot measure before voters, Del Chiaro said.

Critics of the state’s current program insist that the state needs both panels on rooftops and large utility solar farms. And they deny that the push for change has anything to do with protecting utility profits.

“We’ve got no love for utility shareholders and we would be happy to take these costs out of their hide, but that’s not how it works,” said Freedman, of TURN. “The costs are being paid by other customers. This is a neighbor versus neighbor issue.”