California eyes rooftop solar policy changes. The industry says its future hangs in the balance

The proposals’ supporters say residents who have solar panels are being overpaid for their excess energy, allowing them to avoid electric grid costs that run into the billions of dollars statewide. They contend that forces everyone else, including people with fewer means, to foot the bill.

But opponents say many of the policy changes would be little more than a profit grab by investor-owned power companies that could devastate the rooftop solar industry, hampering efforts to decentralize the grid and make it more resistant to wildfire risk and blackouts.

The debate is playing out on multiple fronts. The most immediate is AB1139, which needs to pass out of a key fiscal Assembly committee by Friday to advance through the Legislature. Critics of the bill say its provisions, which include new charges and lower credits for power shared with the grid, could ruin California’s rooftop solar market.

“Under no uncertain terms, AB1139 kills rooftop solar,” said Bernadette Del Chiaro, executive director of the California Solar & Storage Association. “It moves us to a time at which only the extremely wealthy can afford to go solar. It moves us back in every possible way: climate change, equity, grid reliability, wildfire abatement.”

Assembly Member Lorena Gonzalez, D-San Diego, who is carrying the bill, said the idea that she’s trying to destroy the rooftop solar market is “ridiculous” and “a silly argument.” In her mind, AB1139 tries to right-size an unfair burden faced by those who don’t have solar panels.

Gonzalez said she has solar panels on her home and believes the current net metering program pays her too much. She said her most recent electric bill was negative, meaning she owed no money and doesn’t have to pay fixed costs for the electric system that her neighbors without solar can’t escape.

“I actually hope we continue to grow rooftop solar,” Gonzalez said. “We just have to be realistic with people about the actual cost.”

Established in 1995 and modified in 2016, net metering has been a huge factor fueling the growth of California’s rooftop solar industry — more than 1 million homes across the state have panels. Under the program, solar customers are compensated at the retail price of electricity for the extra energy their panels send to the rest of the power system. But they still have to pay certain charges that support public programs, such as low-income bill assistance, and they’re charged a one-time fee — usually $75 to $145, depending on the utility — to connect their panels to the grid.

Independent of AB1139, regulators at the California Public Utilities Commission are already considering changes to net metering. Pacific Gas and Electric Co. and Southern California’s large investor-owned electric companies submitted a proposal in March that would accomplish some of the same goals as the bill. A proposed decision should be ready for commissioners to consider by December, with a vote likely early next year.

Gonzalez said her bill’s changes to net metering would not take effect if the commission adopts its changes by February and they’re implemented by the end of 2023.

Still, some solar supporters worry that the bill’s passage could motivate regulators to adopt far-reaching changes, including monthly charges of about $70 that utilities have proposed for new solar customers. Dave Rosenfeld, executive director of the Solar Rights Alliance, said he viewed the bill as “instructions to the CPUC on what to do.”

Rosenfeld was particularly alarmed by a proposal in AB1139 to switch existing rooftop solar customers to the newer, less favorable net metering system 10 years after their panels were installed. He said that could create marketplace chaos as the state’s current policy guarantees residents’ solar investments for 20 years, the standard lifetime of rooftop panels.

“Nobody’s going to trust this stuff,” Rosenfeld said.

Moreover, Rosenfeld thinks rooftop solar panels are being misconstrued as a major reason for California’s steep electricity prices, when other factors like utility profit motives are far more to blame.

“The premise of this bill is based on a lie,” he said.

But a February report led by UC Berkeley researchers found that greater adoption of rooftop solar panels in the state “has disproportionately shifted cost recovery onto non-solar customers.” Severin Borenstein, an energy economist and an author of the report, said the growth of rooftop solar under current net metering rules was a significant driver of high electric rates, though not the only major factor. He estimates that overhauling net metering could save the average household about $75 per year.

PG&E, its Southern California utility counterparts and various other groups that want regulators to reform net metering are aligned under a coalition called Affordable Clean Energy for All. One of its arguments is that the benefits afforded by the current program no longer make sense in light of how the costs of solar power technology have plummeted while California’s electric rates have risen.

“The subsidies are too generous now,” said Kathy Fairbanks, a spokeswoman for the coalition. “They may have made sense in 1995 but they don’t make sense in 2021.”

Rooftop solar advocates push back on the coalition’s main claims, denying that the current policy shifts billions of dollars in costs onto non-solar customers.

Del Chiaro, the solar and storage association leader, said the net metering law was never defined as a subsidy and is instead designed as a billing mechanism to encourage residents to install as many panels as their roofs can hold. And more panels on more roofs means that utilities don’t need to construct as much traditional infrastructure, she said.

“You don’t need to build the big power plant in the desert because the big power plant is now on rooftops in San Francisco,” Del Chiaro said.

Looming over the debate is the main challenge faced by California’s electric grid: wildfires sparked by power lines, especially those owned by PG&E.

Utilities have spent billions of dollars trying to prevent their aging poles and wires from causing more deadly disasters, and the rooftop solar industry sees its product as a key piece of the solution by helping shift the state away from the centralized grid model. Solar panels with batteries can also keep homes’ lights on when utilities turn off power to prevent their wires from causing fires, something PG&E has done frequently in recent years.

“Why would we want to limit rooftop solar right now when the state needs it so much?” said Walker Wright, vice president of public policy at the San Francisco solar company Sunrun. “If anything, we should be doing more for distributed generation right now, and I think that lines up with what the public wants overwhelmingly.”

But even The Utility Reform Network, normally a staunch critic of investor-owned utilities, thinks the net metering program needs revisions. Matthew Freedman, a staff attorney for the organization, said the program’s costs “have gotten completely out of control,” creating a “reverse Robin Hood phenomenon where low-income customers are paying for higher-income customers’ solar systems.”

“If you live in San Francisco and your neighbor puts solar on their roof, should you have to pay their share of the wildfire costs? That’s how it works today,” Freedman said.