The debate over rooftop solar through NEM 3.0 in California placed the solar industry at odds with consumer groups and unions, but a different solar policy issue has now united them in a new battle. The state’s community solar program revision brought together consumer groups, union workers and the solar industry to try to make this sector of solar work for developers, workers and consumers alike.
The unlikely alliance first formed when the Coalition for Community Solar Access (CCSA) included a community solar proposal within the NEM 3.0 discussion.
“When California went to revisit net-metering in 2020, it seemed like a natural time to say, ‘Hey, here’s a model that, at least for new DERs [and] community solar, could be a model where we can address the key concern about distributed solar, which was cost-shifting,” said Brandon Smithwood, senior director of policy at Dimension Renewable Energy, a community solar developer.
The CPUC did not advance the proposal then, but The Utility Reform Network (TURN) and the Coalition of California Utility Employees (CUE) began working with CCSA behind the scenes to draw a plan to rework the stalled community solar market in the state.
In comments to the CPUC during the new community solar proceedings, CCSA said the commission has tried unsuccessfully to develop a community solar program to equitably expand access to renewable energy resources since 2013.
“Existing programs are duplicative, they do not result in robust participation among low-income Californians, and they are inefficient in serving customers,” the comments read.
The coalition’s efforts at reform culminated in the passage of AB2316, a law requiring utilities serving 100,000 or more customers to create and implement community solar-type programs that serve at least 51% low-income customers and are built by workers paid prevailing wages.
The groups continued working together afterwards on a proposal to the CPUC about what these programs might look like, and ended up with the Net Value Billing Tariff (NVBT). This tariff program would compensate subscribers to community solar projects up to 5 MWAC based on the value of a project’s generation at the time it’s provided to the grid. The structure would require projects to be co-located with storage to be profitable.
The community solar proposal united these typically opposed groups for a few reasons. Both TURN and CUE say they opposed NEM 3.0 because of the cost-shift of solar incentives to non-solar customers. But the new community solar proposal was generally supported by these groups because of the different value structure used in the incentive methodology.
The NVBT used the state’s Avoided Cost Calculator (ACC) to determine the compensation for projects — the state’s official solar incentive evaluation tool, which measures the utility’s avoided costs from solar power. The calculator includes metrics like “environmental value” and “generation capacity.”
“The use of the avoided cost calculator, to us, seems like the right way to anchor the valuation of output from the shared facilities, because it’s consistent with our view of delinking the compensation from retail rates, which include all of these costs that have nothing to do with the value of generation,” said Matthew Freedman, staff attorney for TURN.
CUE supported the ACC method too, since it’s designed to avoid shifting the costs between participating and non-participating customers. The utility workers group also stood behind the NVBT because it would require projects to be interconnected to the distribution grid instead of the larger transmission grid.
“In California, we have a very big backup in the ISO interconnection queue. This community solar proposal would bring more solar and storage online faster. Not only is that great for our climate goals, but it’ll create new jobs all over the state,” said Rachael Koss, attorney at Adams Broadwell Joseph & Cardozo who represents CUE before the CPUC.
Both groups also supported the NVBT for its potential under the Title 24 mandate for solar on all new homes. Title 24 technically allows community solar as an alternative to rooftop for compliance, but the current community solar program did not incentivize developers to choose that path. CUE would like to see more community solar instead of rooftop to satisfy this requirement.
“That is much more cost-effective for non-participating ratepayers, when you use community solar for Title 24. So we have been urging the PUC to adopt the joint proposal for this small segment of the market,” Koss said.
CPUC roadblocks
Despite the diverse support for the NVBT, the CPUC rejected the proposal in March, saying it “conflicts with federal law and does not meet the requirements” of AB 2316. Instead, the commission proposed that utilities PG&E and SCE should determine the cost cap available to disadvantaged communities through community solar.
“We don’t think that this program should have the utilities be in charge of selecting the projects. We have a decade of experience of that happening, and the program just kind of dead-ends. The utilities are fundamentally not motivated to make these programs succeed. They’re focused on having them be niche products,” TURN’s Freedman said.
But much more consequential than the program continuing to languish is the commission’s assertion that the NVBT violated federal PURPA law, which requires utilities to purchase renewable energy from qualified facilities if the cost of energy meets or is less than fossil fuels. The coalition and others argue community solar connected to the distribution grid is under state jurisdiction rather than federal.
“You have over 20 states with existing programs that look very similar to the type of program that we’re proposing in California,” Freedman said. “The idea that basically all of these state programs are preempted as a matter of federal law is extremely problematic.”
Other state and federal leaders agree that these small community solar projects aren’t under FERC wholesale market jurisdiction, including Republican California legislators Sen. Shannon Grove and Assemblymember Vince Fong and former FERC commissioners Norman Bay, Neil Chatterjee and Jon Wellinghoff.
“During my tenure as chairman of the FERC, we worked to ensure that FERC did not preempt decision-making on retail programs such as community solar, where states have exclusive jurisdiction,” wrote Wellinghoff.
Along with these letters, Freedman said other state governors including New York Gov. Kathy Hochul and Massachusetts Gov. Maura Healey have contacted California Gov. Gavin Newsom to express their concern with the proposed decision and PURPA implications. Even the White House called Newsom, since the administration set a goal for community solar systems to power the equivalent of five million households by 2025.
“The goal is to not have California’s outcome take down other state programs. That would be a total epic disaster,” Freedman said.
The commission has postponed a vote on its proposed decision twice now and has had two closed-session meetings on the topic. Advocates have also continued to meet with commission staff and other leaders to urge them to change course and revisit the NVBT. The coalition is holding out hope that the final decision will take their proposal into account.
“It’s not that these are the same people, these are the same dividing lines we’ve had on DG solar,” Dimension’s Smithwood said. “I think it’s a fair guess that the commission is taking some time because they’re hearing from these voices and saying, ‘Hey, maybe this deserves a second look.’”
