LOGO - Citizen's Climate Lobby CCL

REGIONAL — A coming update to rooftop solar incentives may soon affect California electric customers whether they have solar or not.

At its Nov. 17 meeting, the Tri-Valley chapter of the Citizens’ Climate Lobby considered the impacts of reducing financial credits — by up to 80% — to rooftop solar owners. While lowering the credits would reduce the drive for rooftop solar expansion, continuing incentives at their current levels would increasingly burden non-solar customers through rising distribution costs.

The meeting focused on a decision the California Public Utilities Commission (CPUC) will make on Dec. 9 about how much the next iteration of the Net Energy Metering (NEM) program will compensate rooftop solar owners for the power they export to the grid.

“NEM is basically the policy that allows people who have solar to share their excess energy back into the grid and spin their meter backwards,” SunPower Corporation Senior Manager Patrick Sterns explained at the meeting. “You’re exporting energy out onto the grid, and you get a financial credit for that.”

SunPower installs home solar systems in the Bay Area.

Igor Tregub, Senior Policy Advisor for the California Solar & Storage Association, stated during the Nov. 17 meeting that policy should protect the incentives to continue the growth of rooftop solar. Tregub prefers rooftop solar over utility-scale solar because it does not use any additional land, and because it brings power generation closer to where it is used, reducing transmission costs. He added that President Joe Biden’s “30 by 30” conservation plan, which aims to protect 30% of U.S. land and water by 2030, cannot succeed without rooftop solar.

Tregub then presented a website of the Solar Rights Alliance (savecaliforniasolar.org), California’s association of solar users that works with California Solar & Storage. The website referred to the drastic credit reductions as a utility-company “profit grab” and a defensive reaction to growing homeowner energy independence.

Utility companies, explained Tregub, earn a return from transmission lines and therefore benefit financially from more centralized generation sources.

Tregub also pointed out a socioeconomic downside to lowered incentives: the longer it takes for a rooftop solar installation to pay for itself, the less feasible it will be for households to go solar.

In a comparison of NEM successor proposals prepared by SunPower, the 80% credit reduction would extend the cost-recovery period from 7 years to over 20 years. This effect could make home solar and its benefits, such as lower energy bills, cost-prohibitive to lower income households.

“We fundamentally believe that customers should not have to choose between paying their rent and paying their utility bill,” said Tregub.

Proponents of the drastic credit cuts argue that, under the current NEM program, rooftop solar owners have been over-compensated at the expense of non-solar customers.

Scott Murtishaw, Policy Director at Independent Energy Producers, explained at the meeting that when an electric customer pays for power, some money goes toward the generation and some money goes toward the distribution of that power.

Under the current NEM program, however, when a rooftop solar owner exports power back onto the grid, that owner collects both the generation and the distribution payments, even though the power is actually distributed by the utility company. In other words, those distribution costs never make it back into the grid. And because the grid still must be paid for, those costs are reallocated to everyone else, Murtishaw explained.

In an increasingly solar California, continued Murtishaw, this has shifted distribution costs from those who are able to afford rooftop solar to those who are not.

Crediting solar owners the full retail rate made sense at NEM’s inception, said Murtishaw. Meters were analog then, and the easiest way to calculate credits was to simply let the meter spin backward. Also, solar installations “were so expensive at the time that nobody was very concerned about it,” he continued.

But the solar landscape has since changed. According to the Solar Energy Industries Association, solar installation costs have dropped by more than 70% over the past decade. And because electric rates have gone up, so has the compensation received by owners of rooftop solar.

Instead, Murtishaw said the proposed 80% reduction would tie “export compensation to something that’s more pegged to the wholesale cost rather than the retail cost.”

But even if the CPUC decides to reduce NEM credits, non-solar customers will not see significant changes to their power bills for several years because the decision will not apply to pre-existing NEM participants.

Finally, Tregub emphasized this should not be viewed as a choice between rooftop or centralized solar.

“It's important to recognize that in order to meet our climate action goals, we do need both,” Tregub continued. “We cannot achieve as a state our goals without both.”