California solar installers are in the midst of an installation boom as new solar rules take effect on Friday.
Last December, the California Public Utilities Commission (CPUC) ended two years of contentious debate by approving new Net Energy Metering (NEM) rules. Those rules spell out how much utilities pay customers for excess electricity generated by rooftop solar panels.
Solar industry officials warned the new regulations would hurt their businesses. But in the short term the rule changes fueled an installation boom, keeping installers busy.
“The utility companies want to pay you less for what you produce,” said a Baker Home Electricity ad airing in the San Diego market. “It totally goes against California’s goal for more renewable energy. Now is the time to go solar and lock in your savings.”
That “install now before the rules change” pitch worked so well that solar installers around the state saw a 40% surge in business in the first three months of the year.
“A lot of consumers that were previously on the fence about going solar, jumped off that fence” said Bernadette Del Chiaro, the executive director of the California Solar and Storage Association (CALSSA). “There has been a significant increase in the number of people scrambling to get in under the current existing program because quite frankly the savings are bigger.”
The industry should stay busy well into the summer installing all the solar systems that had a formal interconnection agreement signed before the deadline.
However, once that backlog of projects is finished, Del Chiaro expects the number of new installations to fall off dramatically.
The new rules change the economics of solar
California regulators decided against a draconian flat-fee proposal for solar users — something opponents derisively called a solar tax.
However, the CPUC slashed the credit for electricity generated on rooftops and sold back to the grid.
“They cut the value of the credit,” Del Chiaro said. “The value on your bill that you get for every electron that you send back to the grid on a sunny day, they cut that by about 75%.”
Essentially, that means residents will have to wait a longer to recover the upfront investment, from thousands to tens of thousands of dollars, they made on a solar system.
How this happened
The rule changes came after a two-year struggle that generated unprecedented interest in proceedings at the California Public Utilities Commission.
Hundreds of local officials, public agencies and local governments worked to moderate the proposals being pushed by the state’s investor-owned utilities.
The utilities wanted fixed and unavoidable grid connection fees, and a steep reduction in the amount of money they paid for electricity bought from customers.
More than 170,000 people offered public comments.
“Overwhelmingly, like 90% to 95% of the public comments that went in were saying don’t do it. And they did it anyway,” said Dave Rosenfeld of the Solar Rights Alliance.
Challenges to new solar rules
The decision compelled three California organizations to take legal action. The Protect Our Communities Foundation, based in San Diego, worked with the Center for Biological Diversity and the Environmental Working Group to challenge the ruling.
The petition to the CPUC asked the agency to reconsider the decision because it did not follow state law.
California requires the CPUC to enact rules that encourage solar adoption, make rooftop solar accessible to low-income residents and include all of the distributed generation’s benefits in its calculations. The petition argues the commission failed on all three counts.
The challenge was filed Jan. 18 starting a 60-day clock for the CPUC to act. That expired in the middle of last month without action.
“Further legal action is an option,” said Aaron Stanton, an environmental attorney working on the petition. “But again we’re still focused on just trying to get the commission to change its mind.”
The Protect Our Communities Foundation remains optimistic that the five members of the commission will revisit the rule changes because rooftop solar is a critical part of the state’s efforts to decarbonize the California economy.
If the commission does not act, the petitioners can ask for a judicial review, effectively moving the issue into the court system.
“The political dynamics are quite meshed in all of this,” said Bill Powers of The Protect Our Communities Foundation. “And so, it’s really about — in my opinion — the scales of regulation being out of balance. Meaning the utility has gained almost total control of the process.”
