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Environment, Energy and Transportation

Solar subsidies could be slashed in California

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Bill Mead
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On Monday, California proposed reducing incentives for people who own rooftop solar panels. The proposal includes a monthly fee, as well as reducing the price for the energy that they sell back to the grid, a practice known as net energy metering.

Net energy metering is the backbone of rooftop solar in California. Dave Rosenfeld, with the nonprofit group Solar Rights Alliance, explains how it works.

“When you have solar, you are making energy when the sun is shining and you use that energy right away,” says Rosenfeld. “But when you make more energy than you're using, then that extra energy basically goes out your wires, spins your meter backwards and goes out in your community. And the utility right there on the spot sells that power that you made and then credits you on your energy bill. And then when you need to use the grid, like when the sun goes down then those credits get applied to the energy that you use.”

Is rooftop solar elitist?

Right now, solar users in California are credited at full retail price for the energy that’s being resold. This pencils out to about 25 to 28 cents a kilowatt. Utility companies, consumer advocates and some environmental groups argue that this is too high. They say the consequence is artificially high energy prices as well as a cost shift on to low-income residents.

Kathy Fairbanks is with the Affordable Clean Energy for All Coalition, a group that includes the utility companies. She says that most people who have solar panels are wealthy, which creates an unfair burden on other utility users.

“If you aren't paying utility bills or if you have a negative bill that means you as a solar rooftop solar homeowner are not paying for the cost to maintain the grid,” says Fairbanks. “Paying for wildfire mitigation costs. There a lot of state energy efficiency programs that are paid for through your utility bill.”

But Dave Rosenfeld, with the Solar Rights Alliance, cites a study by the Lawrence Berkeley National Laboratory which found that 43 to 45% of new solar is being put into low and middle-income households. He says without the subsidies, solar would stop being affordable.

“The utilities are in an all-out effort to effectively change net metering in a way that would double the cost of going solar and if the changes that they're proposing go through or really anything close to it we will go back to where we were 15 years ago, where the only people that can get solar, put solar panels on the rooftop, would be wealthy people.”

Rosenfeld also argues that in 2018, the state canceled 2.6 billion dollars of planned spending on long-distance powerlines because of reduced wear and tear, part of which was contributed to by rooftop solar.

However in 2019, the California Independent System Operator Corporation (CAISO) wrote a response to the Solar Energy Industry Association’s (SEIA) claims.

“SEIA presumes that canceling or downsizing a project is due to changes only occurring since the last year, enabling a straightforward attribution of the specific cause of the change. This is overly simplistic, and SEIA misunderstands CAISO’s transmission planning process as well as the past review of the previously-approved projects in the PG&E territory.”

A more measured approach

Utility companies like PG&E would like to slash the price of net energy metering by around 80% as well as impose a monthly fee to solar users. People like Sachu Constantine at Vote Solar, a nonprofit advocacy group, are proposing a more gradual and measured reduction in solar subsidies.

“We recognize that full retail compensation was a great start” says Constantine. “But we've always known that we would eventually have to adjust that compensation down to what we call the avoided cost. So that's one of the main elements of our proposal is that we slowly ramp the compensation for rooftop solar down to the value that it has for the utility and other ratepayers.”

Avoided cost is money that solar users save the utility company.

“Maybe they reduced the wear and tear on the wires in the system, maybe they shaved energy off of the peak,” explains Constantine. “Both utility and the customer in turn, pay more for peak power. So if we can reduce the peak, we are avoiding some of the cost of the system. And we don't have to allocate it to the customer and we don't have to collect it through rates.”

Constantine says that a fair price could end up being around 10 to 15 cents per kilowatt-hour. Utility companies want to reduce the price even further, saying they can buy energy from solar farms for around 3 cents a kilowatt-hour.

But Constantine says that the price comparison is unfair because that doesn’t account for transmission costs and other expenses that utilities save when they get solar power directly from rooftops.

Rooftop solar: incentivize it or penalize it?

Advocates for keeping solar subsidies higher cite other benefits to solar energy such as reducing the chance of wildfires, protecting residents from rolling blackouts, and moving away from fossil fuels.

Constantine says that additional fees for owning solar panels is counterproductive to California's clean energy goals.

“The point is I am no different from someone who has an energy-efficient refrigerator or energy-efficient lighting. They’re also using less energy and they're helping the grid and we recognize that. That’s the same thing that a solar user is doing all the time. But we don’t go and try to accuse that energy efficiency user of somehow harming other consumers. We don’t try to charge them a punitive fee. Nor should we do that for solar customers.”

The California Public Utility Commission is taking comments on the proposal until late January.