On Thursday, the California Public Utilities Commission will vote on a controversial reform of the state’s rooftop solar program. The revised proposal strikes a necessary balance that protects consumers and still encourages solar adoption.
For a few moments this year, California was powered by 100% clean energy.
This first-of-its-kind milestone was the result of two decades of investment in renewable energy, especially in solar power. Almost 40% of our solar power comes from customers who have rooftop solar and get paid for the electricity they produce and provide back to the grid.
California needs to build on that success. As a part of the path to the state’s clean energy future, the California Public Utilities Commission rolled out a much-anticipated update to the state’s rooftop solar program last month. It will be considered by CPUC commissioners on Thursday.
This update makes necessary and important changes to this decades-old policy. Unfortunately, the way the policy is currently structured incentivizes homeowners to make solar power during the day but does little to address when the state burns more fossil fuels on hotter nights.
The CPUC’s new proposal addresses this issue and closely aligns the rates paid for excess energy from residential rooftops with the value it provides the grid.
For instance, the price for electricity provided during the day – when sun power is bountiful – is about 5 cents per kilowatt-hour. During the evening, the price can increase more than 20-fold. This new structure encourages homeowners to prioritize installing solar systems with batteries so they can collect the solar energy during the day, store it, and put it back on the grid when the sun goes down. With this advance, clean energy, not dirty fossil fuels, will help power the electricity system during evening hours.
The proposed update also reduces the growing costs of the program and benefits all consumers. Net energy metering is effectively funded by ratepayers that do not have solar, and the tab makes up about 10% to 20% of the average customer’s monthly bill. This proposal aims to create a fairer rate structure.
Solar systems with batteries come with upfront costs, but the return on investment is attractive. The simple payback for a solar system is nine years or less under the new proposal, according to the CPUC’s Public Advocates Office. With battery storage, it would take less than seven years. These payback periods will continue to drop as solar costs continue their precipitous decline and electricity prices increase.
What’s more, the CPUC calculates the proposal saves a residential solar customer $100 per month on average, and a residential solar plus battery storage customer at least $136 per month on average.
The proposed update encourages battery storage, a key technology and growing industry that helped California through this summer’s grid emergency. The proposal continues to ensure solar panels are affordable and builds on the solar industry’s growth and success. The day the new proposal was announced, for example, the value of the solar company Sunrun saw a jump of more than 25%.
The CPUC’s net energy metering proposal, which has justified critiques, is a huge step forward. Other improvements are needed, such as a battery credit and rate structures for those with existing solar systems to encourage them to add a battery to their systems.
But in the state that helped build the U.S. solar industry, it is time to embrace the proposal that is before us. The new rooftop solar proposal incentivizes people to install solar, which is good for the industry and good for the grid. Plus, it provides affordable rates for consumers and helps with energy reliability.
The vote by CPUC commissioners on Thursday will have lasting effects on the growth of rooftop solar in California. Opponents argue that the revised proposal will derail widespread adoption, while some proponents believe that the revised proposal does not go far enough.