California cuts subsidies for homes with rooftop solar panels

California regulators voted unanimously on Thursday to dramatically reduce the amount utilities must pay owners of rooftop solar panels for the electricity they send to the power grid — a move that could hurt the growth of the renewable energy sector.

The five-member California Public Utilities Commission said existing payments to homeowners through a program known as net metering amounted to an overly generous subsidy that was no longer needed to encourage the use of solar panels. According to the proposal adopted on Thursday, the compensation for energy sent to the grid by rooftop panels will be reduced by around 75% for new solar rooftop houses from April.

The move could have national ramifications as regulators in other states often follow California’s lead. Debates about how far states should go to encourage the use of renewable energy are simmering across the country. Many utilities have long opposed net metering, arguing that it does not sufficiently take into account the cost of maintaining electrical networks and that it places too high a value on the electricity supplied by utility panels. roof.

“This decision is significantly fairer than the status quo,” said Alice Busching Reynolds, chairwoman of the California Public Utilities Commission. She added that the solar industry provides many benefits to California, but has been subsidized by residents who don’t have solar panels. “We have to be very careful how we design subsidies for this industry when we use taxpayer funds,” she said.

The California Solar and Storage Association said the ruling would limit the growth of rooftop solar even as the state tries to increase clean energy use and reduce fossil fuel burning, the primary cause of climate change.

Consumer and environmental groups that criticized the proposal noted that California has seen some of the most destructive impacts of climate change, including deadly wildfires, extreme heat and severe drought.

“This decision goes against everything California stands for: leadership in clean energy, climate solutions and equity,” said Bernadette Del Chiaro, executive director of the California Solar and Storage Association. “This runs counter to the Biden administration’s clean energy goals for America. This move will result in job losses and business closures, especially small businesses, which make up the majority of installers here in California.

California began strongly encouraging the use of solar power under Governor Arnold Schwarzenegger, a Republican, beginning in the early 2000s. He quickly became the national leader in the use of solar power on rooftops. About 1.5 million solar rooftop systems for homes and businesses are installed in the state. These small systems provided about 10% of the electricity generated in California last year, more than nuclear plants or hydroelectric dams, according to the Energy Information Administration, a federal agency.

By reducing the subsidy to owners of rooftop solar panels, the commission aimed to establish what it said was a fairer system, in line with arguments from utility companies and some consumer and environmental groups like the Utility. Reform Network and the Natural Resources Defense Council. These groups had claimed that wealthy homeowners were more likely to install rooftop solar systems, leaving low-income residents to bear more of the cost of supporting the power grid.

Under the new net metering program, average residential customers of Pacific Gas and Electric, Southern California Edison and San Diego Gas & Electric who install solar panels would save $100 per month on their electric bill, and residential customers Installing solar power combined with battery storage means saving at least $136 per month, according to the commission.

With these savings, he said, the average household installing a new solar or solar and battery system would be able to pay for the system in full in nine years or less. The compensation would not change for homeowners who already had solar panels on the roof, for at least 20 years from the installation of their system.

The commission has taken a less drastic approach than it proposed a year ago. In addition to reducing payments for excess electricity sent to the power grid, the previous proposal would also have imposed new monthly charges on utility bills for rooftop solar homes.