Utilities, solar companies, energy advocates and rooftop solar owners are locked in hand-to-hand combat at the California Public Utility Commission over how rooftop solar customers should pay for grid access and how much they should be compensated for energy they generate and then sell back to the grid.
The debate has unfortunately deteriorated into a zero-sum game.
If the utilities get what they want, rates for rooftop solar will go up dramatically and the solar companies and their customers will get much less. If the solar companies get what they are asking for, utilities and ratepayer advocates argue that rates for everyone else – especially low-income customers – will go up.
The Public Utility Commission is in the middle – stuck between the need to push decarbonization and enlist customers in the transition to clean energy, and the need to protect low-income customers from rising electricity costs.
The way out of this conundrum is to think big about what California needs from higher income customers and what protection and opportunities it should provide to lower income customers.
The hard truth is that given the challenges of the energy transition – like the blackouts of summer 2020 – in the future, California needs more than just rooftop solar from customers who are interested in participating in the transition to clean energy. At the same time, rooftop solar may be a great way to help low-income customers maintain affordability in a context of wildfire driven electricity rate increases.
Here’s a vision in four parts that looks beyond the current narrow arguments, is consistent with California’s values and gets us where we need to go in the next 10 years.
Our rooftop solar policy has helped us to get to where we are now – on the cutting edge of the energy transition, this vision would help us take the next step toward a clean energy future.
The first part of a holistic solution is to mandate that everyone pay for energy in a way that is much closer to what it actually costs.
Energy during the middle of the day is incredibly cheap – even free – because of California’s solar resource. Energy between 5 p.m. and 10 p.m., when the sun doesn’t shine and demands are high is much more expensive. Residential rates need to reflect this difference in value so that everyone has incentives to think twice about doing their laundry in the evening, to consider getting a programmable thermostat for their air conditioner, or for those with means to invest in a home battery to store energy during the day for use at night.
As it stands, we cannot afford to pretend that energy at midday is just as valuable as energy at 8 p.m. Fixing this makes solving every other problem easier.
Second, we need to insist that higher income customers who are interested in solar also install home batteries. This transition to solar-plus-storage could occur in a short three-year period.
New solar plus storage installations could receive fair compensation for energy they sell back to the grid but could be operated to reduce energy taken from the grid, especially at critical moments. This will reduce overall grid costs and improve reliability, facilitating the energy transition. And it will provide the opportunity for those who can afford it to participate in the next phase of moving to clean energy.
We also need to facilitate a pathway for those who installed solar panels 5, 10 or 15 years ago to add energy storage to their solar systems. Adding batteries to previously installed rooftop solar is straightforward from an engineering perspective but faces contracting and regulatory barriers that need to be fixed.
Third, lower income customers are currently suffering from the rapid inflation of energy costs largely driven by the spate of wildfires over the past five years and the need to harden the grid to wildfire. They deserve protection from rising costs.
These customers have only in the last few years found solar panels more accessible because of continued cost declines in the technology. We should continue to allow access to net energy metering – albeit at a modified compensation rate for energy sold back to the grid – for the residents of California who can only now afford the investment. Low-income customers in California should be able to keep most of the good deal on offer now.
Fourth, the growth of rooftop solar plus storage market is currently constrained by the supply of batteries – not the demand for them. Addressing the supply shortage is key to ensuring availability of battery packs and to allowing participation of Californians in the next phase of the energy transition.
The governor should offer substantial tax incentives to battery manufacturers who are willing to site one or two giga-factories in California. Tax benefits could be conditioned on sale of the batteries for use as stationary storage in California. The governor’s budget already includes tax incentives designed to spur growth of climate jobs in California. These could be targeted to overcoming the supply shortfall of batteries.
Often, successful negotiation strategy requires thinking bigger. Finding dimensions that weren’t originally considered that can be shaped so that everyone can win. Right now, negotiations on rooftop solar are increasingly bitter and deadlocked.
We can achieve a viable outcome for everyone on rooftop solar by focusing on our values – equity and clean energy – and by focusing on a vision for how customers can participate in the transition to clean energy over the next decade, rather than on how they have contributed up to now. California practically invented rooftop solar. Now is the opportunity for us to envision what comes next.