California is adopting a program that could obstruct community solar

Regulators in California approved a community solar program, but proponents of sustainable energy argue that at a time when the Biden administration is pushing the growing industry, the state would still lag behind.

However, the California Public Utilities Commission’s (CPUC) 3-1 vote left the door open for a future, less restrictive scheme to benefit from federal funds supporting community solar.

Despite having a robust solar market, California has historically struggled to develop community solar projects—moderate-sized solar arrays that can serve a local community of customers. Unlike rooftop solar systems that service a single residence, community solar projects cater to subscriber groups, such as low-income households, renters, or those with physically restricted dwellings, who are unable to install solar on their own.

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A 2022 state law mandated that the CPUC establish a new community renewable energy program with a minimum of 51 percent benefiting low-income users.

That piece of legislation was the catalyst for the Thursday-approved program. It expands on state and investor-owned utility programs already in place and establishes a new community renewable energy program to make use of $250 million in federal cash granted to the state.

Customers in underprivileged neighborhoods can subscribe to a network of solar projects in exchange for a guaranteed 20 percent energy bill rebate under an existing scheme called the Disadvantaged Community Green Tariff scheme. We will extend this program to encompass 144 megawatts of solar projects. We will add language to another current tariff that allows for battery storage in solar projects.

Opponents claim that the current programs offer little return on investment and are overly restrictive. They claim that merely making them larger won’t stimulate enough new growth.

The author of the 2022 legislation, California Assemblymember Chris Ward, stated in a public comment on Thursday before the CPUC that the program was “wholly inconsistent” with his legislation. He claimed that there would be no significant new development as a result of the “fatally flawed” proposal.

“California must get this right, as a leader in solar adoption,” Democratic Commissioner Ward urged commissioners to reject the idea.

In order to achieve its objective of having a net-zero grid by 2035, the Biden administration has prioritized community solar, with 20,000 MW of installed solar expected to be operational by 2025. Depending on how well developers prosper in California, given the state’s disproportionate influence in the solar industry, achieving that objective may or may not be possible.

The “shocking” decision and other recent votes restricting compensation to solar owners, according to Stephanie Doyle, California State Affairs Director for the Solar Energy Industries Association, “threaten to unravel California’s clean energy progress.”

A coalition of solar developers and ratepayer groups supported the Net Billing Value Tariff, which would have established a new compensation system similar to net metering, compensating solar users for excess electricity returned to the grid. Under the concept, consumers could have signed up for solar projects and received credits on their bills based on how much energy they supplied to the grid; at peak grid stress, payments would have been higher.

The developers claimed that their arrangement would aid their investment recovery and was comparable to a successful model in New York. Homebuilder associations also endorsed the concept, claiming it would assist them in complying with state laws requiring solar electricity on newly constructed homes.

However, CPUC President Alice Reynolds stated that the proposed net value billing tariff would have been too expensive and would result in higher rates for other consumers. According to Reynolds, the decision that was passed on Thursday meets the state’s dual objectives of providing all communities with clean energy and maintaining the most downward pressure on bills possible.

Darcie Houck, a commissioner, disagreed with the ruling, claiming that the scheme would not go far enough to encourage new building. Matt Baker, the commissioner, did not attend the voting.

On Thursday, the Coalition for Community Solar Access harshly criticized the choice. The Coalition for Community Solar Access expressed their harsh criticism of the decision in a statement addressed to the CPUC on Thursday.

The net-value billing tariff may be illegal under federal law, according to a preliminary, suggested ruling from March. Two former Federal Energy Regulatory Commission members chastised California for this, raising concerns that a vote on that phrase could expose programs in other states to legal challenges.

That sentence was removed from the version that was adopted on Thursday, stating instead that the panel “finds it unnecessary” to determine whether there were federal conflicts.

Commissioners pointed out that a new community renewable energy program, available to consumers of all income levels as well as commercial customers, will provide an opportunity to keep working on implementation. The state will rely on funding for that program from the U.S. EPA as part of the 2021 Inflation Reduction Act’s Solar for All initiative.

Reynolds stated that there is “no reason to think that viable projects wouldn’t come forward in this program,” and that the CPUC will allow commentators to offer their opinions on “various aspects” of project design.

In an interview, Brandon Smithwood, vice president of policy at community solar producer Dimension Renewable Energy, stated that the new initiative presents a “once-in-a-generation grant from the federal government opportunity for the state to take advantage of.”

“This is an opportunity the state should seize, especially in light of its current struggles with high electricity rates,” Smithwood stated. “We are grateful that the commission is pausing and permitting some program development that can effectively use these federal funds.”