In summary
The California Public Utilities Commission is considering a rule that would eliminate payments received by solar panels on residential buildings. Why are so many housing groups mad about this?
California has no shortage of lofty goals: Lawmakers have pledged to zero out the state’s carbon emissions by 2045, build 2.5 million new homes by the end of the decade and replace gas-burning appliances with electric appliances in 7 million homes over the next 12 years. Years.
Now California’s top utility regulator is considering a new rooftop solar policy, which a group of critics say will make it harder for the state to meet any of those ambitious goals.
On October 12, the California Public Utilities Commission will vote on whether to reduce the payments that owners of residential buildings equipped with solar panels receive for the electricity they generate on their roofs. The decision could reverse a sweeping reform the commission adopted late last year for solar-powered single-family homes, part of a larger battle between environmentalists and energy policymakers over what role individually owned solar panels should play in the state’s planned divorce from the United States. Energy derived from fossil fuels.
In either case, the new rules only apply to new customers.
Supporters of the rule change — the state’s top electric utilities — argue that the proposed new rates, which vary throughout the day, better reflect the actual value that rooftop solar panels provide to the electric grid while providing a fairer shake to customers who don’t have the luxury of living under solar panels.
The new pricing system is also designed to encourage property owners to hook up solar panels to batteries, which can store solar energy in the middle of the day when it’s plentiful and cheap and send it out when the grid needs it most after sunset and when the revised rates proposed by the CPUC are higher.
“Under these new rules, I have serious concerns that entire building electrification projects will no longer be implemented.”
David Chanin, co-founder of FutureFit Partners
But a remarkably diverse coalition of interest groups in California have banded together to say otherwise. Now landlords, renters’ rights organizations, affordable housing advocates, environmental nonprofits and the building industry — all of whom rarely agree — say the policy will only “eviscerate” the multifamily solar market.
What’s more, they say, the proposed change runs counter to a set of ambitious policy goals California lawmakers have set to combat climate change, air pollution and the affordable housing crisis.
“This proposed resolution appears to be going in the opposite direction,” said Bob Reimer, technical director at the California Building Industry Association, a lobby group that opposes regulatory reform. “It’s nuts. I’ve been doing this stuff for over 40 years and it’s very confusing.”
Solar policy before
If this argument sounds familiar, a version of it has appeared publicly before.
In December, the commission reduced payments received by homeowners who use rooftop solar panels by about 75%. The decision came after months of debate, with both sides claiming to speak in favor of clean energy and economic justice.
Previously, utilities were required to pay homeowners roughly the retail price for electricity produced by a photovoltaic array and export it back to the grid. Utilities have long resented this arrangement, joining organized utility workers and even some environmental groups in arguing that the most cost-effective way to boost clean energy production is to focus on utility-scale (read: large) projects. This stands in contrast to the fragmented fleet of PV arrays, which are disproportionately found in the homes of the wealthy, who have been able to save on the costs of maintaining and upgrading the grid, effectively shifting that onto everyone’s monthly bills.
The CPUC agreed with this argument and replaced the retail tariff with a much lower, adjustable tariff.
That’s what’s being considered this time around for apartment building owners, but with one hotly contested difference.
Even with these lower payments, single-family homeowners using solar can still boost the utility of their array by using the electricity they generate on-site. Every kWh that is “self-consumed” is a kWh that the homeowner does not have to pay at high retail rates. This can add up to significant savings.
But under the proposed reform for apartment dwellers, such savings will not be allowed. All electricity generated will be counted as “export” to the grid and will be compensated at the lower wholesale price. Likewise, all electricity used by the residents of this apartment building must be purchased from the utility at retail. For accounting purposes, there will be no “self-consumption” allowed.
For rooftop solar companies, the lack of “self-consumption” provision for residential buildings poses an existential threat.
Ivy Energy, a San Diego company that sells software to multifamily landlords hoping to provide solar power to their tenants, argued before the CPUC that the rule, if adopted as proposed in August, “would remove the economic value proposition” of multifamily solar “That Offers It All” New projects are infeasible, unbankable, and are effectively collapsing the multifamily solar market.
Both the state’s major investor-owned utilities and the CPUC say coming up with a way to calculate self-consumption for residential buildings, where different residents use different amounts of electricity at different times and will require different levels of compensation, would well be a technical nightmare for management. They argue that construction would be expensive, raise potential privacy concerns among tenants and landlords, and result in bills that are too complex for any resident to use to predict the cheapest time to run their dishwasher.
“Unreasonable and complex” is the term used in a joint letter to the CPUC by Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric.
Just because such a system is difficult to implement does not guarantee that the entire industry that has built itself around the old system will be upended, said Bernadette Del Chiaro, executive director of the California Solar and Storage Association.
She pointed to the single-family solar market as a clear example. She added that since the new policy came into effect, the number of residential solar projects underway has declined by at least 40%.
“But we have gotten ourselves into this situation where we are almost promoting the single-family version” of this policy, she added. “It won’t be great yet, but at least it’s not sudden death. Which is what this is.”
And in the opposition: a big tent
As the Chinese Communist Party committee considered the decision over the summer, a disparate array of interest groups flocked to the rooftop solar industry’s defense, but for different reasons.
Builders oppose anything that makes solar less financially attractive because the California Energy Commission, another state agency, now requires that almost all new residential buildings be equipped with solar panels.
Throwing a wrench into the economics of rooftop solar also complicates the statewide push to go electric, much to the chagrin of property owners and the entire electricity industry.
“Solar is one of the biggest revenue streams for a property owner who’s wondering, ‘Why should I invest all this money in a thermal hump and a new hot water system?'” said David Chanin, co-founder of FutureFit Partners, a company that helps build homes. Apartment owners make these investments. “Under these new rules, I have serious concerns that entire building electrification projects will no longer be implemented.”
Although the single-family solar overhaul mostly directly affected homeowners, residential renters are likely to be most affected by the current decision.
Andrew Dawson, a lobbyist for the California Housing Partnership, a nonprofit that advocates for affordable housing, said the current system “is really the only mechanism available for a lot of low-income people who live in multifamily housing to get solar energy.” and clean energy.” . “For electricity purposes, solar is really important to make sure people’s bills don’t go up too much.”
“As climate impacts such as rising temperatures continue to increase, there is a continued need for grid independence.”
Andrea Barnier, Self-Help Organizations
Other programs exist to help low-income Californians go green. The state’s multifamily affordable housing solar program provides financial incentives for property owners to invest in new panels and is funded under a different formula. Dusom said coverage of this program is patchy across the state.
Only 15 of the organization’s 40 multifamily projects will be insulated from the policy change through this state program, said Andrea Barnier of Self-Help Enterprises, a low-income housing provider in Visalia. For the remaining sites, and all future apartment projects, she described the new rule as a “potential deterrent to all-electric design.”
In a filing with the CPUC, the state’s three investor-owned utilities noted that multifamily solar remains a relatively rare phenomenon in California. At last count, only 217 residential properties across the state are benefiting from the program, along with another 513 mixed residential and commercial sites.
But with the state pledging to boost apartment construction, buy electric cars and phase out gas stoves and hot water heaters at the same time, critics say that while subsidizing distributed solar may not be vital now, it will be in the near future.
“As climate impacts such as rising temperatures continue to increase, there is a continued need for grid independence and alternative energy solutions from batteries during power outages and emergencies, thus also impacting our ability to develop resilient communities,” Barnier said.
Political conflict coming?
It may only be a matter of time before this argument is pulled from the high-tech and often-ignored corridors of the Chinese Communist Party into the broader sphere of party politics.
In July, the California Democratic Tenants Council, a coalition of tenants’ rights, housing and environmental justice advocacy groups, sent a letter to the CPUC’s five commissioners. She denounced a proposed regulatory change that “would force renters to buy all their energy from utilities even when it is generated on their rooftops” and “discriminate against renters by not giving them the same fair treatment as single-family homeowners.”
Although many observers expect the CEC to ultimately vote in favor of the reform next week, the breadth of the coalition amassed against it may be difficult for other state lawmakers to overlook, the construction industry’s Reimer said.
“From a political standpoint, if this passes in the manner proposed, I think the Legislature will come back in 2024 to address this,” he said.
