California is a clean energy leader in the United States, thanks in large part to the widespread adoption of solar by 1.5 million residents and businesses throughout the state. Over the past five years, half of all solar built in California has come from consumers converting homes, churches, schools, apartments, and businesses into mini-electricity generators for themselves and their communities.
It’s been impressive to watch all of these small-scale systems add up to the equivalent of six nuclear power plants — sparing us from the waste that comes from nuclear energy and the pollution of fossil fuels. However, this progress is threatened by a proposal pending before the California Public Utilities Commission to modify the popular and effective program called net metering, a billing process that credits solar owners for the electricity they add or export to the grid.
Under pressure from investor-owned utilities, the CPUC is now proposing to slash the value of solar energy sent back to the grid on sunny days by 75% to 80%.
If approved, this would be the steepest decline in value of solar energy in the United States, including Nevada’s disastrous decision from 2015, which was later reversed by its legislature. These cuts would take effect almost immediately and would put solar out of reach for most consumers, choking off the growth of solar-charged batteries at the same time.
In its proposal, the CPUC tried to ease the transition to lower value for customers selling excess solar energy back to the grid. Regardless, the value of rooftop solar energy would still be cut by 75% on average. California’s rooftop solar market, the crowning jewel of its clean energy market, would grind to a halt.
We appreciate that CPUC’s latest proposed decision is a significant improvement from its original December 2021 proposal. The 2021 proposed decision would have implemented a punitive tax on rooftop solar users and retroactively slashed benefits for Californians who had already installed solar. However, the absence of these provisions in this updated proposal alone does not equal good policy.
California requires a lot more clean energy if we are to keep the lights on while meeting the clean energy targets our planet demands. The California Air Resources Board, one of the most influential climate agencies in the world, recently provided a reminder of how we must accelerate the move toward clean energy. Its updated climate action plan found that local solar needs to triple by 2045 for California to achieve its climate goals.
This is an example of why, as members of Congress, we worked hard to pass the Inflation Reduction Act, which extended the tax credit for consumer solar systems by 10 years and bumped the credit up from 26% to 30%. Our goal was to accelerate the adoption of solar energy, including storage batteries, and help consumers save on their monthly utility bills. Multiple independent analyses have found that the overall incentives in the act will reduce greenhouse gas emissions by approximately 40% by 2030 below 2005 levels — but those analyses assume the continuation of supportive state policies.
By making solar energy more expensive overnight, California would erase the value of the extended tax credit, raising costs for Californians and threatening our nation’s ability to meet our emissions reduction targets. It would reverse years of progress making solar more affordable for low- and moderate-income families.
The good news is the proposal can still be changed, starting with creating a real glidepath to allow for batteries to become available and affordable for working and middle-class consumers. There has been discussion of an eight-year transition to gradually step down the value of rooftop solar sold onto the grid to reduce the likelihood of a solar market crash. That seems reasonable, especially given headwinds from global supply chain constraints and rising costs. The state should also consider consumer rebates to further drive storage adoption.
Ultimately, California needs to remain a clean energy leader and it can’t do that without rooftop solar. This proposal, if adopted as is, would not only threaten the state’s clean energy goals, but it would project the wrong kind of leadership for the rest of America and the world.
Rep. Mike Levin represents the 49th District in north coastal San Diego and south Orange counties. Rep. Mike Thompson represents the 5th District in Napa, Contra Costa, Lake, Solano and Sonoma counties.