Subscribe
Solar panel installer Laird Whisman of First Response Solar, carries a 354-watt solar panel into place while installing a new system at a home in Glen Ellen on Friday, Jan. 28, 2022. (Chad Surmick / The Press Democrat)

High-stakes cost-sharing battle ignites solar power industry, rooftop solar adopters

In her written comments to utility regulators, one Santa Rosa woman was emphatic, saying, she “WOULD NOT HAVE PURCHASED ROOFTOP SOLAR WITHOUT THE CURRENT INCENTIVES.”

Another Santa Rosa resident wrote, “We are retired persons who invested in good faith that the state will support and protect forward thinking …”

And a Sebastopol man told the California Public Utilities Commission -- the agency typically referred to as CPUC -- it is “incredibly incredulous to claim that the CPUC is on the public’s side.”

Solar panel installer Brian Britton of First Response Solar uses cable ties to secure cords on newly installed solar panels at a home in Glen Ellen on Friday, Jan. 28, 2022. (Chad Surmick / The Press Democrat)
Solar panel installer Brian Britton of First Response Solar uses cable ties to secure cords on newly installed solar panels at a home in Glen Ellen on Friday, Jan. 28, 2022. (Chad Surmick / The Press Democrat)

They and hundreds of other Californians are in fight mode over a proposal introduced in December that would gut the incentives — $180 a month or more for some individual users — that have helped persuade residents and business owners to install nearly 1.3 million rooftop solar systems over the past 15 years.

The plan, which is pending before the commission, would potentially upend the solar power trade and jeopardize progress toward California’s ambitious renewable energy goals, critics say.

It is, one leading solar advocate said, a cynical stab by investor-owned electric utilities at “killing solar in the name of the poor.”

However, supporters of the proposal say reform is needed to ensure everyone connected to the electrical grid pays for the costs of maintaining it. Those costs, they say, are currently shouldered disproportionately by poorer households, fixed-income seniors and others who have been left out of the solar energy revolution.

Rooftop solar power has historically been adopted at higher rates by homeowners in the upper income ranks, excluding many renters and lower-wage earners ― though that’s improving.

Those who obtain their power directly from utilities, the argument goes, are stuck paying an estimated $3.4 billion a year for things like transmission infrastructure, wildfire mitigation and discounted electricity rates offered to those with the lowest incomes.

That means, in effect, that those with less money are subsidizing solar power adopters who are, on average, better off.

‘An equity issue’

Right now, conventional consumers pay about $250 a year toward upkeep of the grid. It is a charge that solar payers do not pay, according to supporters of the plan.

By 2030, those costs are projected to reach $550 a year, according to Kathy Fairbanks, a spokeswoman for Affordable Clean Energy for All, a coalition funded by California’s major electrical providers.

“This is an equity issue,” said Fairbanks, who speaks for PG&E and other utilities on the issue.

A decision that could change the equation is in the hands of the five-member CPUC, an appointed, independent panel whose regulatory purview is generally not the stuff of broad public interest.

“This proposal is preposterous. Citizens have heavily invested in solar energy for the benefit of the planet. Amortizing this cost will take years, and hiking the tariff for solar energy investors is a punch in their face and discourages other potential users.”

But this issue has generated more ink and outrage than anyone might have expected.

Hundreds of people have weighed in with the CPUC in recent weeks, including more than 500 who have submitted written comments online. Another 455 were queued up on the phone to make oral comments when the commission started its regular Jan. 27 meeting, though only about 328 were able to hang on long enough to speak by the time the session ended more than seven hours later.

“This proposal is preposterous,” one Mendocino County woman wrote to the commission, echoing the general tone of the comments.

“Citizens have heavily invested in solar energy for the benefit of the planet. Amortizing this cost will take years, and hiking the tariff for solar energy investors is a punch in their face and discourages other potential users.”

Suntegrity Solar panel installer Calvin Bartholow puts the finishing touches on an Enphase backup battery linked to the solar system installed in an Oakmont home Friday, Jan. 28, 2022. (Chad Surmick / The Press Democrat)
Suntegrity Solar panel installer Calvin Bartholow puts the finishing touches on an Enphase backup battery linked to the solar system installed in an Oakmont home Friday, Jan. 28, 2022. (Chad Surmick / The Press Democrat)

Conflicting visions

It is a high-stakes battle.

On one side is the state’s major investor-owned energy utilities, including PG&E, and the large union representing its workers.

On the other are some 60,000 independent solar power installers around the state, many of them working for small, family-run businesses now threatened by the proposal, which was released Dec. 13. It is expected to appear on the commission’s most recent agenda, though it’s been postponed.

California Solar Adopter Income Distributions, 2019

Under $50,000 — 12%

$50,000 to $100,000 — 29%

$100,000 to $150,000 — 24%

$150,000 to $200,000 — 14%

$200,000 to $250,000 — 8%

Greater than $250,000 — 12%

Source: Lawrence Berkeley National Laboratory

There is plainly self-interest involved, as well as conflicting visions for California’s future: One with a grid-centered, utility-controlled energy structure or one that is decentralized, democratic and more resilient.

The topic also has mobilized well-organized, sometimes unexpected allies on both sides — disrupting the usual harmony between some social justice and environmental interests, for example.

“The goal isn’t to punish early solar adopters.” Instead, it is to “correct the policy path we are on in which the only people left paying for the grid — the grid that all of us are going to be using for a long time — will be renters and low-income customers.” Severin Borenstein

And those alliances may continue to shift as parties wade through complex economic analyses and mixed predictions about consumer behavior if what one Los Angeles Times columnist called “lavish” incentives for solar adopters disappear.

“The goal isn’t to punish early solar adopters,” wrote one high-profile supporter of the plan, Severin Borenstein, faculty director at the U.C. Berkeley Haas School of Business’ Energy Institute.

Instead, it is to “correct the policy path we are on in which the only people left paying for the grid — the grid that all of us are going to be using for a long time — will be renters and low-income customers.”

Solar panel installer Laird Whisman, right, of First Response Solar, carries a 354 watt solar panel into place while installer Brian Britton, left, moves a panel out of the way while installing a new system at a home in Glen Ellen on Friday, Jan. 28, 2022. (Chad Surmick / The Press Democrat.
Solar panel installer Laird Whisman, right, of First Response Solar, carries a 354 watt solar panel into place while installer Brian Britton, left, moves a panel out of the way while installing a new system at a home in Glen Ellen on Friday, Jan. 28, 2022. (Chad Surmick / The Press Democrat.

Unusual alliances

The utilities-funded Affordable Clean Energy for All coalition has 114 diverse member organizations ranging from local chambers of commerce to taxpayer groups, senior citizen and conservation groups, and nonprofit agencies serving disadvantaged and communities of color.

It also includes the giant and powerful union, International Brotherhood of Electrical Workers.

The National Resources Defense Council, the Sierra Club and the American Association of Retired Persons, or AARP, also back reform of the long-standing practice known as net metering, which allows solar users to sell the excess power they generate back to the grid.

Both sides in the debate have academics, editorials and studies backing their positions and predicting dire consequences should the other side prevail.

“This is just another case of the big guys — the investor-owned utilities — fighting for themselves and hurting people who have invested or want to invest in solar panels.” former California Gov. Arnold Schwarzenegger

Consumers, renewable energy advocates, solar installers and others opposed to the idea are incensed by a plan they believe will slow adoption of systems that capture power from the sun. They say it will turn back the clock on efforts to address climate change in the Golden State.

They contend supporters use flawed analyses that understate the value of customer power generation and plays into utilities’ self-interest in maintaining a large, centralized transmission system that generates more profit as it grows.

Suntegrity Solar installers Colby Cabrera, left, and Alex Albor, right, lift an Enphase Microgrid Interconnect Device onto its mount while hooking up a newly installed solar system and backup battery, Friday, Jan. 28, 2022. (Chad Surmick / The Press Democrat)
Suntegrity Solar installers Colby Cabrera, left, and Alex Albor, right, lift an Enphase Microgrid Interconnect Device onto its mount while hooking up a newly installed solar system and backup battery, Friday, Jan. 28, 2022. (Chad Surmick / The Press Democrat)

“This is just another case of the big guys — the investor-owned utilities — fighting for themselves and hurting people who have invested or want to invest in solar panels,” former California Gov. Arnold Schwarzenegger wrote in the New York Times. It was Schwarzenegger who, in 2006, established the state’s goal of building 1 million rooftop systems.

Fighting for the old ways?

Bernadette Del Chiaro, executive director of the California Solar & Storage Association, described it as “a battle of the titans … fighting for the old ways of doing this,” supported by a revolving door of utility executives, commission members and staff, and analysts who circulate within the same orbit.

A maturing industry has reduced the cost of rooftop solar, allowing increasing numbers of middle-income households that are able to participate. At the same time, investor-owned utility rates are skyrocketing, and wildfires and public safety shutdowns underscore the need to build resilience and independence into the grid, Del Chiaro and others said.

A move to radically cut incentives now would raise barriers to all but the wealthiest, critics say. It would also gut the industry, which employs more than 60,000 people statewide, and decrease rooftop solar installations by 80% or more.

“It would be like hitting a brick wall overnight, once it gets implemented,” said Keith Kruetzfeldt, president of Santa Rosa-based Suntegrity Solar. “I’m hopeful there’s some compromise that’s in between that allows for a healthy solar market going forward, but I think reality is whatever they come up with is going to have a real impact.”

The proposed regulation is the latest iteration of what started in 1995 as net energy metering, known by some in the industry as NEM.

Those who installed photovoltaic panels on their rooftops were billed for the difference between how much electricity they used and how much they generated and fed back to the grid. Solar users were credited at the retail rate at which utilities would sell the electricity to others customers.

Since peak usage across the grid typically occurs in the afternoon, electric rates were highest then, allowing those who gained power from the sun to benefit under the 1995 scheme. Rates were lower at night, when consumer demand was less, so solar users paid less after the sun went down when they had to draw from the grid.

Early adopters could invest in rooftop panels — at a cost, for example, of $30,000, though it’s highly variable — and with credits and rebates, bank on recouping their investment in far fewer than the 20 years their net metering structure was guaranteed.

In 2016, the utility commission made adjustments, adopting NEM 2.0. It was prompted in part by 2013 legislation requiring periodic reviews to ensure balance between the costs and benefits of sustained solar energy growth across all grid users.

New charges added

Under the new version, lower electrical rates were applied to the daily time periods during which solar users were most likely to be credited for surplus power, and higher rates were in play when they were more likely to need to buy electrons, reducing their financial advantage.

A new grid-connection fee between $75 and $150 and other monthly charges were added, as well.

The CPUC says that’s still well below what it costs utilities to serve them, however.

The latest proposal includes new monthly fees averaging $58 per household, or about $700 a year, for those who install solar panels.

It also would cut the value of surplus electrons by at least 80% and adopt a rate structure that asks solar users to pay more for power at night in hopes they’ll invest in solar-storage batteries that would facilitate transition to electrification and reduce reliance on fossil fuels.

Supporters say the scheme better reflects the true value of surplus rooftop solar energy compared to other forms of renewable energy like wind or large solar farms, where solar power can be generated for a fraction of the cost.

Critics argue that associated transmission costs invalidate that argument — that the real expense is addiction to a large, centralized grid whose maintenance and construction allows utilities to reap guaranteed profits. Since deregulation, they can’t profit from the sale of electricity, but return-on-investment in infrastructure is guaranteed.

Suntegrity Solar installer Colby Cabrea works on hooking up an Enphase Microgrid Interconnect Device to a newly installed solar system and backup battery in an Oakmont home Friday, Jan. 28, 2022. (Chad Surmick / The Press Democrat)
Suntegrity Solar installer Colby Cabrea works on hooking up an Enphase Microgrid Interconnect Device to a newly installed solar system and backup battery in an Oakmont home Friday, Jan. 28, 2022. (Chad Surmick / The Press Democrat)

The plan also includes a $600 million equity fund to help lower income communities access solar power generation, but it eliminates incentives that currently make it possible for many people to afford solar power. That, critics say, will raise financial barriers to all but the very wealthiest or those that qualify for low-income help.

That means shutting out the people in the middle who have been driven to solar by skyrocketing electric costs, said Kruetzfeldt, the Santa Rosa solar company president. “The vast majority of our customer base is solid middle class,” he said.

Many consumers already equipped with solar panels also feel betrayed by provisions in the new rules, which would shorten the 20-year time frame under which they enjoy favorable rates for excess power they sell to the grid.

Many took out home loans or used the gains from selling large homes to downsize for retirement.

“This was not the deal I signed up for,” Brian Babbitt, of Santa Rosa, wrote to the commission. “… There has to be a better plan than this.”

Solar industry representatives said they knew when work began on NEM 3.0 that the formula would be tipped further against them, and many said they’re OK with that.

It’s the degree to which they feel it overturns all appeal for adopting solar they can’t fathom.

“We understand the current policy is really good for solar customers,” said Dylan Mathias, co-owner of First Response Solar in Sebastopol, with his brother, Chaz, and a second-generation rooftop solar installer.

“We knew it was going be scaled back a little bit,” he said. “But to go from where we’re at to putting almost every solar company out of business if the current one were to go through, it was a pretty good shock.”

Many point to similar shifts in Nevada and other states that went too far, driving out solar businesses, requiring reform that’s just now getting solar installation back on its feet.

“The industry collapsed,” said Jeff Mathias, owner and chief financial officer at Synergy Solar & Electrical Systems in Sebastopol.

Del Chiaro said part of the problem is the rapid escalation of electricity rates, due in no small part to wildfire liability and maintenance that should have been done in the past. Site-centered solar reduces overall rates, meanwhile, but reduces the need to expand the grid, she said.

“We don’t have to keep having the value of our product go up and up and up in order to keep seeing value,” she said. “We don’t necessarily have to be tied to their inability to control costs.”

‘It doesn’t make sense’

But the drastic rate reduction, without a transition period, would simply turn consumers away and prove disastrous to the industry.

The new plan “is literally just slashing it to a point where it doesn’t make sense for anybody to go solar,” Jeff Mathias said.

Gov. Gavin Newsom, who appointed two new commission members, including its president, at the end of last year, in part to replace the author of the pending proposal. The governor concedes it still needs “some work,” though precisely what that means is unclear.

But an extension of the public comment period after its December release made an anticipated Jan. 27 vote impossible.

“How do we expect to achieve 100% clean energy if we are slowing down progress in the name of progress?” Anna Baney

The CPUC announced Thursday that its new president, Alice Reynolds, had requested “additional time to analyze the record and consider revisions to the proposed decisions based on party comments.” The issue has not been scheduled for a hearing.

Anna Baney of Rohnert Park said those driven by conscience “to do something about climate change” will bear the burden of that choice if no changes are made.

“How do we expect to achieve 100% clean energy if we are slowing down progress in the name of progress?” she wrote to the CPUC.

“Our future,” wrote Santa Rosa commenter Daniel Dycus, “is one of microgrids where neighbors cannot only share a cup of sugar but also share valuable electricity. These small microgrids can include whole neighborhoods where we can provide power to each other for each other.

“This tax proposal goes against everything this great state stands for. Don’t let PG&E off the hook, blow up our homes, ravage our state with wildfires and punish our efforts to bring power to where it belongs, with the people.”

You can reach Staff Writer Mary Callahan at 707-521-5249 or mary.callahan@pressdemocrat.com. On Twitter @MaryCallahanB.

Mary Callahan

Environment and Climate Change, The Press Democrat

I am in awe of the breathtaking nature here in Sonoma County and am so grateful to live in this spectacular region we call home. I am amazed, too, by the expertise in our community and by the commitment to protecting the land, its waterways, its wildlife and its residents. My goal is to improve understanding of the issues, to find hope and to help all of us navigate the future of our environment. 

UPDATED: Please read and follow our commenting policy:

  • This is a family newspaper, please use a kind and respectful tone.
  • No profanity, hate speech or personal attacks. No off-topic remarks.
  • No disinformation about current events.
  • We will remove any comments — or commenters — that do not follow this commenting policy.
Send a letter to the editor

Our Network

The Press Democrat
Sonoma Index-Tribune
Petaluma Argus Courier
North Bay Business Journal
Sonoma Magazine
Bite Club Eats
La Prensa Sonoma
Sonoma County Gazette