Rooftop solar has a role to play in fighting climate change. But placing solar panels on every rooftop is an inefficient way to meet California’s clean energy goals and reduce our astronomical electricity rates.
The California Public Utilities Commission made a compelling case last week when it said the costs of the state’s rooftop solar incentive program — known as Net Energy Metering — substantially exceed its benefits. The program is also inequitable. California’s rooftop solar program is a classic case of Robin Hood in reverse — it primarily benefits the rich at the expense of the poor.
In 2006, then-Gov. Arnold Schwarzenegger signed the Million Solar Roofs Initiative into law, setting a goal of building 1 million solar energy systems throughout the state. California achieved that goal in 2019. Solar now provides more than 20% of the state’s electrical supply, reducing its reliance on fossil fuels.
But the current sweetheart deal benefits wealthy homeowners at the expense of low-income neighborhoods. California won’t serve as a model to the world on how to best reduce emissions if it does so in a costly, unfair manner.
Solar rooftop homeowners benefit from selling any excess power generated by their systems. Currently, the state pays solar homeowners an average of 25 cents per kilowatt-hour when it can buy power from solar farms for only 3 cents per kilowatt-hour.
Owners of rooftop solar also don’t pay the fixed costs to utilities for maintaining the state’s electrical grid, distributing power, mitigating wildfires’ impact and investing in new technologies. That burden falls to the rest of the electricity consumers. Renters and people of color living in poorer areas pay an estimated $200 a year more per household in their electrical bills to cover the cost of the benefits enjoyed by rooftop solar homeowners.
The PUC proposal would dial back the incentive program, creating a more equitable law. It would:
- Require new solar customers to participate in helping cover the costs of maintaining the grid.
- Lower the rate paid to solar rooftop owners for the excess power generated by their systems from roughly 25 cents to about 5 cents per kilowatt-hour of electricity.
- Establish a $600 million equity fund to help low-income neighborhoods gain greater access to green energy.
- Extend the break-even point — commonly called the “the payback period” — to offset the costs of new customers installing rooftop solar from the current five years to about 10 years.
The rooftop solar industry is lobbying the CPUC, the Legislature and Gov. Gavin Newsom to retain the current system. But if we’re going to subsidize solar to meet our climate goals, we should be doing it in a cost-efficient and equitable way. The current system fails that test.
