‘Solar tax’ divides local environmental community

‘We want to see [the solar industry] grow, but we can’t do it on the backs of low-income Californians’

Once the birthplace of many solar-powered startups, the Bay Area is now becoming a battleground for the fight brewing over the future of California’s rooftop solar industry.

At issue is a proposal by the California Public Utilities Commission (CPUC) that would revise a policy that allows residents to be paid for excess solar electricity generated by their panels. The measure would cut back the credits allotted to customers and charge a monthly fee to participate in maintaining the power grid — a provision advocates call a solar tax.

The CPUC and some environmental advocates assert the move is a necessary modernization of a two-decades-old policy, known as California’s residential Net Metering (NEM) program. They claim the current system hurts low- and middle-income customers by raising rates for those without solar panels.

But the proposal has drawn fierce opposition from industry and environmental justice groups who say it will effectively kill the sector overnight, threatening jobs and making residential solar panels prohibitively expensive.

Tensions have continued to mount ahead of the CPUC’s decision, which could be made as early as next week. Hundreds of protesters, donning sunny yellow shirts and carrying balloons, crowded the steps of the CPUC offices on Van Ness Avenue last week. Even former governor Arnold Schwarzenegger, who signed the state’s Million Solar Roofs Initiative into law in 2006, weighed in, penning an op-ed in The New York Times that cast the proposal as antithetical to California’s progress on environmental policy and saying it “should be stopped in its tracks.”

Left hanging in the balance, however, is the larger question of the role rooftop solar should play within California’s energy landscape as cities such as San Francisco work to quickly decarbonize their energy supply and mitigate the worst impacts of climate change.

“What’s the larger goal here?” said Severin Borenstein, energy economist at UC Berkeley, who is not affiliated with either side of the debate. “It is to fight climate change. Climate change is a global problem, and California is less than 1% of global greenhouse gas emissions.”

Even so, Borenstein said, the net metering program in its current iteration has created a system where people who don’t have solar panels are subsidizing the costs for people who do. “Somebody still has to pay for the grid — somebody still has to pay for wildfire management, for energy efficiency programs, for the low-income programs,” he said. “All of that stuff is paid for through rates.”

First introduced in the 1990s to jump-start the nascent rooftop solar industry and incentivize residents to invest in a clean energy future, net metering offered a way to help early adopters of solar offset the high cost of installing and maintaining rooftop panels. But in the two decades since, energy prices have increased while costs of panels have come down — and the industry has exploded.

Nearly 1.3 million California roofs now boast sun-soaking panels thanks to programs like the Million Solar Roofs Initiative, which set aside $3.3 billion to help build a self-sustaining solar market through the adoption of long-term rebates, net metering and incorporating solar into new homes.

The net metering program was created in the 1990s to jump-start the rooftop solar industry and offset the then-high cost for homeowners. Since then, energy prices have increased while the cost of solar panels has dropped, causing the solar industry to expand rapidly. (Sundry Photography/Shutterstock)

The net metering program was created in the 1990s to jump-start the rooftop solar industry and offset the then-high cost for homeowners. Since then, energy prices have increased while the cost of solar panels has dropped, causing the solar industry to expand rapidly. (Sundry Photography/Shutterstock)

Much of that growth has Bay Area roots. Many major players, including Sunrun, SunPower and Tesla, are headquartered here, and local programs such as GoSolarSF have brought 5,800 rooftop solar systems to San Francisco homes and businesses.

“San Francisco is obviously home to tech innovation, so there’s a nice little nexus between energy innovation and technology innovation,” said Walker Wright, vice president of public policy at Sunrun, adding that pilot programs like GoSolarSF helped jump-start the industry.

But as wildfires and other climate-related events have threatened Northern California’s grid stability, Wright said many are turning to fossil-fuel-powered generators to keep the lights on during emergencies, when they could be choosing cleaner alternatives.

“This (proposal) doesn’t align with Sunrun’s future vision of what the grid could be,” he said. “We need to be building a grid in which end customers can participate in creating a better and safer, more efficient, equitable grid.”

Supporters of the CPUC’s proposal say they don’t want to stifle the industry’s growth or dampen innovation. “Make no mistake about this, our coalition strongly supports rooftop solar,” said Kathy Fairbanks, spokesperson for Affordable Clean Energy for All, which includes business, low-income and environmental groups and utilities including PG&E. “We want to see it grow, but we can’t do it on the backs of low-income Californians.”

Solar advocates argue the proposal is a death knell for the industry. “Net metering is the foundation of everything,” said Dave Rosenfeld, executive director of the Solar Rights Alliance, a nonprofit association of California solar users. “If you put a penalty on it, if you slash the credit for the extra energy you share back to the grid below what its actual value is, then solar projects don’t pencil out.”

Signs of anxiety already are affecting the marketplace. Solar stocks such as SunPower (SPWR), First Solar (FSLR), and the Invesco Solar ETF (TAN) have plummeted by a third since late November, according to Callaway Climate Insights, a digital business newsletter.

Although the proposal could shake up the industry, the majority of San Franciscans served by the San Francisco Public Utilities Commission’s (SFPUC) energy programs may not even notice the changes.

“One of the advantages of being a public utility is that we can set our own priorities when it comes to incentivizing clean energy production, including around affordability and rooftop solar,” the SFPUC said in a statement to The Examiner.

Borenstein concedes the new rule is likely to curtail the industry’s exponential growth. But he added that if California wants to continue to lead on climate policy and meet its goal to become carbon neutral by 2035, it cannot depend on rooftop solar alone.

“Whether it’s bad policy or good policy, people look to California… so, what we do really, really matters,” he said. “What we need is to take a hard look at where does rooftop solar really fit in?”


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