Cal Lobbyists Push Back on 2020 Solar Mandate

By Kurt Real Estate Dec 8, 2019

In 2019, California became the first state in the nation last year to require solar panels on newly built homes. But it’s starting to look like the mandate wasn’t quite a “mandate.” The California Energy Commission (CEC) also gave home builders the “option” of supplying solar power from an off-site facility, mollifying critics who said rooftop solar would raise the cost of housing.

Now the commission is poised to approve the first “off-site solar program” for new housing over the objections of home solar installers who say the agency is creating an escape clause so broad it could render the rooftop solar requirement meaningless. Under a proposal from the Sacramento Municipal Utilities District, home builders could choose to “take credit for electricity generated by existing solar farms” instead of building houses with rooftop panels.

Homeowners or renters would receive a guaranteed energy bill savings of $5 per kilowatt, or (just) $20 annually for a typical household. Not surprisingly, “rooftop” solar installers say the program would be a bad deal for many consumers.

The CEC estimated its rooftop solar requirement only saves the average single-family home $35 per month with mortgage payments increasingly on the rise. Critics also say the Sacramento program fails to produce the unique benefits of on-site solar:

1) Rooftop solar reduces the need for utility investments in the power grid, which are paid for by ratepayers.

2) When paired with batteries, rooftop solar panels can also help homes and businesses keep the lights on during a blackout — a growing concern as utilities shut off power to prevent wildfire ignitions.

CEC recommended a 5-member commission approve the Sacramento program which is slated for pending consideration. If that happens, other utilities probably would follow suit with similar proposals, said Benjamin Davis, a staffer at the California Solar & Storage Assn., an industry trade group. “This is the end of the new home solar mandate as we know it,” Davis said.

Sacramento utility officials claim “their proposal is well within the rules of California’s home solar requirement” which takes effect Jan. 1, 2020.

The Energy Commission voted in May 2018 to require new single family residences and multifamily residential buildings up to three stories be built with solar panels. But the commission also offered an “alternate route” to compliance saying utilities, home developers, solar companies, government agencies or other entities could propose “community solar” programs.

The Sacramento Municipal Utility District, which serves most of Sacramento County and Placer and Yolo counties said that’s exactly what it’s trying to do. The public utility, known as “SMUD” has proposed using 160 megawatts of existing solar farm capacity — plus 173 megawatts from two projects currently under development — to supply new homes. Conveniently it would be no cost to builders who choose to take advantage of that power. Tim Tutt, an SMUD program manager for regulatory affairs said the utility “is trying to lower costs for its customers by giving them more options”.

That kind of flexibility is what the Energy Commission had in mind when it crafted the home solar requirement, Commissioner Andrew McAllister said. McAllister said he still expects plenty of developers to build new homes with solar panels, because the technology provides significant long-term cost savings to buyers and it is getting cheaper. McAllister acknowledged that “off-site solar farms don’t offer homes all the same benefits as rooftop panels, or — in the case of SMUD’s program — the same energy bill.”

The rooftop solar industry, however, feels blindsided. This is largely because SMUD’s program wouldn’t require any new solar to be built for the foreseeable future. The two solar projects under development already have contracts from the Sacramento utility and would have been built anyway. Solar industry officials also say SMUD’s proposal doesn’t provide true “community” solar.

Although the Energy Commission didn’t define the term, it’s generally understood to mean small solar farms that serve local communities, said Rick Umoff, California Director of State Affairs for the Solar Energy Industries Assn. At least 16 home developers submitted comments to the Energy Commission urging approval of SMUD’s proposal. So did the California Building Industry Assn. whose technical director, Robert Raymer, wrote approval is “desperately needed” ahead of the solar requirement taking effect on January 1, 2020.

Dozens of solar companies have submitted comments arguing the program “is a threat to the solar mandate in Sacramento, and across the state.” Nonprofit advocacy groups including the Solar Rights Alliance and Vote Solar have also asked the commission to reject SMUD’s proposal. Solar advocates are worried other utilities will follow SMUD’s lead, because the utility industry has traditionally been hostile to rooftop solar power.

Public utilities such as SMUD, which is governed by an elected board, claim they don’t have a profit motive. But, like their privately owned counterparts, they’ve long argued rooftop solar creates an unfair “cost shift” from consumers who can afford rooftop systems to those who can’t. The more homes go solar, the argument goes, “the more rates will have to rise for everyone else to pay the costs of running the grid” — a notion disputed by the solar industry.