California’s rooftop solar debate is raging again. Advocates fear more cuts to the state’s battered rooftop solar incentives as regulators consider ‘cost-shift’ arguments in their bid to lower utility bills. Two years after slashing compensation for rooftop solar owners who send power back to the grid, California policymakers are once again looking for ways to contain high and rising electricity rates. Last month, representatives of the California Public Utilities Commission testified in a state legislative hearing that California’s system for compensating owners of rooftop solar is a primary cause of the state’s rapidly rising utility rates. That testimony is backed by a CPUC report, issued last month in response to an October order from Democratic Gov. Gavin Newsom to find ways to reduce utility-rate increases. Among other potential cost savings, the report proposes further reductions to rooftop solar compensation that the CPUC has already cut for homes, businesses, farms, and schools in the past two years. The CPUC’s rationale is that solar programs shift costs onto customers who don’t have solar. Linda Serizawa, director of the CPUC’s Public Advocates Office, which is tasked with protecting utility customers, told lawmakers that the state’s rooftop solar regime has led to non-solar-equipped customers of Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric paying $8.5 billion more than they otherwise would have in 2024. That increase accounts for up to a quarter of those customers’ monthly bills, on average, according to the Public Advocates Office. Solar advocates and environmental justice groups have long said this ‘cost-shift’ argument is false. In fact, they say, California utility customers would be paying even higher electric rates if the state hadn’t launched policies back in 2006 that have incentivized California homes, businesses, schools, and other utility customers to install more than 2 million rooftop solar systems since then. Last week, several pro-solar groups shared new analysis, expanding on research released last year by energy and environmental consulting firm M.Cubed Consulting. The latest round in the ‘cost-shift’ debate comes as the CPUC’s December 2022 decision to cut compensation for newly installed rooftop solar systems has decimated the country’s leading rooftop solar market, potentially putting the state’s carbon-cutting goals out of reach. About 45% of the state’s solar power now comes from rooftop and distributed sources rather than utility-scale projects, but new rooftop solar installations have fallen dramatically since the CPUC’s new compensation system went into effect in mid-2023. Without more rooftop solar, ‘we’re going to have increasing electricity costs, and we’re going to fall short of our clean energy goals,’ said Ken Cook, president of the nonprofit Environmental Working Group. The challenge, he said, is to agree on regulatory structures that allow the state to ‘harness rooftop solar and distributed energy to solve both of these problems.’ But the cost-shift argument has short-circuited that kind of policy discussion, said Brad Heavner, policy director for the California Solar and Storage Association, a solar-industry trade group that funded M.Cubed’s cost-shift analyses. ‘It was devised by the utilities as a way to reframe what rooftop solar is and to put a negative light on it. And it has worked.’ Now, with mounting pressure to reduce utility rates, rooftop solar advocates fear the argument will be used once again to justify further cuts to an industry they view as crucial not only to climate goals but as a net benefit—not cost—to utility customers.

California’s rooftop solar debate is raging again

The debate over rooftop solar in California is intensifying as policymakers consider further cuts to incentives, sparking concerns about the impact on utility rates and the state’s clean energy goals. The California Public Utilities Commission (CPUC) is proposing reductions to rooftop solar compensation, arguing that these programs shift costs onto non-solar customers. Advocates counter that the state’s solar policies have been crucial in reducing electricity rates and meeting carbon-cutting targets.