Is Solar Power Getting More Expensive in California?

Solar advocates are sounding the alarm on proposed changes to California’s rooftop solar program. The changes would reduce the savings that solar customers enjoy, and potentially add a new monthly fee to connect to the grid. Regulators say reforms are necessary because non-solar customers are paying too much to maintain the grid, but solar supporters say the changes will discourage people from installing solar and make it difficult to meet California’s green energy goals. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. The California Public Utilities Commission released the proposal on Monday, December 13th. (1) There’s a long list of changes that include a reduction in the discount consumers would get for installing a solar system. That would increase the amount of time it takes to recoup the cost of the system. The break even window would expand to about double what it is now or about ten years. New Fees, Reduced Sell-Back Amounts The proposal also includes a monthly Grid Participation Charge of $8 per kilowatt of installed solar. If you have an 8 kW system, for example, you’d be paying an extra $64 a month to hook up to the grid. The fee would be imposed on solar customers so they could pay their “fair share of the cost of maintaining the grid.” New solar customers would also get paid a lower amount for any excess electricity they produce and sell back to the utilities. That wouldn’t impact existing customers right away. They’d be able to continue with their existing rate structure for the first 15 years of their system. After that, they would transition from net metering to net billing which pays less for any excess energy produced. Net billing has been highly criticized as a disincentive for solar adoption because many consumers have relied on the money they get from producing excess electricity to help pay for their systems. Solar costs have come down but for many people, solar is still too expensive. Incentives for Residential Storage Batteries Regulators are hoping the new rules will encourage the installation of residential storage batteries so that solar customers can keep the excess energy they produce, and use it during peak hours in the evening. Peak hours are between 6 and 9pm. If solar homes are getting a wholesale price for the excess energy they produce during the day, and are charged full price for energy they need during the evening, they end up paying the difference. If they install a storage battery, there’s no extra cost. Regulators say much of this proposal is to address the strain on the grid during those peak hours, after the sun goes down. Long List of Changes There are several other items that the CPUC is proposing that include an Equity Fund to help provide community solar in low-income and disadvantaged communities, new rules that would allow oversized residential solar systems to accommodate future needs for vehicle and appliance charging and electrification, and a change in the way that solar customers are billed from yearly to monthly, possibly because of that proposed monthly grid participation fee. The state’s three main utilities support the proposed changes. Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Edison, along with the CPUC, say the savings that solar customers are currently getting are so big that they are not paying their fair share of the grid’s operating costs. The solar industry and advocates say the changes will make it difficult for California to reach a goal for zero-carbon emissions by 2045. Will This Hamper Clean Energy Goals? Susannah Churchill for Vote Solar told the Associated Press that the proposal will “move us backward on clean energy and block many Californians’ ability to help make our grid more resilient to climate change.” (2) The rooftop solar program was launched in 1995 to encourage more people to “go solar.” According to the solar industry, 1.3 million California homes now have solar. That’s more than any other state in the U.S. Plus, a California law enacted last year, requires that all new homes have solar. The CPUC changes would be phased in over four years for new customers, but if they take advantage of a $3,200 discount on a residential storage system, they’d transition into the new rate structure right away, which pays less for the excess energy that’s produced. But they’d get that big discount on an energy storage system. CPUC Commissioner Guzman Aceves says this proposal is all about distributing the cost of maintaining the grid in a way that doesn’t unfairly impact non-solar customers, and transitioning to a solar system that uses the sun to produce electricity during the day, to one that can also produce electricity after the sun goes down. That can be done if more people install storage batteries. The CPUC is taking public comment on this proposal and could vote on it by the end next month. If it’s approved, the new policy would take effect four months after a final decision. If you’d like to read more about this topic and how you can submit comments to the CPUC, you’ll find links in the show notes at newsforinvestors.com. You can also join RealWealth, for free. As a member, you have access to the Investor Portal where you can view sample property pro-formas and connect with our network of resources. That includes experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more. And please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.cpuc.ca.gov/news-and-updates/all-news/cpuc-proposal-aims-to-modernize-state-decarbonization-incentive-efforts 2 -https://apnews.com/article/science-business-environment-and-nature-california-utilities-1bc5070157e0fb4f0c216f8b1dd1daee