California regulators approved a community solar program that clean energy advocates say would still leave the state a laggard at a time when the Biden administration is promoting the emerging sector.
Still, the 3-1 vote from the California Public Utilities Commission (CPUC) left the door open for a less restrictive program down the road to take advantage of federal funds to support community solar.
Despite its strong solar market, California has long struggled to build community solar projects, the moderate-sized solar arrays that can serve a group of customers in a geographic area. Unlike rooftop solar installations that serve one home, community solar projects are designed to support groups of subscribers that can’t install their own solar, such as low-income households, renters or people whose homes have physical limitations.
A state law passed in 2022 required the CPUC to create a new community renewable energy program that would see at least 51 percent of the benefits go to low-income customers.
The program approved Thursday was designed to respond to that legislation. It builds on existing programs from the state and investor-owned utilities and creates a new community renewable energy program, which is designed to take advantage of $250 million in federal funding awarded to the state.
An existing program known as the Disadvantaged Community Green Tariff Program — which allows customers in disadvantaged communities to subscribe to a network of solar projects in exchange for a guaranteed 20 percent electric bill subsidy — will be doubled to include 144 megawatts of solar projects. Another existing tariff will be expanded with language that allows battery storage to be paired with solar projects.
Critics say those existing programs have been too restrictive and have resulted in little return on investment. Simply expanding them, they say, won’t encourage enough new development.
California Assemblymember Chris Ward, who wrote the 2022 legislation, said in a public comment before the CPUC Thursday that the program was “wholly inconsistent” with his legislation. The “fatally flawed” proposal, he said, would not result in any substantial new development.
“As a leader in solar adoption, California must get this right,” said Ward, a Democrat, urging commissioners to vote down the proposal.
The Biden administration has made community solar a priority as it seeks a net-zero grid by 2035, with a goal of deploying 20,000 MW of installed community solar by 2025. With California’s outsize role in the solar market, the ability of developers to thrive in the state could determine whether that goal can be met.
Stephanie Doyle, California State Affairs Director for the Solar Energy Industries Association, said in a statement that the “shocking” decision, as well as other recent votes limiting compensation to solar owners, “threatens to unravel California’s clean energy progress.”
A coalition of solar developers and ratepayer advocates backed a proposal called the Net Billing Value Tariff that would have created a new compensation structure similar to net metering, under which solar customers are reimbursed for excess power returned to the grid. The proposal would have allowed customers to subscribe to a solar project and get bill credits based on the value of the energy sold to the grid, with higher payments at times when the grid is most stressed.
Developers said their structure was similar to one that has been successful in New York state and would make it easier to recoup their investment. The idea was also supported by homebuilder groups, which said it would help them meet state mandates for solar power on new construction.
CPUC president Alice Reynolds, however, said the net value billing tariff proposal would have cost too much and could raise bills for other ratepayers. The decision approved Thursday, Reynolds said, meets the state’s twin goals of “how to provide all communities with clean energy and keep the most downward pressure on bills as possible.”
Commissioner Darcie Houck dissented from the decision, saying that the program would not do enough to incentivize new construction. Commissioner Matt Baker was not present for the vote.
The Coalition for Community Solar Access blasted the decision Thursday. The CPUC, the group said in a statement, “has chosen to double down on failed programs that have not — and will not — establish a viable community solar market that would provide affordable energy to Californians that need relief the most.”
An initial proposed decision issued in March stated that the net value billing tariff could violate federal law. That led to concerns that a California vote on that language could open up programs in other states to legal challenges and prompted rebukes by two former members of the Federal Energy Regulatory Commission.
The version approved Thursday, however, struck that language and said the commission “finds it unnecessary” to decide whether there were federal conflicts.
Commissioners noted that there will be an opportunity to continue working on implementation through the creation of a new community renewable energy program, which will be open to customers of all income levels and commercial customers. That program will lean on funds the state received from the U.S. EPA as part of the Solar for All program, created in the 2021 Inflation Reduction Act.
Reynolds said the CPUC will allow commenters to weigh in on “various aspects” of project design and that there is “no reason to think that viable projects wouldn’t come forward in this program.”
Brandon Smithwood, vice president of policy for community solar developer Dimension Renewable Energy, said in an interview that the new program is an “opportunity for the state to take advantage of a once-in-a-generation grant from the federal government.”
“At a time when the state is struggling with high electricity rates, this is an opportunity it should take,” Smithwood said. “We appreciate that the commission is taking a pause … and allowing some development of a program that can efficiently use these funds from the federal government.”
