The fight over California’s community solar plan is heating up

Around the country, community solar has emerged as a way to bring clean, affordable power to people who aren’t able to access rooftop solar, primarily because it’s too expensive or they aren’t homeowners.

But in California, a widely supported plan to get subscription-based multi-megawatt solar-battery projects off the ground has languished for years — despite a state law passed in 2022 meant to spur more development.

That’s because state utility regulators have failed to comply with the legislation, a delay that isn’t just flouting the intent of state lawmakers; it is also threatening to undermine California’s clean energy and energy affordability goals.

So said supporters of the law during a February hearing at the state Capitol that gave lawmakers the opportunity to evaluate whether the measures that they authored are being implemented effectively. They law’s proponents placed the blame on the California Public Utilities Commission and demanded that the agency fix its mistakes.

“Community solar has incredible potential to reduce rates across the board, reduce net peak demands, avoid long transmission investments, displace expensive gas generations, and be built quickly,” said California State Assembly Member Chris Ward. The San Diego Democrat authored AB 2316, that 2022 law ordering state regulators to unblock the stagnant community-solar market.

Though the legislative direction was clear, ​“the projects aren’t there,” Ward said. ​“The bill credits aren’t there. The prevailing-wage jobs aren’t there.” In his view, that represents ​“a dismissal of California’s need for clean, reliable, and affordable energy.”

The NVBT was designed to reward community solar projects that store power in batteries, which California desperately needs to capture midday solar power for use during summer evenings, when energy use peaks.

But California’s three major utilities were against the plan — and the CPUC sided with them. In a 2024 decision, the commission rejected the NVBT, claiming that it would unfairly burden utility customers at large with excess costs.

Instead, the CPUC took up a plan that Ward described as ​“fatally flawed.” It introduced a structure that would pay community solar-and-battery developers on the basis of wholesale power rates, which provide far lower revenues to projects. However, similar compensation structures available in California for decades have failed to generate projects.

Because of that structure, the CPUC’s plan — unlike the NVBT — doesn’t provide any incentives for developers to add batteries to their midsize solar projects. That’s a major gap, given that the state needs gigawatts of energy storage to meet its clean energy goals.

What’s more, the CPUC is years behind schedule on delivering a program based on the flawed concept it embraced, Ward said. AB 2316 set a mid-2024 deadline to create a workable community solar-battery program. But the agency doesn’t anticipate having one ready until this summer, he said.

“We’ve had some steps along the way that have certainly, you know, disappointed me, as the author, and many of our stakeholders that worked hard on this,” Ward said at the hearing. 

Last year, Ward introduced legislation that would have required the CPUC to revisit its decision on community solar and storage. That bill failed to emerge from a process known as ​“suspense,” during which the Legislature’s appropriations committees can amend or shelve bills with no debate or transparency.

Ward is planning to reintroduce similar legislation in the coming weeks that would instruct regulators to ​“implement a program that is going to produce the outcomes we’re expecting,” he told Canary Media in an interview earlier this month. 

“Left unchecked, we’ve lost faith that they are interested in producing a program that is workable,” he said. ​“It’s very frustrating. If they need legislation that’s more specific in its direction, that’s what we’ll have to do.”

CPUC defends itself

Kerry Fleisher, the CPUC’s director of distributed energy resources, defended the agency’s actions at last month’s hearing. She cited analysis proffered by utilities and by the CPUC’s Public Advocates Office, which is tasked with protecting utility customers, that found that the NVBT ran the risk of increasing costs for customers of the state’s three big utilities.

“These are costs that end up on all customer bills,” Fleisher said. ​“So we need to be really mindful at this time, when affordability is such a challenge, to keep costs as low as possible.”

Shelly Lyser, a program manager at the Public Advocates Office, echoed that position. ​“Cost shifts are created when programs subsidized by all ratepayers do not create greater or equal benefits for all ratepayers,” she said. Rates can increase when the majority of a program’s ​“benefits accrue to one or a narrow set of customers” — in this case, subscribers to community solar-plus-storage projects.