PD Editorial: Check the math before changing solar credits
State regulators, at the urging of investor-owned utilities, may cut credits for people who installed solar panels before April 2023.
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Two years ago, California slashed one of the best incentives for people to install new rooftop solar systems. Now regulators might cut the benefit retroactively, too. Before they do, they should ask for a second, independent analysis.
The current debate has to do with what’s called “net metering.” Homeowners whose solar panels generate more power than they need send electricity to the grid, and utilities give them a credit for its retail value. Then, when it’s cloudy or dark out, the homeowner can pull electricity from the grid, paying first with credits and then with dollars.
Big, investor-owned utility companies have never liked that setup. They argue that the credits drive up costs for everyone else because the people with solar are using grid infrastructure but not paying for upkeep and other built-in costs like fire mitigation. There’s no denying that electricity rates have skyrocketed in recent years, and solar adoption is part of the reason.
In 2023, the California Public Utilities Commission lowered the value of credits for panels installed after April of that year. That helped the utilities, but it also made solar systems less appealing. The payback period for installing an expensive solar system suddenly became much longer.
At least purchasers of new systems knew what their credit rate would be and could figure out if going green made sense. People with older solar systems might not be so lucky.
CPUC, at the urging of utilities, now might cut the credits for people who installed their systems before April 2023. Their carefully projected payback periods could extend beyond what they’d planned, turning an environmentally sound decision into a costly misadventure.
The issue is about more than dollars and cents; it’s about trust. The public already is skeptical of CPUC’s cozy ties to the investor-owned utilities it regulates. While utilities argue that net metering costs are shifted to nonsolar customers, other analyses conclude that rooftop solar has saved billions and is contributing to the state’s ambitious climate goals. Such contradictory narratives are indicative of a complex system that demands thorough, impartial scrutiny before such momentous change.
To that end, CPUC should postpone a decision on whether to change net metering credits for legacy solar customers until an independent analyst can conduct a comprehensive review of the issue. The review should consider not just any cost shift but also the economic and environmental benefits of rooftop solar.
California fancies itself a global leader in renewable energy and fighting climate change. The state will not meet its ambitious greenhouse gas reduction targets without supporting a wide array of clean energy alternatives. The debate about net metering forces the state to confront broader questions of how to incentivize clean energy for the future while ensuring fairness for all ratepayers. State regulators should slow down and make sure they get this right lest anyone considering rooftop solar in the future suspect that the state’s promises are only good until the utilities cry poor again.
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