The Complicated Non-Existence of Community Solar in California

It seems that politics may find a way to prevent Californians from a community solar program that will provide affordable clean energy to thousands of utility ratepayers. There’s still time to make things right in the state, but time is running out.

Different from both large utility-scale and small residential rooftop solar installations, community solar is a specific type of mid-sized solar development, typically less than 10 megawatts, that democratizes access to renewable energy. Through a subscription model, these projects make it possible for households and organizations to directly partake in the solar energy benefits produced by local community solar farms without any upfront costs. Many other states have successfully enacted community solar legislation and regulation, like Maryland, New York and Illinois, to name a few.

California has long been a leader in clean energy, having passed legislation in 2018 to decarbonize the state by 2045. This law led to a slew of new bills, including a landmark law in 2022 that would create a strong community solar and storage market. Community solar allows small businesses and residents to subscribe to a portion of an off-site solar facility. The subscribers benefit from a utility bill credit for the power the solar facility generates.

But in March, the California Public Utilities Commission (CPUC) unexpectedly issued an adverse proposed decision (PD) that would crush the state’s access to a permanent community solar energy program. If the decision sticks, ratepayers, including small businesses and low-to-moderate income residents, will be the most negatively impacted. According to the World Resources Institute , U.S. households at or below twice the federal poverty level spend 3.5 times more of their income on energy costs (8.1%) compared to other households (2.3%).ld Resources Institute, U.S. households at or below twice the federal poverty level spend 3.5 times more of their income on energy costs (8.1%) compared to other households (2.3%).? Deployment of clean energy could significantly defray utility bills for low-to-moderate households.

While the rest of the world, and many parts of the U.S., have leapt forward in the clean energy transition, California has surprisingly struggled to find its footing in implementing legislation that would be transformational for the state’s community solar program. According to Coalition for Community Solar Access (CCSA) , the legislation in its original form could result in eight gigawatts of community solar for California -- the equivalent of taking two million gasoline-powered cars off the road. That represents 13-fold growth from the 600 megawatts available currently in the state.

The CPUC’s proposed decision implies that the California community solar program would violate federal laws under the Federal Energy Regulatory Commission (FERC) guidelines. In a clear rebuke to CPUC’s stance, Norman Bay, a former FERC chairman and current co-chair of the Energy and Commodities Practice Group at Willkie Farr & Gallagher LLP, said that the proposed California program does not violate federal law .

?“As a legal and policy matter, FERC has refrained from asserting jurisdiction over community solar,” Bay said. “States have exclusive jurisdiction over retail rates, and community solar quintessentially involves state retail rate design and state energy policy. Further, the Inflation Reduction Act shows that Congress intended to promote community solar, not to pre-empt it.”

If California sticks with the misguided proposed decision, it will make way for a utility-backed proposal that would leave the state’s community solar market virtually dead-on-arrival. Besides the obvious implications, the proposed decision could have further negative impact, causing California to miss out on billions of dollars of investment, thousands of jobs, and lower electricity costs for residents. The stakes are high.

It’s not too late to make the right decision for Californians. Fortunately, the CPUC commissioners can still reverse this ill-advised plan that is neither commercially viable, nor good for ratepayers. On May 9, the CPUC will hold a Ratesetting Deliberative Meeting (RDM) to reevaluate the ill-informed proposed decision.

The time has come to get politics out of energy and make decisions that create clean local affordable power and protect our energy independence and security.

If you want more on this topic, take a few minutes and read this article by Sammy Roth at the LA Times.

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