California dealt a blow to renewable energy, some businesses say
California has long cham- pioned renewable energy, but a change in the state’s policies last year has led to a sharp decline in the instal- lation of residential rooftop solar in the state.
Thousands of compa- nies — including installers, manufacturers and distrib- utors — are reeling from the new policy, which took effect in April and greatly reduced incentives that had encouraged homeowners to install solar panels. Since the change, sales of roof- top solar installations in Cal- ifornia dropped as much as 85% in some months of 2023 from a year earlier, accord- ing to a report by Ohm Analytics, a research firm that tracks the solar market- place. Industry groups proj- ect that installations in the state will drop more than 40% this year and continue to decline through 2028.
“The solar installations are off a ton,” said Michael Wara, a senior research scholar at Stanford Woods Institute for the Environment. “What’s happening right now is a pain- ful adjustment process.”
Construct Sun, a solar installation company that is based in Reno, Nevada, stopped doing business in California after its sales dried up four months after the pol- icy began; executives said the company was now focusing its efforts on Florida, North Carolina and Ohio.
“I had a very dismal pipe- line and had to make the deci- sion to shut down in Califor- nia,” said Thomas Devine, executive vice president of operations for Construct Sun. He added that the state’s roof- top policies undercut its goal to effectively eliminate greenhouse gas emissions by 2045. “These competing policies are crazy,” he said.
State officials chafe at the idea that California is undercutting renewable energy and have defended the policy change, which lowered the value of the credits homeowners with new installations receive for the power they send to the grid by 75%. They have argued that the old rules, which still apply to systems installed before April, offered too generous a subsidy, helping mostly affluent homeowners. As a resul , lower-income people who could not afford panels were effectively left bearing more of the cost of maintaining the state’s electricity system.
“California has done more for the solar industry than any other state in the nation by providing billions in rebates and incentives since 2006,” the state’s Public Utilities Commission, which oversees rooftop solar and investor-owned utilities, said in a statement.
States across the country have wrestled with how to compensate consumers for the electricity their rooftop solar systems send to the grid. And officials have often looked to California for guidance.
Many states, including California before it changed its policy, generally allow homeowners to receive credits that are roughly equivalent to the retail electricity rate for the energy their systems send to the grid. This has never sat well with most utility companies, who contend that offering homeowners a one-forone credit for solar energy overstates the value of that electricity.