The California Public Utilities Commission (CPUC) gave the green light on Thursday to a new solar energy program, a move criticized by some within the industry who argue it falls short in incentivizing smaller community projects.
The decision represents another setback for the solar sector in California, despite the state being the leading U.S. solar market overall. However, it currently ranks eighth out of 50 states in terms of community solar initiatives.
In recent years, California has scaled back incentives for clean energy technologies, partly due to concerns that subsidies were being funded by ratepayers without solar installations.
The CPUC's 3 to 1 vote approved the expansion of two existing programs and the creation of a third, supported by utilities. This new program is set to tap into $250 million in federal funds allocated under President Joe Biden's climate change legislation, the Inflation Reduction Act.
While the program update was mandated by state law, it aimed to extend solar energy access to lower-income Californians who may reside in apartments or cannot afford rooftop systems.
Despite California's reputation as a solar energy leader, the state has trailed behind others in implementing community solar projects. By the end of 2023, California had only 163 megawatts of community solar, significantly less than the over 2 gigawatts in New York and 1.1 gigawatts in Massachusetts.
Steven King, a clean energy advocate with the environmental group Environment California, expressed disappointment with the CPUC's decision, stating, “It's disappointing that the CPUC's decision fails to provide meaningful improvements to California's lackluster community solar program.”
California has set ambitious climate change goals, with Governor Gavin Newsom committing to decarbonize the state's economy by 2045.
The CPUC's decision rejected an alternative proposal supported by solar project developers, ratepayer advocates, and environmental groups. This proposal would have compensated project subscribers for exported energy to the grid based on the value of electricity at the time. The CPUC argued that this would have increased costs for non-participating ratepayers.
Instead, the regulator opted for a scheme treating community solar projects as wholesale facilities, compensating them at an avoided cost rate, which was supported by utilities such as Southern California Edison and Pacific Gas & Electric. The CPUC stated it would enhance returns for project developers using state and federal funds.
