A political fight over California’s renewable energy industry is playing out in the corridors of power, but it deals with something closer to home: your rooftop.
Capitol policymakers are advancing an ambitious proposal to have renewable sources generate half of the state’s electricity by 2030, up from the 33 percent benchmark already in law.
The full force of California’s political establishment backs the goal: Gov. Jerry Brown pitched the idea, Senate President Pro Tem Kevin de León, D-Los Angeles, has promoted it aggressively, and bills enshrining the new standard passed both the Senate and the Assembly with strong Democratic support.
The question now seems less whether the new goal will be enacted than how utilities will get there. With the clean energy industry anticipating an opportunity for more business, California’s rooftop solar firms are fighting to be included – and meeting resistance from other industry players.
“The rooftop solar is going to be a big policy issue,” said Assemblyman Anthony Rendon, D-Lakewood, who chairs the committee overseeing utilities and energy. “It’s also going to be a big political issue.”
A brief primer: Utilities buy energy to meet California’s requirement that they get some power from such renewable sources as solar and wind. Depending on where the electrons come from, the state assigns them different values. Most lucrative are the kind produced from sources like sprawling solar panel projects in deserts.
The electricity flowing from rooftop solar panels is assigned far less value because some of it is used on-site by the home’s occupant, unlike energy sold wholesale to utilities.
As a result, industry representatives maintain they are effectively cut out of the process of utilities buying up renewable power. As lawmakers contemplate increasing the volume of renewable energy California produces, the solar rooftop industry wants be included. The companies argue that their continued success depends on it.
“Why should the state of California, as a matter of policy, be picking winners and losers?” said Bernadette Del Chiaro, head of the California Solar Energy Industries Association. “By not including rooftop solar, they are picking a loser.”
That has put rooftop producers and large-scale solar companies at odds. Steve Chadima, the head of a broad industry group called Advanced Energy Economy, said he has advised members against squabbling over the issue. But he said that the current rules, which grew out of their own political fight – “unions wanting this, big solar companies wanting that, utilities wanting something else” – led to entrenched interests.
“We’ve created incumbents in California,” Chadima said. “The (utility-scale) solar and wind industry are the big beneficiaries, and they’re happy to move the goalposts forward without changing.”
California’s existing renewable energy standard has been a boon to large-scale businesses that reap electricity from sources like the wind and the sun. Berkshire Hathaway Energy estimates investing $7 billion over the last five years alone. Building those projects requires substantial labor, often creating jobs in economically distressed areas where undeveloped sun-beaten land is plentiful.
“That really does resonate with some of those lawmakers,” said Michael Wheeler, president of the Large-Scale Solar Association and vice president of policy initiatives for Recurrent Energy, which erects massive solar arrays that sell power to utilities.
But industry officials warn that momentum has flagged because utilities have already reached agreements to hit the 33 percent target.
“The market for renewables has largely dried up,” read near-identical letters to lawmakers from the California Wind Energy Association and the California BioMass Energy Alliance.
Renewable industry groups and businesses like Recurrent Energy have embraced the 50 percent standard as an assurance they can continue growing.
“Having that long-term clarity, that procurement signal from the state directed towards utilities that they must procure renewable resources, helps us to devote scarce development resources toward California,” Wheeler said.
Rooftop solar firms are pushing to get the same kind of business certainty, arguing that they face a precarious period: An installation tax credit will expire at the end of 2016, imperiling their bottom lines. The California Public Utilities Commission is rewriting the rules governing for net metering. The term describes the process under which homeowners with solar sell what they don’t use back into the grid and are compensated with cuts in their energy bills.
Businesses like Sunrun and SolarCity would still need to convince consumers to buy or lease solar panels. But industry representatives believe that if rooftop solar is counted toward the 50 percent goal it would spur more business. They argue that if the energy produced is more valuable, customers would benefit in the form of lower energy bills.
Utility companies are powerful allies of rooftop solar in the fight. Since Brown announced the 50 percent renewable energy goal, they’ve argued for as much flexibility as possible in the kinds of energy sources that qualify.
“To get there we need the whole suite of renewables, and that includes solar rooftop,” said Todd Strauss, senior director of energy planning, policy and analysis for Pacific Gas & Electric.
Renewable energy players opposed to the idea warn that it would upend California’s intricate multi-tiered structure, potentially to customers’ detriment, and make it harder for grid operators to track electrons.
“There is a conflict brewing because the rooftop solar has historically not been part of the renewable portfolio standard,” said Jan Smutny-Jones of the Independent Energy Producers Association. “Historically they’ve been very separate markets” for utility-scale and rooftop solar, he said, so rooftop solar’s new push represents a “very significant issue for the utility-scale solar.”
Del Chiaro said the debate could shape the industry for years to come.
“The sky is the limit when it comes to California’s market for renewable energy,” she said. “Let’s set the rules right.”
The promise of lower energy bills is a key incentive for enticing people to install solar panels on their roofs. How it works:
1. Customer buys or leases solar panels, which convert sunlight into electricity.
2. Unused energy can be put back into the grid and the value deducted from resident’s monthly bill.
3. Electricity generated also produces a “renewable energy credit” that can be sold to utilities, which can then put it toward their renewable energy total. Rooftop solar industry officials say the current structure makes the credits almost impossible to sell.
What the critics say
Skeptics of reclassifying rooftop solar so it’s part of the portfolio standard warn that:
- Since rooftop solar is a “behind-the-meter” source, it’s harder for grid operators to track.
- Utilities buying rooftop solar could both claim the renewable energy credit and reduce their total sales, since they are selling less energy to customers who produce their own, thereby cutting how much the renewable energy they must obtain.
- Letting utilities buy more rooftop solar could mean higher bills for some ratepayers.