The California Energy Commission, more or less on the fly, has decreed that beginning in 2020 all new single-family homes and low-rise multi-family residential projects must be built with rooftop solar panels.
Although they would add perhaps $10,000 to the cost of a new home, the commission insists that solar arrays would pay for themselves in lower electric power bills while helping the state meet its greenhouse gas reduction goals.
All good? Not necessarily.
It has the feel of a political gesture, something that Gov. Jerry Brown and other politicians can tout as part of their “resistance” to President Donald Trump on climate change policy, and that Brown can crow about when he hosts a global climate conference next fall before vacating the governorship.
Tellingly, the new decree is being sharply criticized by the state’s leading energy experts, who – with perfect logic – complain that it’s being done in haste without adequate notice and study, rather than part of a rational energy policy, and has potentially adverse impacts.
Severin Borenstein, of UC Berkeley’s Energy Institute, wrote a letter to the commission just before it acted this month, urging it to back off.
“I, along with the vast majority of energy economists, believe that residential rooftop solar is a much more expensive way to move toward renewable energy than larger solar and wind installations,” Borenstein said.
James Bushnell, director of the Energy Economics Program at UC Davis, echoed Borenstein’s criticism in a Sacramento Bee article.
“Even at the utility-scale cost of 5 to 6 cents a kilowatt hour,” Bushnell wrote, “there is growing concern that the massive commitment to solar in California is creating such a glut of mid-day electricity that prices during the day are plunging, and sometimes below zero. We are literally paying people to consume electricity during some midday hours.”
He added, “The Energy Commission mandate will pile even more expensive power onto that excess. Costs for society will go up, and the value received will go down.”
Those are – or should be – devastating criticisms, and as Bushnell implies, there’s even a greater potential negative effect on California’s existing utilities.
Even if every home in California were to have solar panels, we’d still need the grid to provide power during the night, and to move power around the state as needed. A massive commitment to rooftop solar changes the economics of the utilities that maintain the grid.
After the Energy Commission acted hastily, Moody’s Investors Service issued a bulletin calling it a “credit negative for the state’s utilities,” and suggesting, as have other authorities, that utility rates on residences still getting their power from the grid will have to be raised to offset the loss of revenue from those generating their own energy.
This is serious business, too serious to be done on a political whim.
Having reliable and reasonably priced electric power is crucial, and shifting to solar, wind and other “renewable” sources for that power is difficult at best, due to the complex financial and technical aspects. Therefore, it needs to be done carefully and comprehensively.
Two decades ago, we saw what happened when government officials arbitrarily decided to change California’s electric power system, shifting to partial deregulation with promises of universal benefit.
It was one of the greatest policy errors in the state’s history, leading to the bankruptcy of one major utility and near-bankruptcy of another and saddling Californians with even higher power costs.
The hastily drafted rooftop solar mandate has the potential for similarly adverse consequences, as the state’s leading energy experts are trying to tell us.
Dan Walters is a columnist at CALmatters. Reach him at email@example.com.