Are California Solar Subsidies A Victim Of Their Own Success?

Ever since the inception of its highly successful $3.3 billion solarsubsidy program, California has been continually touted by solar powerenthusiasts—ourselves included—as the model state for renewable energyadoption in the United States. As the LA Timesreports this week, however, not everything is coming up roses in solarcountry. Due to the overwhelming success of the program, the stateutilities are toeing the legal limit for the amount of electricity theycan buy back from customers. Parts of northern and central Californiaserved by Pacific Gas & Electric Co. may hit the limit by the endof this year, whereas the areas served by Southern California EdisonCo. and San Diego Gas & Electric Co. are in less danger of doingso. What’s a supporter of clean energy to do?

Enter Assemblywoman Nancy Skinner (D-Berkeley), whose bill AB 560,which proposes to raise the net metering cap from 2.5% to a whopping10%, passed the California State Assembly in Mayand awaits a crucial Senate utilities committee vote this week. PresentCalifornia law restricts utilities from buying back from customers morethan 2.5% of a utility’s maximum generating capacity, a cap which somewould prefer to see gone altogether. Not surprisingly, PG&E, Edisonand SDG&E all oppose the bill—although perhaps not as violently asone might expect, given what they might lose.

All three companies oppose Skinner’s bill. They do notwant lawmakers to raise the limit until next year at the earliest,after the California Public Utilities Commission tallies up theprogram’s costs and benefits.

Utilities say they strongly support solar power but want moreinformation about whether it’s fair to further increase financialincentives for solar-panel ownership.

Such incentives, they point out, would come at the expense of mostof the utilities’ other customers, who don’t want or can’t afford toinvest in the costly panels.

Other complaints extended beyond the net-metering to the solarsubsidy program overall, which a report from the Senate Energy,Utilities and Communications Committee lodged against California’ssolar incentives program. It noted that solar power users receive astate subsidy of roughly 20% of the purchase and installation cost, aswell as a federal income tax credit of 30%, and suggested that addingmore incentives could be going “too far,” citing the disparity betweenthe benefits solar power users receive and regular ratepayers receive.Some supporters of the program, however, chose to focus more on solarenergy’s potential as a consumption-mitigation tool.

Caps are an impediment to fully developing solar power’spotential and its ability to provide clean energy that can be tapped inurban areas, where it is most needed, during peak demand on hot summerafternoons, [Adam Browning, executive director of the Vote Solarinitiative,] said. Eighteen states allow net metering without any caps,he noted.

Ultimately, though, it’s often the hard numbers that speak theloudest. The LA Times article opens with the anecdote of a woman who,after installing 20 solar panels on her roof, found herself with anelectric bill of $1.26 this past June. You can’t even buy an In-N-Outhamburger for $1.26. Furthermore:

Legislation, approved in 2007 and known as the MillionSolar Roofs program, has spurred the production of solar-generatedelectricity to rise 78%. That’s equivalent to the power generated by amodern power plant, the Public Utilities Commission reported last week.

I doubt that the overwhelming popularity of California’s solarsubsidy, and the roadblocks that have arisen from it, will sound thedeath knell of the state’s solar industry. It has far more longevitythan that. Former solar poster children—Spain, Germany—have survived,retooled their programs and carried on promoting the adoption of solarenergy. But what’s at stake aren’t just some extra dollars we could besaving on an electric bill—it’s a model of solar power adoption inAmerica. Do the utility companies’ arguments seem valid? What possiblesolutions are there, and have they been tried before elsewhere? Wewelcome any thoughts, comments, questions—let’s make this an ongoingdiscussion as the events unfold.

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