Those that follow the solar industry know that California – the leader in residential solar installations – revised their net-metering program effective April of this year. Net-metering regulates the price paid to owners of solar systems for the excess power that is generated. California’s program was very generous – until now – when it slashed the rates paid by 75%.
For those that claim solar can stand on its own two feet and no longer needs subsidies – think again. The payback period on a residential solar installation even with subsidies remains in the 5 to 7 year range. This is why most solar systems are purchased by upper income households. That payback period just got a bit longer, and it’s having an immediate impact on the residential solar market in California.
According to a recent California Solar & Storage Association (CALSSA) survey of over 700 of its members, 22% of solar jobs have or will be lost by year’s end, and 59% of the state’s residential solar contractors anticipate layoffs.
According to Ohm Analytics – a keeper of a U.S. solar project permit and interconnection database – year-over-year sales of residential solar systems have been slashed by more than 75%.
Why did California do this?
A couple of reasons. One was the belief that non-solar owners were unduly subsidizing those that could afford to install a solar system. This was an environmental justice argument that has credibility but could have been solved in a less disruptive way. The other stated objective was to restructure the net-metering program to incentivize battery storage. That is a worthy goal, but it completely altered the dynamics of the market.
The result: a massive downturn in sales and in turn, the adoption of clean energy in California at the residential level.
Other states have or are looking to follow California’s lead. The argument will continue to be that the low-to-moderate income community is subsidizing solar for the wealthy. And there is sufficient truth in that argument to warrant changes.
Rather than complain about it – and claim that the utilities are being disingenuous – the industry needs to develop a strategy to resolve the “unfairness” issue without disrupting momentum.