California's Transition to Solar Energy Is at a Crossroads: What That Means for Equity and Your Energy Bill

The pitched battle over rooftop solar regulations in California is at a momentary détente, with several vested interests hoping that Gov. Gavin Newsom will intervene to swing the new rules on solar incentives their way. 

The proposed changes would affect subsidies for generating power with rooftop solar arrays. In January, they provoked an all-out revolt among solar installers and some environmentalists. But unions and utilities are on the other side. They want drastic changes, arguing that renters and people with lower incomes shouldn’t have to pay more than their fair share for power.

Environmental groups that usually agree on green energy are divided on the proposed changes, because they say the changes that are supposed to promote equity will jeopardize the state’s ability to reach its ambitious climate goals. 

Luverta Cooper, a retired accountant, installed solar panels last year on the family’s 1963 ranch-style home in Richmond’s Hilltop neighborhood. If the proposed net-metering changes were in place, they would’ve changed her entire calculus on whether to install solar. 

“It cost about $40,000. More than we were expecting, but we’re totally electrified now,” she said. “Our PG&E bill was running like $500 a month.” 

The family went big: 19 panels, 320 watts, a battery in the garage to store power for blackouts, and a heat pump in the side yard to replace the gas heater and AC. Her daughter, Veronica Young, who takes care of her parents, helped with the research and decision-making, and said the savings means the investment will pay off in about 10 years. 

“We always had crazy-high electric and gas bills, so we used some of her retirement to essentially eliminate the worry about unpredictable energy bills,” Young explained. 

The utility bill went from about $500 per month to only $5 per month — a fee for the gas connection. And now PG&E pays the family for the excess electricity their system generates and transmits to the electrical grid. 

At issue are the rules that govern selling power back to the utilities. It’s been five years since state utility regulators last adjusted the incentives to go solar so people like the Coopers could make the change financially feasible. Experts say it’s high time for adjustments, because when the Coopers pay less for power, that means their neighbors pay more. 

The utilities still have to maintain infrastructure, build new and greener power plants, and bury power lines so they don’t start wildfires. Those costs are built into the cost of energy per kilowatt. Customers with solar pay for fewer kilowatts, or maybe don’t pay at all if they can sell enough extra solar power back to the utility. That means rates go up for the rest of the utility’s customers. The utilities argue that someone has to pay so the electrical grid functions. 

“It’s the other electrical customers who pay the subsidies. The subsidies do not come from the utility companies, it comes from utility customers,” said Mark Toney, executive director of The Utility Reform Network, or TURN, a utility watchdog.

For once, TURN has found itself agreeing with the state’s investor-owned utilities. But TURN’s argument is about equity. The people who have a few extra thousand dollars to invest in rooftop solar aren’t representative of California as a whole, Toney said. 

Solar adopters skew whiter and higher-income compared to California’s demographics, although their median incomes are dropping gradually. However, most renters — 45% of California residents — don’t even have a chance to go solar, he said. People who invested in solar should pay their fair share. 

“It made sense for early adopters to receive a high subsidy rate. But the price of solar installation has dropped [by] more than 50% in the past several years. And the solar subsidies have tripled in that same time,” Toney said. 

Some environmental justice advocates are pushing for a grid participation fee that would be reduced for homeowners with lower incomes, along with lower subsidies for future solar customers, in alignment with the reduced cost of actually installing solar, plus more incentives to install battery storage and funding to help lower-income homeowners install solar. 

“We think it’s important that the cost of greening the grid does not mean that low-income families, that communities of color are cut off from solar because the prices are too doggone high,” he said. “We have to find a solution that provides the greatest amount of clean energy at the most economical prices. The fact is, utilities are awful at doing that in a cost-effective manner.”

On the environmental front, respected national organizations are split — with the Natural Resources Defense Council siding with the investor-owned utilities in the name of equity, and the Sierra Club lining up with the solar installers to keep things the same, so as not to jeopardize the state’s ambitious climate goals. 

The Public Utilities Commission proposal that went public in December would cut the rates that customers can get when they sell their excess solar power back to utilities. The proposal would also impose a new monthly fee to connect solar customers to the grid. Plus, it would set aside $600 million to help lower-income communities go solar and add battery storage for peak evening hours after the sun goes down, when electrical usage is still high.

There are two competing visions for what solar power generation will look like in California. Solar installers want it distributed, in small arrays on rooftops across the state. Utilities want to invest in large-scale arrays developed out in the desert and built by union labor. 

Many environmentalists ask, why don’t we have both? 

“It is going to be a tall order to build out all the resources we need to hit our climate targets. And California needs a thriving rooftop solar industry,” said Kate Ramsay, an attorney with the Sierra Club, one of the many parties that weighed in to ask state regulators to keep the subsidies. She says the fact that this discussion is going on at all means that California’s green energy industry is thriving and mature. 

“We have greened many parts of our grid,” she said. “Now a lot of parties are trying to focus on decarbonizing those peak hours in the late afternoons and evenings, when we’re firing up our gas plants, particularly on the hottest days of the summer.”

Rooftop solar systems won’t solve that peak problem, unless more homeowners invest in battery storage. The proposed changes include incentives to install batteries. But they’ll also mean it’ll take longer for the savings on power bills to pay off after a home gets panels. 

Ben Giustino, with A1 Sun, the Berkeley company that installed the Coopers’ panels and battery, says solar installers are in limbo, waiting for the PUC to reevaluate its proposal and wondering what to tell their customers and sales leads in the meantime. 

Giustino’s father founded the company, which makes Ben the second generation in his family to work in solar. It’s a family-owned business, complete with a dog named Sunshine. He and his colleagues are riled up about what the Public Utilities Commission might do to their industry. But he says one thing he’s learned from watching his dad over the years is that solar is a threat to the status quo, which benefits investor-owned utilities. 

“People call it the solar coaster. It’s a disruptive technology. And so there’s a lot of larger powers that don’t really necessarily know what to do with it or like it because it challenges their way of doing business,” Giustino said. He thinks the proposal before the Public Utilities Commission was bought and paid for by investor-owned utilities and jeopardizes the future of clean energy in California. 

“There’s rooftops that can be used” to generate power, he said. “That benefits the homeowners, it benefits the grid, it reduces CO2 emissions. So the main gist of what investor-owned utilities are trying to do is pull the rug out from the competition so they can maintain monopoly.”

The California Solar and Storage Association, which represents installers and the 75,000 Californians who work in the solar industry, says the proposed changes to subsidies would cost thousands of jobs statewide. Giustino says they would jeopardize a dozen jobs at his company. But worse, he says, cutting subsidies and adding fees would make solar power a niche industry, like it was when his dad got into the business — only for tinkerers, off-grid homesteaders and devoted environmentalists. 

“There’s still lots of people here who are probably going to install solar just because it’s the right thing to do,” he said. “But if you look across the state and across the industry, there’s no doubt that people will stop installing solar if it stops making financial sense for them.”

Since the proposal came out in December, it’s been busy at A1 Sun. Potential customers want to complete their solar projects and get grandfathered in before regulators make a decision. But even customers who already have rooftop arrays will lose their current rates eventually. Exactly when depends on what California utility regulators decide to do. 

Under the much-criticized proposal that the PUC is reevaluating, Luverta Cooper will be grandfathered in and able to sell power for solar credits at current rates for the next 15 years, and then at dramatically lower rates. But Veronica Young is quick to admit that part of what inspired her and her family to go solar was that “we truly hate PG&E” because the company isn’t managing the environment and wildfire risk well.

“PG&E has not done what they should have,” she said. “And because of that, the customer is being punished. We’re the ones paying the lawsuits that they lost.” 

Young and her mother don’t buy the arguments about equity, even though the family is African American. 

“Veronica did not grow up poor, but I did. And so I do understand that part of it,” Cooper said. “I have family who couldn’t afford to do this, and I understand those issues, but I don’t feel like I need to be made responsible for what others are doing. I’m taking responsibility for my own situation.”

Cooper says she and her husband worked hard to buy this house back in 1984, so she could provide her daughter with all the privileges of a middle-class upbringing. She intends to keep her home updated so she can pass it on to her daughter and share the generational wealth she’s accumulated. 

“A lot of the people who do solar aren’t exactly truly rich,” Young said. “I think they’re like us, who are [a] middle-class family who want to get off from paying unpredictable energy bills.”