Some businesses say California has dealt a blow to renewable energy

Some businesses say California has dealt a blow to renewable energy

California has long been a supporter of renewable energy, but changes in state policies in the last year have led to a steep decline in residential rooftop solar installations in the state.

Thousands of companies — including installers, manufacturers and distributors — are upset by the new policy, which took effect in April and greatly reduces incentives that had encouraged homeowners to install solar panels. Since the change, sales of rooftop solar installations declined greatly in California. 85 percent That’s a few months from a year ago to 2023, according to a report from Ohm Analytics, a research firm that tracks the solar market. Industry groups estimate that establishments in the state will decline by more than 40 percent this year and will continue to decline through 2028.

“Solar installations are very low,” said Michael Vara, a senior research scholar at the Stanford Woods Institute for the Environment. “What’s happening right now is a painful adjustment process.”

Construct Sun, a solar installation company based in Reno, Nev., ceased doing business in California after its sales ended four months after the policy was launched; The company is now focusing its efforts on Florida, North Carolina and Ohio, officials said.

“My pipeline was very disappointing and I had to make the decision to close it in California,” said Thomas Devine, executive vice president of operations for Construct Sun. He said the state’s cap policies fall short of its goal of effectively eliminating greenhouse gas emissions 2045, “These competition policies are crazy,” he said.

State officials angry at the idea that California is cutting back on renewable energy have defended a policy change that reduced the value of credits homeowners with new installations can receive by 75 percent for electricity sent to the grid Is. They have argued that the old rules, which still apply to systems installed before April, offer too generous subsidies, helping mostly wealthier homeowners. As a result, low-income people who could not afford panels effectively had to bear the greater cost of maintaining the state’s electricity system.

The state’s Public Utility Commission, which oversees rooftop solar and investor-owned utilities, said in a statement, “California has expanded solar capacity more than any other state in the country by providing billions of rebates and incentives since 2006.” Has done more work for the industry.”

States across the country are struggling with how to compensate consumers for the electricity their rooftop solar systems send to the grid. And officials often look to California for guidance.

Many states, including California, before changing their policy, generally allowed homeowners to receive a credit that is equal to the retail electricity rate for the energy their system sends to the grid. This has never gone over well with most utility companies, who argue that offering homeowners one-for-one credits for solar power exceeds the value of that electricity. Utilities say they can buy power at much lower prices on the wholesale market or by producing it themselves.

Overall, renewable energy is growing and now provides more than a fifth of the country’s electricity. In California, renewable sources produce more than one-third of electricity.

But growth of carbon-free sources has been difficult as regulators, utilities, consumers and renewable energy companies fight over its financial benefits. They are trying to not only add devices that can generate electricity but also add batteries that can store it since solar and wind energy is intermittent.

California officials say even as they have reduced compensation for rooftop solar, they have offered residents more incentives to install batteries. Batteries can help provide energy to the grid when it’s needed most, he says, not just in the middle of the day when California typically has a surplus. The devices can provide power even during blackouts.

David Hochschild, Chairman of the California Energy Commission, said, “Today, California is in desperate need of more energy storage and our state is turning to storage technologies to support reliability, close polluting gas facilities and reduce downward pressure on electric rates. Should be encouraged.” , which largely oversees the energy industry.

Since regulators implemented the new rooftop solar policy, the percentage of consumers purchasing solar panels with batteries has increased to 50 percent, from only 5 percent before the change.

But batteries are expensive, especially in a time of high interest rates. Without federal tax incentives, a solar and battery system costs an average of $33,700, while systems that do not include batteries cost $22,700, according to EnergySage, a shopping site that compares rooftop solar panels.

Installers and homeowners say it is difficult to financially justify investing in rooftop solar systems without access to adequate electricity credits. California’s decision to reduce incentives has increased the time it takes to pay off for a solar system from about five to at least eight years.

The nation’s largest residential solar company, Sunrun, based in San Francisco, cut nearly 2,000 jobs after California regulators slashed rooftop incentives.

“It’s very unfortunate from the perspective that this comes at a time when the planet is on fire,” said Mary Powell, Sunrun’s chief executive. But he said because of his company’s size and nationwide operations, it is able to absorb most of the impact.

Other businesses face bigger challenges.

Amy Atchley started Amy Roofing & Solar about four years ago. Before California changed its policy, solar power sales drove more than 55 percent of her business, which she ran with her husband, Brian, in Petaluma, north of San Francisco. Sales of solar power fell by 45 percent since the policy was implemented. To reduce costs, Ms. Atchley said she typically recommends that her customers install solar panels when replacing their roofs.

“California must do everything it can to become a clean energy state,” Ms. Atchley said. “But the momentum has stopped.”

Offering energy credits to homeowners with rooftop solar was a central component of legislation, approved when Arnold Schwarzenegger was governor, aimed at adding one million solar roofs, lowering electric bills and protecting against climate change. Had to fight. State meets ceiling target 2019 And there are now panels on 1.8 million rooftops.

Some solar experts claim that California’s new policy is flawed because it does not adequately take into account the environmental value provided by rooftop solar panels.

“You’re giving solar energy the same importance as fossil fuel energy, so it doesn’t make sense,” said Yogi Goswami, an engineering professor and director of the Clean Energy Research Center at the University of South Florida. “We should have given some importance to the environmental factor.”

By cutting incentives at a time when the world needs more clean energy, “they’re making it more difficult,” he said.

Nationally, rooftop solar grew an estimated 13 percent last year but could decline 11.5 percent this year, according to the Solar Energy Industries Association, with the decline largely due to California’s policy change. .

California’s largest utility, Pacific Gas & Electric, said rooftop solar connections on its system reached a record high last year, up 20 percent from 2022. This probably happened because many homeowners rushed to install solar panels before the new policy came into effect in April. ,

“At PG&E, we recognize the important role rooftop solar plays in California’s clean energy future,” Carla Peterman, PG&E’s executive vice president for corporate affairs and former state utility regulator, said in a statement. “We are proud to have connected more than 750,000 private solar customers, more than any other U.S. utility.”

Rooftop solar proponents have asked courts to intervene, and others have lobbied regulators and state lawmakers to reverse course or risk losing more jobs and companies.

“The question is, who survives this?” said Bernadette Del Chiaro, executive director of the California Solar & Storage Association. “How many businesses go through this transformation?”

Some energy experts said rooftop solar could regain some of its financial appeal as California raises electricity rates, which are already among the highest in the country. The utility commission recently approved higher rates for customers of investor-owned utilities Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric.

PG&E customers will soon pay 45 cents per kilowatt-hour, up from about 35 cents. This works out to about $250 per month for 571 kilowatt-hours, which is the average usage of homes in California. By comparison, the national average retail electricity rate in October was 16.2 cents.

More Californians may install solar panels and batteries, not to earn credit for excess electricity produced by the panels, but to reduce their dependence on utilities. But that option would mostly be a benefit that affluent homeowners are able to take advantage of, rather than those with limited means, Stanford’s Mr. Vara said. He added: “California faces a major electricity affordability challenge.”

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