Community solar is finally about to have its moment in the sun.
Signed into law last year, Assembly Bill 2316 requires the California Public Utilities Commission to assess new community renewable energy program proposals with a focus on serving low-income customers. This will make solar power an option for all residents, not just wealthier homeowners.
Community solar allows families to subscribe to a project through a community solar provider. Customers will receive a community solar credit on their utility bill, saving them money on their energy bills. The customer’s participation in the community solar program supports the development and operation of a community solar project that provides energy to the grid. Projects are generally connected to the distribution grid and are typically located on underutilized land.
While California has the most rooftop solar installations in the country, solar energy is still out of reach for many residents. This includes the 44% of Californians who rent their homes, homeowners whose roofs are unable to host solar panels, or those who don’t have the resources to finance a rooftop solar system.
For these families, community solar is an important path to reducing energy bills and participating in the clean energy economy.
Under the new law, the CPUC is responsible for designing new programs so that all Californians can access solar energy and the state can maximize the significant federal dollars becoming available.
Under the Inflation Reduction Act, California can take advantage of federal tax incentives to bolster the growth of community solar and provide every household with clean, low-cost energy. The federal funds became available in February, and since other states already have viable community solar programs, California regulators must prioritize creating a fair and workable community solar program and have it in place as early as possible to fully take advantage of the additional incentives.
While this must be done quickly, it cannot be done in haste. California must ensure the program is structured in a way that allows it to thrive and equitably serve residents.
As regulators at the CPUC begin crafting the rules governing the new programs, past mistakes that made previous attempts at community solar unaffordable and unattractive to most residents must not be repeated.
The California Energy Commission should also set aside a portion of the $1 billion designated for distributed energy resources to provide greater bill savings to low-income and disadvantaged communities. These funds could also provide incentives for projects that are owned and led by these communities.
If California wants to provide energy savings to households and receive its share of the federal tax credits that will be made available in 2023, it must act with urgency. And it must do so in the face of stiff opposition. Utilities like PG&E and other fossil fuel interests view community solar programs as a threat and will do anything to pressure the CPUC to squash the programs or set them up to fail.
In other states, utilities and fossil fuel interests have successfully lobbied regulators and policymakers to adopt policies that limit the reach and effectiveness of community solar. This playbook includes imposing significant fees on community solar subscribers or putting arbitrary statewide caps on the amount of electricity that can be produced by community solar programs.
The stakes are too high to allow the same in California. Compared to the median household, those at or below twice the federal poverty level spend 3.5 times more of their household budget on electricity. With inflationary pressures leading to a surge in energy prices, power bills have become an increasingly larger burden for California families. Many families are forced to make dire choices about their basic needs, such as paying either an electricity bill or buying groceries with their limited income.
Under the Inflation Reduction Act, certain community solar projects that benefit low- and moderate-income communities can qualify for as much as a 40% or 50% tax credit. This is an unprecedented incentive to help enhance California’s solar footprint. This funding, paired with other federal and state dollars, will help California reach the goals laid out by AB 2316 – if regulators can create the framework for new state programs in 2023.
California has the potential to create one of the largest and most equitable community solar programs in the country. The CPUC needs to swiftly and effectively develop policies supporting the success of community solar. This is the only way to seize on the incredible opportunity to bring the benefits of clean energy to every Californian.
About the Authors
Alexis Sutterman is the energy equity program manager at the California Environmental Justice Alliance. Assemblyman Chris Ward, a San Diego Democrat, represents the 78th Assembly District. He is the Assistant Majority Leader in the Assembly. They wrote this for CalMatters, a nonprofit, nonpartisan newsroom committed to explaining California policy and politics.
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