The forecast for California’s solar power expansion is cloudy, with a good chance of pain.
Late in 2022, I reported that California utility regulators made significant changes to rules applied to the state’s rooftop solar market, saying that the moves will ensure solar-powered homes contribute their “fair share” to maintain the power grid. Basically, the California Public Utilities Commission ended the power buy-back scheme that was a big selling point for homeowners to purchase and maintain solar panels.
How incentivizing was that incentive? Quite…as rooftop solar power installations have dropped over 80 percent, and companies are fleeing the state.
Thousands of companies — including installers, manufacturers and distributors — are reeling from the new policy, which took effect in April and greatly reduced incentives that had encouraged homeowners to install solar panels. Since the change, sales of rooftop solar installations in California dropped as much as 85 percent in some months of 2023 from a year earlier, according to a report by Ohm Analytics, a research firm that tracks the solar marketplace. Industry groups project that installations in the state will drop more than 40 percent this year and continue to decline through 2028.
“The solar installations are off a ton,” said Michael Wara, a senior research scholar at Stanford Woods Institute for the Environment. “What’s happening right now is a painful adjustment process.”
Construct Sun, a solar installation company that is based in Reno, Nev., stopped doing business in California after its sales dried up four months after the policy began; executives said the company was now focusing its efforts on Florida, North Carolina and Ohio.
“I had a very dismal pipeline and had to make the decision to shut down in California,” Thomas Devine, executive vice president of operations for Construct Sun, said. He added that the state’s rooftop policies undercut its goal to effectively eliminate greenhouse gas emissions by 2045. “These competing policies are crazy,” he said.
The forecast for California’s solar power expansion is cloudy, with a good chance of pain. Over 17,000 solar jobs have been lost in 2023, which accounted for 22% of all solar jobs in the industry.
Based on interviews of residential solar installers across the state, CALSSA found that 59% of installers expect more layoffs ahead, and 63% expect to have cash flow issues over the next three quarters. About 70% expressed concern about their business outlook, while 43%, or about 300 businesses, said it will be difficult to remain in business.
To meet its clean energy goals, California needs to install 3.5 times as much solar and seven times as much energy storage as what is cumulatively installed today. With minimal demand, layoffs and business closures, it will be very difficult to meet these requirements.
Laughably, David Lappen (an electrical engineer who serves on a subcommittee of the Santa Monica Commission on Sustainability, Environmental Justice and the Environment), proposes that California taxpayers continue to foot the bill for incentives as a solution to this quite foreseeable collapse.
…Without incentives, though, it doesn’t make financial sense for most Californians to install rooftop solar, meaning we all get less of this badly needed common good. Instead of forcing private utilities to shoulder the costs of incentives, which they then pass through to rich and poor ratepayers alike, California itself should accept the responsibility of supporting rooftop solar.
I can almost hear the screams about high taxes, but hear me out. If we shift support for rooftop solar from utility bills to the tax base, Californians can save on their utility bills by as much as the state pays in incentives.
…In California, our state income tax is progressive: Those who earn more pay a higher percentage of their income for the public benefit. Electric utility bills, by contrast, are regressive: Those who can’t afford rooftop solar pay a larger share of their income for their basic necessities. We need to restore financial support for rooftop solar — but let’s do so equitably, through our progressive tax code, and redistribute the costs of clean energy away from California’s most vulnerable residents.
Proposing that the state shoulder another financial commitment will be a tough sell, particularly in a year of big deficits. But the world is running out of time to address climate change, and more rooftop solar will decarbonize our grid faster.
Such a solution will inevitably lead to more Californians leaving the state for another region that allows the free market to flourish and doesn’t base its policies on pseudoscience or “justice” narratives.
The population of California posted a decline of tens of thousands in 2023. Among them are some of the wealthiest Californians, who account for a sizable portion of the state’s tax base.
The state’s population dropped by about 75,400 over 12 months, bringing it to over 38.96 million as of July 1, the U.S. Census Bureau estimated Tuesday.
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