As California goes, so goes the nation. However, other states should regard the Golden State’s residential rooftop solar troubles as a cautionary tale.
In 2023, the California Public Utilities Commission (CPUC) approved reducing compensation by 80 percent for exported rooftop solar generation. The changes only apply to new solar customers. The five-member CPUC adopted the changes to incentivize “multi-tenant and multi-property customers interested in installing solar or solar paired with battery storage on their properties.”
“Under the CPUC’s leadership, California is responsible for the largest loss of solar jobs in our nation’s history,” according to CALSSA.
California needs 3.5 times more solar energy than it has now, a report by CALSSA found. The state’s renewable energy standard requires utilities to obtain 60 percent of their energy from renewables by 2030 and 100 percent by 2045. The changes to compensation for exported rooftop solar will make it harder and harder for the state to meet its mandate.
The Shrinking Rooftop Solar Market
A survey by the California Solar & Storage Association (CALSSA) of California solar and storage companies found that 17,000 jobs have or will be lost, representing 22 percent of all solar jobs in the state.
“All over California, we are seeing the grim reality of how the CPUC’s cuts to solar are taking livelihoods away from thousands of families,” said CALSSA Executive Director Bernadette Del Chiaro. “No one would expect a supposed climate leader like California to be pulling the plug on green jobs and our fastest and most accessible path to a clean energy future. But that is where we are today. Under the CPUC’s leadership, California is responsible for the largest loss of solar jobs in our nation’s history.”
The compensation changes have affected the solar market. Almost two-thirds of the solar and storage residential contractors expect to experience cash flow issues in the next three quarters. Seventy percent of contractors are concerned about their business outlook. Nearly 43 percent of companies think it will be difficult to stay in business. Some have already closed up shop.
“We exited the residential sector 100 percent due to CA market conditions.’ Central Valley contractor
Solar sales decreased between 77 and 85 percent since the changes in compensation. A survey by the California Solar & Storage Association (CALSSA) of California solar and storage companies found that 17,000 jobs have been or will be lost. That represents 22 percent of all solar jobs in the state. More than half of residential solar and storage contractors expect layoffs. And 11 percent are unsure. The majority of the jobs lost are from solar installation. The positions pay $70,000 per year on average, with benefits including health insurance and retirement plans.
In early January, Enphase Energy in Fremont, California, announced it would lay off 350 employees. The company stated in an SEC filing that it will reduce its global workforce by approximately 10 percent. Sunrun announced weeks later that it would lay off 62 employees in San Diego.
For some companies, layoffs will not be enough to keep them solvent. PV Magazine warned in December that 75 percent of California rooftop solar companies are “high risk” and predicted that more bankruptcies will occur.
Sacrificing Residential Solar for Big Utilities
The CPUC “ruled in favor of its private investor-owned utilities,” according to a report by PV Magazine. Those three utilities are Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas and Electric’s parent conglomerate Sempra. The three companies “have successfully fixed the market to punish small rooftop solar installers and support utility-scale development instead.”
“The state’s three investor-owned utilities – Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric – sought the changes,” the Environmental Working Group (EWG) said in a statement. “They despise the successful solar initiative because it allowed their captive ratepayers to escape the utilities’ grip and generate their electricity at considerably lower costs.”
During a recent webinar, EWG President and Bay Area resident Ken Cook pointed out that the CPUC “did exactly what PG&E told them to.” He added that the decision helped PG&E, the largest utility company in California, eliminate its “only source of competition.”
The territory of PG&E is bigger than the size of Florida. It appears that the CPUC favors the huge utility company. The commission approved rate PG&E hikes in November 2023 to “reduce risk” in the company’s operations. In other words, ratepayers are paying for the company’s disastrous past mistakes, including the 2018 wildfire in Paradise, California, and a gas pipeline explosion in San Bruno in 2010. The residential solar market is also a sacrifice on the altar of incompetence and greed.
