California regulators torpedo popular plan to boost community solar
Over the past three years, an unusually broad coalition has come together to champion a new way to finance and build community-solar-and-battery projects in California. It includes solar companies, environmental justice activists, consumer advocates, labor unions, farmers, homebuilder industry groups, and both Democratic and Republican state lawmakers — a rare instance of concord in a state riven by conflicts over rooftop solar and utility policy. Supporters say the plan, known as the Net Value Billing Tariff (NVBT) could enable the building of up to 8 gigawatts of community-solar-battery projects over the coming decades, all of which would be connected to low-voltage power grids that sell low-cost power to subscribing households, businesses, and organizations. But on Thursday, the California Public Utilities Commission (CPUC) voted 3–1 to reject the coalition’s plan. Instead, it ordered the state’s major utilities — Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric — to restructure a number of long-running distributed solar programs that have failed to spur almost any projects in the decade or more they’ve been in place. Critics warn that these utility-backed plans won’t create a workable pathway to expanding a class of solar power that has become a major driver of clean energy growth in other states and a key focus of the Biden administration’s energy equity policy. They also fear that the CPUC’s reliance on state and federal subsidies to boost the economic competitiveness of these existing failed community-solar models might jeopardize the state’s ability to even qualify for the $250 million in community-solar funding that the Biden administration has provisionally offered it. “We are cheating ourselves out of the benefits of community solar and storage with this decision,” said Derek Chernow, western regional director for the Coalition for Community Solar Access (CCSA), which represents companies and nonprofits that advocate for community solar. Since CCSA devised the NVBT in 2021, it has won “unprecedented bipartisan broad-based support from stakeholders that don’t typically come together and see eye to eye on clean energy issues,” Chernow said. The plan the CPUC cobbled together from utility proposals, by contrast, lacks “any support — broad-based or otherwise,” he said. An outpouring of rage from community-solar supporters CPUC President Alice Busching Reynolds defended the decision to reject NVBT at Thursday’s meeting. She pointed to other existing California programs that assist low-income households and multifamily buildings in obtaining solar, and noted that the CPUC’s plan will expand an existing community-solar program that offers low-income customers a 20 percent reduction on their bills. She said that the NVBT program was too costly a way to bring new solar-and-battery resources to the state, compared to the large-scale energy projects being contracted by utilities and community energy providers. “California is really at an inflection point where we must use the most cost-effective clean energy resources that provide reliability value to the system,” Reynolds said. Backers of the NVBT hold a very different view. Since March, when the CPUC unveiled its proposed decision to reject the NVBT, there has been broad public outcry. Letters protesting its proposal have flooded into the CPUC from community-solar advocacy groups, environmental organizations, commercial real estate companies, farmworker advocacy groups, farming industry associations, and Republican and Democratic state lawmakers. The CPUC issued a revised proposed decision on Tuesday, ahead of Thursday’s vote, which differs little from the initial March proposal. The only major change is the removal of a legal argument claiming that the NVBT violates federal law — a theory that was met with widespread incredulity and which was rebutted by three former chairs of the Federal Energy Regulatory Commission in letters to the CPUC. The Utility Reform Network (TURN), a nonprofit that advocates for utility customers, has warned that the CPUC’s community-solar plan will “favor large utility companies by ensuring solar program development costs are incurred by home builders, renters, and other solar community participants,” while failing to offer lower-income customers a chance to reduce their fast-rising electric bills by subscribing to lower-cost solar power. And 20 lawmakers who supported AB 2316, the 2022 state law that ordered the CPUC to create an equitable and affordable community-solar program, have told the CPUC that its failure to support the NVBT could mean the state falls short on its clean energy and climate goals. “Transmission-scale renewables face significant siting, interconnection, and transmission challenges,” creating the risk that utilities won’t be able to hit the aggressive clean energy procurement targets set by the CPUC, the lawmakers wrote in a September letter. “Small, distribution-sited community solar and storage projects have incredible potential as we modernize and expand our transmission system.” Speaking at Thursday’s CPUC meeting, Assemblymember Chris Ward, the San Diego Democrat who authored AB 2316, called the CPUC’s pending decision “a dismissal of California’s need for clean, reliable, and affordable energy.” “After agreeing with nearly all stakeholders that the state’s existing community renewables programs are not workable, the proposed decision has opted to repeat these mistakes by creating an outdated, commercially unworkable program that will result in no new renewable energy projects or energy storage,” he told the CPUC commissioners, all of whom were appointed by Governor Gavin Newsom. Why California lags on community solar California leads the country in rooftop solar and stands behind only Texas in utility-scale solar-and-battery farms. But its community-solar projects make up less than 1 percent of the 6.2 gigawatts of community solar that have been built in the 22 states with policies that support this form of solar development. That’s largely because the community-solar programs that have existed in California for more than a decade have been unattractive to solar developers, financiers, and would-be subscribers. The earliest programs, which targeted commercial and industrial customers, charged a premium over standard utility rates, making them undesirable. Later programs created for lower-income and disadvantaged communities have been stymied by limits on how many megawatts’ worth of projects can be built and the size of individual projects, as well as onerous rules that require projects serving disadvantaged communities to be located within 5 miles of those customers. Designed to remove those barriers, NVBT was modeled on a community-solar program created by New York that has led to more than 2 gigawatts of projects in that state. That structure allows community-solar projects to earn steady revenues from the power they produce based on a complex calculation of benefits. Those benefits include helping to meet state climate goals, bringing clean power to underserved customers, and, importantly, helping to support utility grids by, for example, avoiding the cost of securing power during the rare hours of the year when utility grids face the greatest stress. Unlike California’s existing community-solar programs, the NVBT would incentivize projects to add batteries to store and shift solar power from when it’s in surplus to when it’s most needed on the grid. And under AB 2316, any new community-solar-and-battery projects in California must provide at least 51 percent of their capacity to serve low-income residential customers at prices that reduce their electricity bills — a valuable option for low-income households, renters, and other utility customers that can’t access rooftop solar. “We’re very interested in seeing renters have access to community-solar projects,” said Matt Freedman, a staff attorney at TURN. “And we’re excited that the California statute requires at least 51 percent of the benefits go to low-income customers. We think that’s revolutionary — that we’re putting low-income customers first in line to receive the benefits of these projects.”
Over the past three years, an unusually broad coalition has come together to champion a new way to finance and build community-solar-and-battery projects in California. It includes solar companies, environmental justice activists, consumer advocates, labor unions, farmers, homebuilder industry groups, and both…
Over the past three years, an unusually broad coalition has come together to champion a new way to finance and build community-solar-and-battery projects in California. It includes solar companies, environmental justice activists, consumer advocates, labor unions, farmers, homebuilder industry groups, and both Democratic and Republican state lawmakers — a rare instance of concord in a state riven by conflicts over rooftop solar and utility policy.
Supporters say the plan, known as the Net Value Billing Tariff (NVBT) could enable the building of up to 8 gigawatts of community-solar-battery projects over the coming decades, all of which would be connected to low-voltage power grids that sell low-cost power to subscribing households, businesses, and organizations.
But on Thursday, the California Public Utilities Commission (CPUC) voted 3–1 to reject the coalition’s plan. Instead, it ordered the state’s major utilities — Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric — to restructure a number of long-running distributed solar programs that have failed to spur almost any projects in the decade or more they’ve been in place.
Critics warn that these utility-backed plans won’t create a workable pathway to expanding a class of solar power that has become a major driver of clean energy growth in other states and a key focus of the Biden administration’s energy equity policy.
They also fear that the CPUC’s reliance on state and federal subsidies to boost the economic competitiveness of these existing failed community-solar models might jeopardize the state’s ability to even qualify for the $250 million in community-solar funding that the Biden administration has provisionally offered it.
“We are cheating ourselves out of the benefits of community solar and storage with this decision,” said Derek Chernow, western regional director for the Coalition for Community Solar Access (CCSA), which represents companies and nonprofits that advocate for community solar.
Since CCSA devised the NVBT in 2021, it has won “unprecedented bipartisan broad-based support from stakeholders that don’t typically come together and see eye to eye on clean energy issues,” Chernow said.
The plan the CPUC cobbled together from utility proposals, by contrast, lacks “any support — broad-based or otherwise,” he said.
An outpouring of rage from community-solar supporters
CPUC President Alice Busching Reynolds defended the decision to reject NVBT at Thursday’s meeting. She pointed to other existing California programs that assist low-income households and multifamily buildings in obtaining solar, and noted that the CPUC’s plan will expand an existing community-solar program that offers low-income customers a 20 percent reduction on their bills.
She said that the NVBT program was too costly a way to bring new solar-and-battery resources to the state, compared to the large-scale energy projects being contracted by utilities and community energy providers.
“California is really at an inflection point where we must use the most cost-effective clean energy resources that provide reliability value to the system,” Reynolds said.
Backers of the NVBT hold a very different view. Since March, when the CPUC unveiled its proposed decision to reject the NVBT, there has been broad public outcry. Letters protesting its proposal have flooded into the CPUC from community-solar advocacy groups, environmental organizations, commercial real estate companies, farmworker advocacy groups, farming industry associations, and Republican and Democratic state lawmakers.
The CPUC issued a revised proposed decision on Tuesday, ahead of Thursday’s vote, which differs little from the initial March proposal. The only major change is the removal of a legal argument claiming that the NVBT violates federal law — a theory that was met with widespread incredulity and which was rebutted by three former chairs of the Federal Energy Regulatory Commission in letters to the CPUC.
The Utility Reform Network (TURN), a nonprofit that advocates for utility customers, has warned that the CPUC’s community-solar plan will “favor large utility companies by ensuring solar program development costs are incurred by home builders, renters, and other solar community participants,” while failing to offer lower-income customers a chance to reduce their fast-rising electric bills by subscribing to lower-cost solar power.
And 20 lawmakers who supported AB 2316, the 2022 state law that ordered the CPUC to create an equitable and affordable community-solar program, have told the CPUC that its failure to support the NVBT could mean the state falls short on its clean energy and climate goals.
“Transmission-scale renewables face significant siting, interconnection, and transmission challenges,” creating the risk that utilities won’t be able to hit the aggressive clean energy procurement targets set by the CPUC, the lawmakers wrote in a September letter. “Small, distribution-sited community solar and storage projects have incredible potential as we modernize and expand our transmission system.”
Speaking at Thursday’s CPUC meeting, Assemblymember Chris Ward, the San Diego Democrat who authored AB 2316, called the CPUC’s pending decision “a dismissal of California’s need for clean, reliable, and affordable energy.”
“After agreeing with nearly all stakeholders that the state’s existing community renewables programs are not workable, the proposed decision has opted to repeat these mistakes by creating an outdated, commercially unworkable program that will result in no new renewable energy projects or energy storage,” he told the CPUC commissioners, all of whom were appointed by Governor Gavin Newsom.
Why California lags on community solar
California leads the country in rooftop solar and stands behind only Texas in utility-scale solar-and-battery farms. But its community-solar projects make up less than 1 percent of the 6.2 gigawatts of community solar that have been built in the 22 states with policies that support this form of solar development. That’s largely because the community-solar programs that have existed in California for more than a decade have been unattractive to solar developers, financiers, and would-be subscribers.
The earliest programs, which targeted commercial and industrial customers, charged a premium over standard utility rates, making them undesirable. Later programs created for lower-income and disadvantaged communities have been stymied by limits on how many megawatts’ worth of projects can be built and the size of individual projects, as well as onerous rules that require projects serving disadvantaged communities to be located within 5 miles of those customers.
Designed to remove those barriers, NVBT was modeled on a community-solar program created by New York that has led to more than 2 gigawatts of projects in that state. That structure allows community-solar projects to earn steady revenues from the power they produce based on a complex calculation of benefits. Those benefits include helping to meet state climate goals, bringing clean power to underserved customers, and, importantly, helping to support utility grids by, for example, avoiding the cost of securing power during the rare hours of the year when utility grids face the greatest stress.
Unlike California’s existing community-solar programs, the NVBT would incentivize projects to add batteries to store and shift solar power from when it’s in surplus to when it’s most needed on the grid.
And under AB 2316, any new community-solar-and-battery projects in California must provide at least 51 percent of their capacity to serve low-income residential customers at prices that reduce their electricity bills — a valuable option for low-income households, renters, and other utility customers that can’t access rooftop solar.
“We’re very interested in seeing renters have access to community-solar projects,” said Matt Freedman, a staff attorney at TURN. “And we’re excited that the California statute requires at least 51 percent of the benefits go to low-income customers. We think that’s revolutionary — that we’re putting low-income customers first in line to receive the benefits of these projects.”