In California, where electricity demand is skyrocketing, the Public Utilities Commission’s final decision on community solar has yet to create a viable community solar program for solar developers and other stakeholders.
The California Public Utilities Commission (CPUC) issued a proposed decision in March that the Net Value Billing Tariff (NVBT) conflicts with federal law, leaving to question the future of the potentially burgeoning community solar market.
In May 2024, California approved a new community solar program following the enactment of Assembly Bill 2316 (AB 2316) in 2022. In this Decision, the CPUC kept most of the Proposed Decision language intact, but struck out the federal conflicts.
The new law was intended to incentivize more community solar development, expand solar energy access to low-income residents, and leverage federal funding opportunities. However, solar developers and advocates, including the Coalition for Community Solar Access (CCSA), say that the CPUC’s approved program only made minor changes to the previous programs that have failed. As a result, community solar developers are investing in other states with more viable programs.
The CPUC still has not released any information since then on how the program should be implemented, nor how federal Solar for All dollars will be spent.
CCSA favored their Net Value Billing Tariff (NVBT) proposal, which included adding energy storage to community solar projects, which helped to solve California’s grid instability problems.
NVBT met with strong support from the Solar Energy Industries Association (SEIA), GRID Alternatives, Vote Solar, TURN (ratepayer advocates), the California Building Industry Association (CBIA), the Natural Resources Defense Council, and more. Notably, investor-owned utilities, which serve over 75% of the electricity usage in the state, opposed the NVBT design. Unsurprisingly, the CPUC approved a utility-backed proposal with few changes.
pv magazine USA spoke with Aaron Halimi, founder and president of Renewable Properties, and Derek Chernow, Western Regional Director for CCSA, about the impact of CPUC’s final decision on California community solar projects. Renewable Properties is headquartered in California and has executed 177 MW of solar projects across 42 sites and 15 states. The company had been developing many California sites in anticipation of the NVBT design being approved. But because the CPUC approved the utility-backed design, the company is now shifting resources to more stable markets like New York, Illinois, and Maryland.
Chernow pointed out that California should be a major market for community solar. “California can be, and should be, the largest market for community solar companies, and it just isn’t living up to its potential.” To live up to its potential what’s needed are adders for capacity, for time and delivery, “and to make these pencil out, you need to make storage a viable part of any community solar installation,” Chernow said. He said that CCSA is hoping the state will look at how to extend the Solar for All money, a community solar program funded by the Inflation Reduction Act (IRA), to make the California program more attractive to solar developers like Halimi.
“We’re trying to make lemonade out of lemons with that decision,” said Halimi. He said that by using the Solar for All money, the state would create an upfront incentive similar to how the New York Sun program works with NYSERDA.
The NY Sun program has been a very successful community solar program, Halimi said. A program like that in California would “help make projects pencil and ultimately get some amount of megawatts onto the grid in the more immediate to medium term,” he said. But the Solar for All funds are limited and will quickly run out.
Many people working in the solar development community had been investing a significant amount of resources in anticipation of the CPUC coming to a workable decision, and the stakeholder support was “unprecedented,” Halimi said. “From the industry trade groups to the environmental justice folks to the ratepayer advocates, to the labor unions, to the building trade association–basically everybody except the investor owned utilities– was supporting the net value billing tariff.” Because of this support, developers were investing into their pipelines here in California in anticipation of a workable program being implemented.
Since the decision, many developers including Renewable Properties, have shifted resources to other markets. “We’re shifting the dollars, the people power, the jobs… to other areas across the country where there’s more stable and workable community solar regimes,” Halimi said , adding that it’s too bad, since the company is based in California, but the company has reprioritized its efforts.
The California effect
In the first half of 2024, the U.S. Solar Market Insight report from the Solar Energy Industries Association and Wood Mackenzie notes that there were 577 MW of community solar installations, a 2% decline compared to H1 2023. In the recent pv magazine USA Week presentation by Jeff Cramer, president and CEO of CCSA said at least 7.3 GW of new community solar capacity is projected to come online in the next five years across current state markets, bringing U.S. total community solar capacity to 14.25 GW. He noted that that does not include new potential markets that are considering new programs.
Chernow pointed out that while community solar is growing in communities across the country, “California can be a drag on that growth by not implementing a scalable, sustainable program.” He added that companies like Renewable Properties that are headquartered in California are looking elsewhere to do business “even though they are ready to invest [in California],” he said.
Renewable Properties is not alone in hoping for change. In March, 30 CEOs sent a letter to the Newsom administration saying they want to invest in California but that they can’t do it under this program. “We’re hoping we can change that. We’re hoping we can drive that investment, create the jobs that come along with it, and meet our clean energy goals at the same time,” Chernow said.
Strong support
People are listening, Chernow said. For example, Darcie L. Houck, commissioner of the CPUC took an opposing position in a written dissent, which is highly unusual for the PUC. “First of all, openly voting against the decision is unusual, but issuing a written dissent is incredibly rare,” he said.
Bipartisan support has increased since passage of Assembly Bill 2316 and 2022, where we’ve had Republicans join Democrats in support of community solar and storage here in California, Chernow said. “We’ve had farmers and farm workers–just groups that don’t often see eye to eye–have all come together.”
With the CPUC essentially not carrying out what the legislature had hoped for with the original bill. Chernow has hope for a new bill in 2025. “I think folks are motivated and activated and ready to make sure that it does happen and that California can regain that leadership mantle in a crucial clean energy space.
Saving the farm
Developers are not the only entity that would suffer the loss of the California community solar market. It’s a blow to landowners as well. Halimi said California is a great example where the financial viability of farming may not be there anymore due to rises in commodity prices or access to water, or shortages of labor, he said. Solar can provide a means for farming families to generate revenue while maintaining their real estate.
Halimi said it’s a story they see time and time again, and he spoke of a dairy farmer in New York state who was looking to retire. His operation was no longer financially viable and he was at risk of losing his home and his land, but community solar saved the farm. “It provided a means for him to keep his home, keep his land, keep his farm, and continue to live his life,” Halimi said.
Community solar provides farmers with a means to provide stable income through the form of a land lease agreement to landowners that may be in a tough spot, that may not be able to farm anymore, that may be looking to retire, that may have lost their water rights. It solves a variety of issues for those folks as well. And so when we say that, hey, community solar, you know, really benefits the local communities. I mean, that’s what we’re talking about.
With supportive policy, community solar can play a strong role in a state that has not only ambitious clean energy goals but also huge—and growing—demand for electricity. Chernow noted that California is trying to electrify everything. “We’re electrifying our fleets, our transportation sector, our buildings, and we’re adding data centers and AI. And that demand is not going to decrease.” Community solar is one of the solutions that can help meet that demand in a sustainable way.
“We’re looking forward to making those investments to play that role. But we have got to make sure that the rules are there to flourish and scale up. And right now, we just don’t have that,” Chernow concluded.
Demand
Community solar has caught the attention of large corporations who are turned off by the long interconnection delays in utility-scale solar, and understand that community solar projects can get built much faster. Halimi said that subscriber companies involved with the market say they have more demand than supply in terms of viable project right now.
California’s Title 24, which mandates solar on newly built homes, can also potentially drive great demand because solar drives up the cost of those homes, and community solar offers an alternative to new home developers.
Halimi said that one aspect of Assembly Bill 2316 was that any new community solar program has to be compliant with Title 24 and those new home standards, adding “but right now, this decision at the PUC really hampers the ability to meet all the new home construction requirements.”
Halimi is optimistic, though, because of the support of the building industry and so many others. “We are looking to build on that,” Halimi said, adding “no pun intended.”
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.