Where is community solar in California?

Solar installation
June 29, 2017

It’s almost taken as a given that California will be a leader when it comes to solar energy. The state was among the first to embrace solar and has installed far more than anywhere else. Yet, when it comes to community solar, California can’t seem to get off the ground floor. Poorly designed policy and other solar options have left California out of the community solar boom.

In 2013, California passed SB 43. This bill created the state’s “Green Tariff Shared Renewables Program”. It directed the California Public Utilities Commission (CPUC) to create rules for community solar. Rather than setting the parameters for a successful program, these rules have blocked community solar projects from happening.

“The economic and program restrictions made it too difficult to build,” said Jeff Cramer, Executive Director of the Coalition for Community Solar Access, a trade group that promotes community solar. “So no projects were built.”

Cramer cited several barriers put forth by the CPUC rules. The biggest barrier is that the rate set by the CPUC for community solar is too low for community solar projects to pencil out financially. The CPUC set the community solar project compensation rate at the generation rate of 8-10¢/kWh. This means community solar customers do not receive the same 1-to-1 rate of getting reimbursed for every KWH of solar production that rooftop solar customers receive through net metering. This same issue delayed the implementation of community solar in Washington, D.C., until solar supporters were successful in convincing the D.C. City Council to legislate a solution to the problem.

The CPUC also allows utilities to include an additional charge on customers for not using electricity from the utility. The net result is that electricity from community solar is only valued at 6-8¢/kWh, far below the rate of retail electricity. This rate level makes it almost impossible for community solar subscribers to get a better deal from subscribing to a community solar than just staying with their utility.

The rules for the community solar program the CPUC developed put up other restrictions as well. This included geographic restrictions, restrictions on receiving a third party legal opinion on securitization, and onerous customer engagement requirements. This amounted to few bids into the program and no bids being approved by the CPUC.

Cramer said the CPUC was working to easing these burdens and that work is being done at the legislative level to redesign the program so that it can work as it was intended. Meanwhile, the desire for community solar may be lessened by other solar options.

“Community Solar was the buzzword here a few years ago.” said Dan Lieberman, Director of Marketing and Public Affairs for Peninsula Clean Energy. “Now its about community choice aggregation.”

Community Choice Aggregation enables municipalities to de-couple their energy source from their electricity provider. Several communities in California have done this in order to source more of their electricity from renewable energy sources.

Lieberman provided the example of the community of Santa Clara, which now sources half of its electricity from renewable energy at a lower price than what residents were paying previously to their utility, PG&E. Santa Clara residents are still PG&E customers and still receive a PG&E bill. The utility is responsible for maintaining electric transmission services, and Santa Clara customers pay the utility for that. Lieberman said within the next two years nearly half of Californians would be served by community choice aggregation.

While community choice aggregation is a way for customers to go renewable, it does not enable them to take an ownership stake like they would be able to do with community solar.

Cramer believes to get community solar back on the right path there needs to be a phased approach. He cited Maryland’s community solar pilot program that is compensating community solar at the retail rate. Cramer believes this is unsustainable in the long term, as utilities will want a share of compensation as community solar grows. He offered the next step could be the creation of a tariff for community solar.

“That phased approached is so that community solar happens and happens in the near term and starts to scale,” Cramer said. “What you’re seeing in California is the valley of death."