California is adopting a program that could make it harder for communities to use solar energy

California regulators have approved a community solar program that clean energy advocates say will continue to leave the state behind as the Biden administration promotes the emerging sector.

Still, the California Public Utilities Commission (CPUC)’s 3-1 vote left the door open for a less restrictive program in the future to use federal funds to support solar communities.

Despite a strong solar market, California has long struggled to build community solar projects, which are medium-sized solar panels that can serve a group of customers in a given geographic area. Unlike rooftop solar installations serving a single home, community solar projects are designed to support groups of subscribers who cannot install their own solar system, such as low-income households, renters, or people whose homes have physical limitations.

A state law passed in 2022 required the CPUC to create a new community-based renewable energy program with at least 51 percent of the benefits going to low-income customers.

The program approved Thursday was intended to respond to that legislation. It builds on existing state and utility programs and creates a new community-based renewable energy program that aims to leverage $250 million in federal funds allocated to the state.

The existing scheme known as the Green Tariff Scheme for Disadvantaged Communities, which allows customers from disadvantaged communities to subscribe to a network of solar projects in exchange for a guaranteed 20 per cent top-up on their electricity bills, will be doubled to include solar projects with power of 144 megawatts. Another existing tariff will be expanded to include language allowing battery storage to be linked to solar projects.

Critics say existing programs are too restrictive and provide little return on investment. They say that simply expanding them will not encourage sufficient development.

California Assemblyman Chris Ward, who wrote the 2022 legislation, said in public comment to the CPUC on Thursday that the program is “completely inconsistent” with his legislation. He said the “fatally flawed” proposal would not lead to any significant new changes.

“As a leader in solar energy, California must fix this,” said Ward, a Democrat, urging commissioners to vote on the proposal.

The Biden administration has made solar a priority for local communities, pushing for a net-zero grid by 2035, with a goal of deploying 20,000 MW of on-site solar PV installations by 2025. Due to California’s outsized role in the solar market the ability of developers to prosper in the state could determine whether this goal can be achieved.

Stephanie Doyle, California state director for the Solar Energy Industries Association, said in a statement that the “shocking” decision, as well as other recent votes limiting compensation for solar panel owners, “threatens to undermine California’s progress on clean energy.”

A coalition of solar developers and ratepayer advocates has backed a proposal called a net billing value tariff, which would create a new pay structure similar to net metering in which solar customers are reimbursed for excess energy returned to the grid. The proposal would allow customers to subscribe to a solar project and receive bill relief based on the value of energy sold to the grid, with higher charges during periods when the grid is at its busiest.

Developers said their structure was similar to what has worked in New York state and would make it easier to recoup their investment. Homebuilders’ groups also supported the idea, saying it would help them meet state requirements for solar energy in new buildings.

CPUC president Alice Reynolds, however, said the net worth-based tariff proposal would be too costly and could raise bills for other ratepayers. The decision approved Thursday, Reynolds said, meets the state’s dual goals of “how to provide all communities with clean energy and maintain as much downward pressure on bills as possible.”

Commissioner Darcie Houck disagreed with the decision, saying the program would not be sufficient to encourage construction of new facilities. Commissioner Matt Baker was not present for the vote.

On Thursday, the Coalition for Social Access to Solar Energy criticized the decision. The CPUC, the group said in a statement, “has chosen to double down on failed programs that have not created – and will not create – a viable local solar market that would provide affordable energy to Californians who need help most.”

The initial proposed decision issued in March found that the net-worth tariff could violate federal law. That raised concerns that California’s vote on the language could expose programs in other states to legal challenges, and drew rebukes from two former members of the Federal Energy Regulatory Commission.

The version approved Thursday, however, strikes at that language and states that the commission “deems it unnecessary” to decide whether there was a federal conflict.

Commissioners noted that there would be an opportunity to continue work on implementation by creating a new Community renewable energy program that would be open to customers of all income levels and commercial customers. This program will build on funds the state received from the U.S. Environmental Protection Agency (EPA) under the Solar for All program created under the 2021 Inflation Reduction Act.

Reynolds said the CPUC would allow commenters to evaluate “various aspects” of project design and that “there is no reason to believe that this program will not propose feasible designs.”

Brandon Smithwood, vice president of policy for local solar developer Dimension Renewable Energy, said in an interview that the new program represents “an opportunity for the state to take advantage of a once-in-a-generation subsidy from the federal government.”

“At a time when the state is struggling with high electricity rates, this is an opportunity it should take advantage of,” Smithwood said. “We appreciate that the Commission is taking a break… and allowing us to develop a program that can effectively utilize these funds from the federal government.”