BUSINESS

Why rooftop solar advocates are upset about California's clean-energy law

California's aggressive push to increase renewable energy production comes with a catch for people with solar panels on the roof: You don't count.

If a home or business has a rooftop solar system, most of the wattage isn't included in the ambitious requirement to generate half of the state's electricity from renewable sources such as solar and wind by 2030, part of legislation signed in October by Gov. Jerry Brown.

That means rooftop solar owners are missing out on a potentially lucrative subsidy that is paid to utilities and developers of big power projects.

It also means that utility ratepayers could end up overpaying for clean electricity to meet the state's benchmark because lawmakers, by excluding rooftop solar, left out the source of more than a third of the state's solar power.

Owners of rooftop solar systems and their advocates aren't happy about the policy.

"Ratepayers essentially subsidize utility companies," said Bernadette Del Chiaro, executive director of the California Solar Energy Industries Assn. "We all get taken to the bank" if utilities are spending to reach a 50% clean-energy mandate that could be attained faster and cheaper with the help of roof panels.

For homeowners such as Carrie McCandless, the state's policy on rooftop solar came as a surprise.

"I'm stunned," said McCandless, a Livermore, Calif., resident who wanted to help improve the environment because her daughter suffers from severe asthma.

Her solar panels fit the bill, producing clean energy for her family. And they gave her a sense of pride, she said, in helping the state reach its energy targets — or so she thought.

"We all think we're making a difference and contributing," McCandless said. "I'm just so angry."

The rooftop solar industry and consumer advocates say opposition to including rooftop solar in California's renewable energy mandate came from large developers that feared competition for subsidies as well as unions that were upset because rooftop solar installers typically aren't members.

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"They excluded it because the unions and corporate entities didn't want it," said Jamie Court, president of the advocacy group Consumer Watchdog.

Twenty-one states and the District of Columbia include rooftop solar panels in their mandates for clean energy, with varying benefits for participants.

Among the states with clean-energy mandates, the solar industry says, California is alone in its approach of counting mainly commercial installations that sell to utilities — Southern California Edison, San Diego Gas & Electric and Pacific Gas & Electric — or facilities that the utilities own themselves. (Municipal utilities such as the Los Angeles Department of Water & Power set their own clean-energy goals.)

Under the state's new renewable energy requirements, the priority is large-scale projects such as solar and wind farms that supply non-municipal utilities. Because rooftop solar falls into a lower category than large-scale producers, system owners are losing out on valuable financial benefits, energy experts say.

Large producers of solar and other renewable energy earn a clean-energy credit every time they send the electric grid 1,000 kilowatt hours — roughly the amount of electricity an average home consumes in a month.

For utility-scale solar and wind energy producers, the value of that credit in California is about $50, said Bryan Miller, senior vice president of public policy and power markets for Sunrun Inc., the nation's largest residential solar company. The credits can be traded and sold to help a power company improve its clean-energy footprint.

The basic value of rooftop solar under the state policy is one-hundredth of a penny, Miller said.

"They're worthless, essentially," he said.

Sunrun and San Mateo, Calif.-based SolarCity would benefit from counting rooftop solar in the mandate, but so would consumers, Del Chiaro said. Given the total cost of building large generators, transmission and distributing that electricity, Del Chiaro said, utility customers will continue to see higher rates as state policy builds two sets of electricity systems — one on rooftops, the other with big-box power plants in the desert.

"We're going to be better off," Del Chiaro said, "building a smarter grid."

Kip Lipper, a state Senate staffer who helped draft the legislation setting the 50% renewable energy benchmark, said the clean-energy mandate wasn't designed to deny rooftop solar owners but to ensure that the utilities did their part in curbing carbon pollution.

Utilities supported the idea of counting rooftop solar in the clean-energy goal, said Lipper, who is renowned for his environmental work. That's because including rooftop solar would have meant that the utilities wouldn't have to buy or build as much themselves.

"The utilities were delighted with that approach," Lipper said.

Scott Wetch, a lobbyist for the California Coalition of Utility Employees, said unions opposed inclusion of rooftop solar in the clean-energy mandate because the goal was to build "as much green power as possible."

"It is designed to change the behavior of the utilities," Wetch said. Allowing rooftop solar into the clean-energy requirement would create a "double dip for the rooftop solar industry," which he says already receives substantial subsidies.

The debate over the role of rooftop solar energy production comes at a time of great uncertainty for the solar panel industry and system owners.

The Edison Electric Institute, the utility industry trade association, has referred to rooftop solar and energy efficiency as "disruptive technologies" to a business model that relies on keeping power generation centralized.

Rooftop solar increasingly faces its own disruptions.

A 30% federal tax credit that has helped homeowners and businesses acquire rooftop solar expires at the end of 2016 and may not be restored to that level — and possibly not at all for residential customers.

In addition, the California Public Utilities Commission is drafting new rules for how rooftop solar owners will be compensated for power they send to the electric grid. The proposals for compensation, known as net-energy metering, include tacking additional fees onto rooftop solar owners' electric bills.

Utility companies argue that rooftop solar users don't pay their fair share for power lines, transformers, wires and other costs associated with maintaining the electric grid. So they have proposed a range of fees that the rooftop solar industry says could kill its business and the expansion of rooftop solar in the state.

The potential threats to rooftop solar have dismayed McCandless. She said she personally has campaigned in her neighborhood to convince other homeowners to go solar.

McCandless, who works in robotics, said her family bought a sizable solar system for their 2,200-square-foot home 12 years ago. She said they still use some energy from the grid but her 7-kilowatt system generates as much as 800 kilowatt hours of electricity in a month.

McCandless said she would give tours of her home to encourage others to go solar, and she's tried to stay informed about developments in the rooftop solar industry. But she said she didn't know that she wasn't contributing to the state's clean-energy mandate and missing out on a $50 certificate every time her system generates 1,000 kilowatt hours.

"I think the utility companies are all attacking rooftop solar," McCandless said.

David Rusch, 67, a retired educator from Culver City, spent $12,600 in March to buy 11 solar panels for his house and take advantage of the 30% federal tax credit.

Rusch said he was looking "to do my part to transition from carbon emission to zero carbon."

Catherine Washington, 72, bought rooftop solar panels in 2012. The Long Beach resident now pays a couple of dollars a month just to remain connected to the grid. The retired retail sales worker said the solar system has helped her avoid $80 to $90 electric bills in the hottest months and $40 to $50 bills during other months.

Those kinds of benefits, Washington said, have proved the system's value to her. And as others are seeing those benefits, she said, they increasingly will protest any state effort to stymie rooftop solar's growth.

"People aren't stupid," Washington said. "Some people are going so green, they're off the grid."

ivan.penn@latimes.com

Twitter: @ivanlpenn

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A version of this article appeared in print on November 30, 2015, in the News section of the Los Angeles Times with the headline "Blowing a fuse over energy law Rooftop solar owners are upset that most of their wattage is left out of state mandate." — Today's paperToday's paper | Subscribe
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