California approves community solar program backed by utilities

[May 31, 2024]  (Reuters) -The California Public Utilities Commission on Thursday approved a new solar energy program that the industry had said would not go far enough to incentivize smaller community projects.

The decision marked the latest disappointment for the solar industry in California, which is the top U.S. solar market overall but ranks eighth out of 50 states in community solar.

In the last two years, California has reduced incentives for the clean energy technology, in part because regulators worried the subsidies were being funded by ratepayers who do not have solar.

The CPUC voted to expand two existing programs and create a third, which was supported by utilities, in a 3 to 1 vote. The new program will be able to tap $250 million in federal funds provided under President Joe Biden's climate change law, the Inflation Reduction Act.

The program update, which was required by state law, was in part meant to expand solar energy to lower-income Californians who may live in apartments or cannot afford rooftop systems.

Despite its reputation as a leader in solar energy, California has lagged other states in building community solar projects. As of the end of 2023, California had 163 megawatts of community solar, compared with more than 2 gigawatts in New York and 1.1 GW in Massachusetts.

"It's disappointing that the CPUC's decision fails to provide meaningful improvements to California's lackluster community solar program," Steven King, a clean energy advocate with green group Environment California, said in a statement. "Utilizing spaces such as rooftops, parking lots, and roadside land for generating solar power is essential to address the climate crisis and reach 100% clean energy as soon as possible."

California has among the most ambitious climate change goals of any U.S. state, and Governor Gavin Newsom has pledged to decarbonize the state's economy by 2045.

The CPUC decision marked a rejection of a scheme backed by solar project developers, ratepayer advocates, environmental groups and others that would have compensated project subscribers for energy exported to the grid based on the value of the electricity at that time.

The PUC said that proposal would have increased costs for ratepayers not participating in the program.

Instead, the regulator embraced a proposal to treat community solar projects like wholesale facilities and compensate them at a rate they would pay for power elsewhere, known as the avoided cost. That scheme was backed by utilities including Southern California Edison and Pacific Gas & Electric.

The PUC said it would sweeten the returns for project developers with state and federal funds.

(Reporting by Nichola GroomEditing by Chris Reese, Diane Craft and David Gregorio)

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