Amid surge in solar adoption, several states see battles over consumer incentives

Florida Gov. Ron DeSantis’s decision Wednesday to veto a controversial rooftop solar proposal is the latest round in a coast-to-coast battle over measures that utilities say are needed to ensure equitable and affordable energy solutions but which opponents say would ratchet back consumer incentives for adoption of rooftop solar. 

The Florida bill would have phased out credits for new rooftop solar customers, erasing the credits entirely by 2029. Similar measures are being fought over in several states where solar energy is seen as a key to helping wean the nation off a dependence on fossil fuels.

The moves come as rooftop solar is surging in popularity with consumers who see “clean energy” as a way to help mitigate harmful climate change, and after the Biden administration set a goal for the United States of ensuring a “carbon-free electricity sector” by 2035.

Many of the proposed changes deal with “net metering” — an arrangement in which a homeowner or business generating power through a solar system can store excess power for use later or send the surplus back to a utility provider for credit. The arrangement between solar system owners and utilities can save electric customers thousands of dollars annually, and is a key incentive for solar adoption.

Increasingly, however, utility operators are arguing that the arrangements are too costly and changes are needed to make the energy grid more equitable, and to account for the additional costs associated with providing solar.

Solar advocates say those arguments ring hollow and utilities are simply looking for ways to continue to maintain control and profits.

“As rooftop solar grows and as individual homeowners and small businesses become the owners of virtual power plants it fundamentally threatens the business model of investor-owned utilities,” said Johanna Neumann, senior director of the Campaign for 100% Renewable Energy at the Environment America nonprofit group. 

Surging solar adoption

Last year, the United States saw the installation of roughly 23.6 gigawatts (GW) of solar photovoltaic (PV) capacity, for a total of 121.4 GW of total installed capacity, which is enough to power 23.3 million American homes, according to the Solar Energy Industries Association (SEIA).

Solar accounted for 46% of all new electricity-generating capacity added last year in the country, and 2021 marked the third year in a row that solar made up the largest share of new capacity, according to a report by SEIA. 

A market survey released in April found that 34 U.S. cities now have 50 or more watts of solar PV capacity installed per capita, compared to only 8 cities with that much capacity in 2014.  The survey, a joint effort of the Frontier Group and the Environment America Research & Policy Center, noted that fossil fuel interests and some utilities “are working to slow the growth of distributed solar energy.”

In addition to looking to rollback net metering — the practice of crediting solar energy customers for the excess energy they supply to the grid — some states and utilities are hitting solar customers with special fees, charges and new rate designs “to reduce the appeal and financial promise of installing solar panels,” according to the market survey report.

“These changes undermine the value of solar power and can stall cities’ development of their solar resources,” the report states

California fight

In California, Pacific Gas & Electric (PG&E), a utility with more than 16 million ratepayers in the center and north of the state, is pushing regulators to accept plans that could hike the cost of residential rooftop solar, potentially making the energy option unaffordable for many people.

PG&E cites support from the environmental group Natural Resources Defense Council (NRDC) for its California proposals. Under the plan, PG&E, along with San Diego Gas & Electric and Southern California Edison, are asking the California Public Utilities Commission (CPUC) to approve a plan that would cut the credit the utilities have to pay rooftop solar owners every month, while increasing charges for new solar.

Proponents of the plan say the net metering that credits energy customers who generate excess solar power  gives credit at a rate that has roughly doubled in the last decade. The result is a growing gap between the value of solar generated at homes and the credit given to those customers with solar. 

The CPUC in December had signaled it was poised to approve the plan, but after pressure from hundreds of environmental and other advocacy organizations opposed to the measure, Gov. Gavin Newsom expressed doubts about it. The CPUC now has the issue on hold “until further notice.”

A spokesperson for PG&E did not respond to a request for comment. 

Solar backers cheer veto

In Florida, solar backers cheered the governor’s decision to veto the legislation that the solar industry warned would have significant negative economic impacts on ratepayers.

The bill, which cleared the state Legislature on March 7, would have forced people with rooftop solar to accept reduced rates for selling the excess energy that they generate back to utilities. The measure had the backing of Florida Power & Light. 

According to state Rep. Lawrence McClure (R), who introduced the bill, it was designed to prevent a situation in which people with solar pass all of their energy costs on to non-solar ratepayers. 

Opponents say the changes would cut payment rates to solar customers by 50% within four years.  They also warned of negative impacts for the 11,000 solar industry-related jobs in Florida.

In a statement opposing the Florida bill, Will Giese, southeast regional director for SEIA, described the measure as “a nightmare for anyone who believes in energy freedom and the rights of people to choose the energy that works for them and their families.”

DeSantis cited economic concerns in his April 27 announcement vetoing the solar bill.

“Given that the United States is experiencing its worst inflation in 40 years and that consumers have seen steep increases in the price of gas and groceries, as well as escalating bills, the state of Florida should not contribute to the financial crunch that our citizens are experiencing,” he wrote in a letter to Florida Secretary of State Laurel Lee announcing the veto.

Advocates warn of ‘extravagant’ energy bills

In North Carolina, Duke Energy is asking the state to accept a plan that would charge solar rooftop owners a new monthly fee, while also reducing payments for excess solar generated. 

Duke Energy’s proposed changes to net metering in North Carolina have the support of several environmental groups and would not hurt rooftop solar customers but would “compensate solar owners for their power back to the grid at rates that match the value of power to the company at that given time,” Duke spokesperson Randy Wheeless told The New Lede.

The utility supports carbon-reduction and clean energy goals in the Carolinas and  promises “fair and reasonable treatment for all customers whether they choose to install solar or not,” according to Wheeless.

The North Carolina Utilities Commission is taking public comments on the proposal through May 12.

NC Warn, an environmental and climate justice non-profit, is among the groups fighting the plan, and might request a public hearing on the issue, according to NC Warn Policy Coordinator Sally Robertson.

In comments filed with the commission, NC Warn said there is no basis for the proposed changes, and warned that if enacted, the plan would hinder interest in solar installation and impose “extravagant” bills on solar customers.

Duke Energy faces a May 16 state law deadline to submit a separate proposal to the NCUC on how the state could meet its goal of reducing electricity sector emissions 70% by 2030 and net-zero by 2050, and Robertson said that plan needs to be considered before any discussion can happen over the solar scheme.

“You can’t change the net metering rules before you decide what role solar is going to play” in North Carolina’s long-term electricity planning, Robertson said.