California solar panel owners’ biggest incentive is in jeopardy

California solar panel owners who make money by selling excess electricity back to the grid have their biggest incentive in jeopardy. The state’s largest power utilities have asked California officials to reduce the amount of money homeowners can make by contributing electricity to the grid. If officials comply with utility companies’ requests, the widespread adoption of solar could be hindered, a risk that some California lawmakers may not be ready to take.

California stands as the United States’ largest market for rooftop solar panels. The widespread adoption has been fueled by a favorable climate and environmentally-friendly incentives that encourage residents to go green. Because of the state’s success with convincing residents to switch to solar, other territories within the U.S. have used California’s policies as a template for their own fights against the use of fossil fuels that drive climate change.

This week, the California Public Utilities Commission is hosting utility companies, solar representatives, ratepayer advocates, and others, who are presenting their ideas on potential policy reforms, Reuters said. Policies will be effective in the coming years if passed.

Proposals presented over the past several days have focused on net metering, a policy that allows homeowners to profit off of the excess energy that is produced from solar panels that are equipped on their homes. When solar panels capture the sun’s energy, not all of it is always used. This excess energy is then given back to the grid. It can help power other homes in the event of energy shortages, which is a common occurrence in California due to the massive population. In the state last year, heatwaves caused blackouts in some areas due to the lack of available energy in the grid.

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Net metering has been a selling point for some solar installation companies like Tesla and Sunrun, but small, local firms also benefit. This has caused California’s three investor-owned utility companies, Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Edison, to recommend monthly charges of between $49 and $79 for solar owners for a 5-kilowatt system while compensating them for excess power, but the payout would be less.

Solar representatives are not keen on the idea because the incentives drive solar adoption. Executive Director of the California Solar & Storage Association Bernadette Del Chiaro believes that taking away the incentives could be detrimental to the environment.

“If we really put the brakes on rooftop solar today… we’re going to be in a world of hurt in 10 years when you wake up and realize ‘We actually do need to build (more solar panels),’” Del Chiaro said in an interview.

Net metering could be gradually reduced as solar trade groups are proposing a scheduled reduction over the next five years. By 2027, the rates would range between 25% and 50% lower than what they are currently, depending on the utility company that is used.

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