An attack on California solar benefits that affects us all
From an investors’ perspective, what’s afoot in California spells trouble not only for the Golden State but also for the rest of the nation
This article was written by guest author Patrick Costello, Certified Financial Planner™, Founder of Green River Sustainable Financial Services and an author of “Low-Carbon Investing, Defending the Climate/Emphasizing Performance”
As a financial advisor to environmentally conscious investors, my job is to steer clients toward investments that both offer steady returns and align with their desire to protect the planet. To that end, my clients generally reject fossil fuel-related stocks while embracing opportunities to invest in clean energy.
Unfortunately, in my home state of California, the state’s top utility regulator has proposed rule changes that would stunt the growth of the solar industry. Needless to say, this has rattled investors with a stake in clean energy markets. Renewable energy technology is one of the most potent tools we have to fight climate change, and we know that developing and installing the amount of renewable energy we need, by the time we need it, will require massive investment.
Over the past 15 years, California’s solar programs have been wildly successful. The state’s secret sauce has been its well-crafted policies and programs that have, up until now, signaled a long-term commitment to building out solar projects. An example is the state’s Million Solar Roofs Initiative that launched in 2006, setting its sights on creating 1.9 Gigawatts of new solar-produced electricity in ten years. The Initiative’s ambitious goals and long time horizon created the kind of predictability and ambition that investors seek. It comes as no surprise then, that by 2015, California had surpassed its goal by more than 150%, achieving a total rooftop solar capacity of 3.9 Gigawatts.
The state’s thoughtful approach to solar incentive policy and market transformation has also resulted in more skills specialization and technological development throughout the solar supply chain. As a result, prices for rooftop installations have plummeted from $9.45 per watt in 2006 to $3.80 per watt in 2018. That’s a 250% decrease in costs — making solar installations available to a wider customer base.
Regrettably, the California Public Service Commission (CPUC) has recently put forward a new proposal that could bring the state’s solar progress to a grinding halt. The misguided plan would make solar much more expensive by adding a record-high $57 monthly fee on current and future solar owners. It would also gut the compensation customers receive for delivering energy back to the grid. If approved on January 27, 2022, it would be the highest solar fee in the country.
From an investors’ perspective, what’s afoot in California spells trouble not only for the Golden State but also for the rest of the nation. As anti-solar public policies crop up and threaten to strip away benefits from solar customers, they will undoubtedly shrink the public’s appetite for new installations. The unintended consequences will be to depress investment in new solar ventures and send a warning to future solar and clean energy technology investors that state commitments to renewables could be on shaky ground.
California is the bellwether for many trends, and if it starts to cannibalize its solar industry, we may expect that other states will take a similar path. For example, just this past November, a Florida state senator introduced a bill that would allow utilities to add fixed monthly minimum bills, grid access fees or other such charges to solar owners. This kind of backwards approach could damage every state’s solar progress.
Rather than go backwards on solar, my hope is that my governor, Gavin Newsom, will put a halt to the CPUC’s solar benefits rollbacks. I hope he sees what investors see: California leading the country to a solar-powered future.
Senior Director, Campaign for 100% Renewable Energy, Environment America Research & Policy Center
Johanna directs strategy and staff for Environment America's energy campaigns at the local, state and national level. In her prior positions, she led the campaign to ban smoking in all Maryland workplaces, helped stop the construction of a new nuclear reactor on the shores of the Chesapeake Bay and helped build the support necessary to pass the EmPOWER Maryland Act, which set a goal of reducing the state’s per capita electricity use by 15 percent. She also currently serves on the board of Community Action Works. Johanna lives in Amherst, Massachusetts, with her family, where she enjoys growing dahlias, biking and the occasional game of goaltimate.