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Green Building News

Waiting for California to Raise Its Solar Subsidy Limit

The state’s Senate Appropriations Committee has been reviewing a bill that would further help homeowners cover the cost of solar power installations

California has been encouraging homeowners to install solar power systems by allowing them to receive full retail value for the electricity their systems generate back into the grid. Called net metering, the subsidy is available to utility customers until the total program capacity exceeds 2.5% of the utility’s peak demand. A bill being considered by the state senate committee would raise the cap to 5%.
Image Credit: iStockphoto

Nancy Skinner, a Democratic freshman in the California State Assembly, began her political career, on the Berkeley City Council, before she had even graduated from college. She knows well that the success of legislative initiatives – particularly environmental proposals – often is tied to perseverance.

But it also helps when a proposal is popular among consumers. This spring, Skinner proposed Assembly Bill 560, which would expand a program that that allows homeowners who have installed solar power systems to get full retail value for the electricity the systems generate back into the grid. Existing law requires utility companies to offer the subsidy, called net metering, to customers until the program capacity in their service area exceeds 2.5% of the utility’s peak demand.

The program is indeed popular. So much so that the capacity limit could be exceeded in the central and northern parts of the state by the end of 2009. The net metering pace in Southern California is slower, but still robust enough to prompt Skinner to present AB 560, which she did in April. The bill originally proposed increasing the limit to 10%, but the cap was amended early this month to 5% by the California Senate’s Energy, Utilities and Communications Committee. The bill awaits approval by the Senate’s Appropriations Committee. From there it will be presented for a vote by the full Senate.

Utilities: Let’s not be hasty

But while the solar industry and homeowners who have installed PV systems support the legislation, California’s three investor-owned utilities –Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric – oppose it. One of their complaints is that it is too early to tell if the program is cost-effective or shortchange customers who can’t afford to install solar power.

A recent Los Angeles Times story points out that solar power users already get a state subsidy of about 20% of the purchase and installation cost and a federal income tax credit of 30%.

“We want to make sure there isn’t an unfair level of cost-shifting,” Jennifer Briscoe, a spokeswoman for San Diego Gas & Electric, told the Times.

But Adam Browning, executive director of Vote Solar Initiative, a San Francisco advocacy group, sees net metering as crucial to increased use of solar power. “Without net metering we’re not going to see a lot more people” buy expensive solar systems, he told the paper. “If we hit the net metering cap, the California solar industry grinds to a halt.”


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