What California Businesses Need to Know About Proposed Changes to Community Solar

Community solar is essential to ensuring that businesses and other organizations can benefit from renewable energy even if they are unable to host a solar energy system on their own property. According to the U.S. Department of Energy, there were more than 7 gigawatts (GW) worth of community solar projects online nationwide at the end of 2023 — with just 46 megawatts (MW) of community solar capacity in California.  

On March 4, the California Public Utilities Commission (CPUC) issued a Proposed Decision (PD) that, if approved, will have drastic consequences for the state’s ability to scale community solar. Let’s explore what’s included in the CPUC’s Proposed Decision, why community solar is vital to California, and what businesses need to know about the future of community solar in the state.

(Related: California EV and Solar Incentives)

What Is Community Solar?

Community solar refers to a type of solar energy project in which utility customers subscribe to a share of the energy generated by a solar system located in their community. Subscribers receive a credit on their utility bill in return, reducing their overall energy costs while also supporting sustainability.

Businesses that choose to host a community solar project by installing a system on their property can benefit more directly by using a sizeable portion of the energy to help run their operations and offset their utility costs. Additionally, businesses can bolster their corporate image by inviting their employees and other local residents to subscribe to the project so they can enjoy significant energy savings as well.

(Related: Understanding the Alternative Fuel Vehicle Refueling Property Credit For Businesses)

Why Community Solar Is Important in California

Californians have some of the highest energy rates in the country. Community solar allows renters, small businesses, homeowners, and others who cannot install solar on their premises to still access the benefits of solar by receiving credits on their utility bills. Like all renewable energy, community solar also lowers carbon emissions, thereby providing environmental and public health benefits, especially for disadvantaged communities.  

Community solar adoption can also help California meet its renewable energy and climate targets. Canary Media reports that California currently has less than 600 MW of distributed solar as opposed to 6.2 GW in states with community solar programs.

But with the California Public Utilities Commission’s recent Proposed Decision, community solar in the state might be in jeopardy.

How CPUC’s Proposed Decision Impacts Community Solar

Siding with utilities and ignoring the needs of the solar industry, the Proposed Decision favors a community solar program based on existing wholesale-market distributed energy programs, despite clear evidence that these programs have failed over the past decade.

PowerFlex along with other members of the Coalition for Community Solar Access (CCSA) have submitted comments to the CPUC detailing why the Proposed Decision does not make for a commercially viable community solar program in California:  

• For one, the PD soundly rejected the Net Value Billing Tariff (NVBT), a proposal backed by the CCSA that would generate 8 GW of community solar paired with battery energy storage and provide benefits to hundreds of thousands of households.

• What’s more, The PD goes so far as to argue that the NVBT violates federal law despite it being based on New York’s Value of Distributed Energy Resources (VDER), the nation’s leading community solar market with over 2 GW of community solar installed. Indeed, 22 states and the District of Columbia already have community solar legislation in place and there is clear federal support for community solar as evidenced by the Low-Income Communities Bonus Credit Program in the Inflation Reduction Act (IRA) and the Solar for All Program. The PD’s arguments therefore fly in the face of federal precedent and threaten existing programs if passed.

• The arguments of the PD therefore contradict the intent of the California legislature, which in 2022 passed AB 2316 directing the CPUC to evaluate and modify existing programs and, if necessary, create a new community solar program “so that all Californians, especially those unable to host a rooftop solar system, realize the benefits of distributed generation through a cost-effective program that provides benefits to all ratepayers.”

Even more concerning is that the Proposed Decision comes on the heels of the Net Billing Tariff (NBT). Passed in April 2023, the NBT reduced the value of solar exports by 70 to 80% on average to encourage the pairing of energy storage with solar. By the end of the year, California rooftop solar sales were down as much as 83% compared to 2022, and 17,000 jobs (22% of all California solar jobs) had been lost.  

Passage of the PD alongside the ramifications of NBT will only further weaken the solar industry and prevent California from reaching its climate goals.  

(Related: Energy Solutions for Property Development.)

What Businesses Should Know About the Future of Community Solar in California

So, what do California businesses like yours need to know about the future of community solar in the state? Here are the key takeaways:

• The PD is just a proposal at this point: While the California Public Utilities Commission’s Proposed Decision is deeply concerning, it’s important for businesses to understand that it’s only a proposal and has no legal bearing unless the Commission approves it. The earliest a vote will take place is May 9, but, based on earlier proceedings that have received a similar level of opposition, there’s a high likelihood that the CPUC will take more time to review the docket and solicit more feedback.

• You have the power to help mold policy: Companies that have business operations in California and other states with existing community solar programs should reach out to their state representatives and California Governor Newsom to oppose the Commission’s Proposed Decision.

• PowerFlex is in your corner: The policy experts here at PowerFlex, along with our allies across the renewables industry, will continue to fight for equitable, clean energy in California and throughout the United States.

Get Started With Community Solar With PowerFlex

Despite the controversy in California, community solar is still a financially and environmentally smart way to reap the rewards of emissions-free solar energy. As mentioned earlier, there are thriving community solar markets in other states that provide economic and sustainability benefits to businesses. PowerFlex can help you explore these markets and stay updated on the developments in California.

PowerFlex has installed over 45 MW of community solar nationwide, including the largest rooftop community solar project in New York for Medline Industries as well as the largest in the country for Summit Ridge Energy.

Contact us today to learn more about how you can start benefitting from a community solar project.

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