California’s decision to change how much customers make from solar energy, which took effect last April, has pummeled the rooftop solar industry in the state, and industry experts expect a nearly 41 percent drop in sales this year.
“We expect installations to fall off sharply in 2024,” Solar Energy Industries Association spokesman Morgan Lyons, a national solar-energy industry trade association, told The Epoch Times.
The state’s Public Utilities Commission (CPUC) put in place a new policy in April that substantially reduced the amount of money solar customers make selling excess energy back to the grid.
The move slashed the value of solar energy shared back to the grid by solar homes and businesses by up to 80 percent overnight, according to the California Solar and Storage Association, a state solar industry association with over 550 member companies.
Preliminary estimates provided by the Solar Energy Industries Association show sales in California were expected to decrease to 1,375 this year—940 fewer installations than last year.
Before California’s new rule went into effect, sales in the state were increasing, according to Mr. Lyons.
Gov. Gavin Newsom promised to provide incentives for energy storage to reduce the losses, but those incentives did not materialize last year, according to the association.
Since the decision, the solar industry has had business closures and depression-level layoffs, the association wrote in a press release in December.
“All over California we are seeing the grim reality of how the CPUC’s cuts to solar are taking livelihoods away from thousands of families,” the association’s Executive Director Bernadette Del Chiaro said in the press release. “No one would expect a supposed climate leader like California to be pulling the plug on green jobs and our fastest and most accessible path to a clean energy future.”
Over 17,000 workers—about 22 percent of solar jobs in California—were laid off as a result, according to SolarInsure, a national warranty service for the industry.
In California, major solar contractors that went out of business last year were Harness Power, American Solar Advantage, and Kuubix Energy.
Infinity Energy, another large contractor in the state, was sinking quickly, SolarInsure reported in December. The phone number listed for the company was out of service Tuesday.
Eleven other California solar companies closed in 2023, including Charged Up Energy, Enver Solar, Polar Solar, and United Solar.
Beyond the change in policy, Federal Reserve interest-rate hikes severely impacted the solar sector, making borrowing more expensive and discouraging consumers from investing in solar energy, SolarInsure reported.
“This drop in consumer demand hit solar contractors hard, as their business model relies heavily on a steady flow of new installations,” SolarInsure wrote in a December statement.
Homeowners or businesses that installed solar panels or other renewable energy systems that met the state’s requirements receive credit on their electricity bill for excess energy generated and fed back to the grid.
The credit is usually equal to the retail rate of electricity, and can be used to offset electricity charges on future bills.
Also in December, the California Solar and Storage Association also showed a 77 to 85 percent decrease in rooftop solar projects since April.
Starting last April, PG&E, and Southern California Edison switched to a new program which reduced the price it paid to such consumers by about 75 percent.
For example, a customer whose monthly bill used to be $250 would go down to $18 with solar credits. Now, the bill will only drop to $95.
The two utility companies have seen a 66 to 83 percent drop in residential rooftop solar connection applications from April to September 2023, compared to the same months in 2022, according to Ohm Analytics, a research and data solutions firm for the clean energy industry.
San Diego Gas & Electric also changed to the same program as the other utilities, significantly decreasing the price it pays for solar energy sent to the grid. Customers are now credited based on wholesale compensation prices for each month.
