Community solar: Can California get it right this time?

California is a leader in the energy transition. But even the most mature solar market in the U.S. hasn't always gotten it right.

The Golden State has watched from the sidelines as community solar programs across the country have been wildly successful. These programs open up access to clean energy's benefits for people who are unable to install solar panels at their residence, while on average saving customers 10% on their electric bills.

Florida, for example, has installed more than 1,600 MW-AC of community solar. California, by contrast, had 45 MW as of January 2022.

That's right: Forty-five.

It's not that California hasn't had a community solar program. It's that it hasn't worked.

Now there's an opportunity to fix it. A new law directs state regulators to design a community solar program. Can the state get it right this time?

Aaron Halimi is the founder and president of Renewable Properties, a community solar developer with a rapidly growing portfolio.

Halimi began his solar career in California real estate and was approached by a solar developer to put solar on his family’s property. The more he learned about solar and the development process, the more he wanted to be a part of the industry.

After working for other developers, Aaron founded Renewable Properties in 2017. The California-based company focuses mostly on community solar and small-scale utility projects outside of his home state. That's largely due to California's inadequate community solar policy.

But Halimi said he remains optimistic that, this time, the California Public Utilities Commission (CPUC) will craft a policy that opens the market for developers like him.

"The solar market has matured a lot," Halimi said on the Factor This! podcast. "We're more organized as an industry. Our lobbying efforts are that much stronger."

This time around, California has plenty of examples to pick from. Twenty-two states, plus Washington, D.C., have policies that support community solar.

Ultimately, California's community solar program should promote access for all, Halimi said.

"That's what community solar is about," he added. "It's my hope that my home state of California gets it right. I'm betting that we're going to get it right."

California's community solar program was first introduced in 2013. Since then, few projects have been built because they haven't been financially feasible.

The Coalition for Community Solar Access said that California has two programs that to date have “failed to unleash community solar’s potential.”

These are the Enhanced Community Renewables component of the Green Tariff Shared Renewables Program. It has no projects in operation after nine years because of unfinanceable rates, the coalition said. 

What's more, fluctuating rates made it difficult to communicate cost savings to customers.

Last September, California Gov. Gavin Newsom signed into law Assembly Bill 2316. It directed the CPUC to design a community solar program that pairs solar power with energy storage, while emphasizing environmental justice.

AB 2316 directs that at least 51% of subscribers be low-income customers, triggering at least a 40% federal tax credit on solar installations under the federal Inflation Reduction Act. It also requires paying prevailing wages for workers, triggering a separate 30% federal tax credit for storage installations, also under the IRA.

The California law is expected to help builders meet state building codes that require solar systems paired with storage in multi-family housing and nonresidential construction starting in 2023.

Responsibility for implementing AB 2316 rests with the CPUC. Regulators are tasked with evaluating the existing programs and reporting to lawmakers its justification for terminating, modifying, or retaining them.

Halimi outlined his vision for a successful community solar program in California:

1. Define a fair and accurate community solar $/kWh value for solar and storage. A fair value of distributed energy must provide enough steady revenue for solar developers and significant energy bill savings for subscribers. Unsuccessful programs typically include poison pill adders, fees, or regulations that discourage subscribers, developers, or both.
2. Eliminate any artificial caps on program capacity. One of AB 2316’s goals is to provide community solar access to non-homeowner residents of all income levels, who comprise the majority of California residents. The CPUC should avoid imposing a too-conservative overall megawatt cap on program capacity, which would create a solar gold rush, followed by a boom and bust cycle. Scarcity and uncertainty are problems for any industry, but especially for solar and its developing workforce. Under an appropriately sized or even uncapped program, the state can create a trained, robust, steady solar and storage labor force with the prevailing wages set in the IRA. An arbitrarily low cap will attract few new workers and simply exacerbate California’s existing solar labor shortage.
3. Consolidate billing. This element is part of the successful community solar programs in New York and other states. With consolidated billing, the community solar program’s billing and accounting are taken care of by the participating utility. Having one electric bill that includes the community solar discounts helps the subscriber by keeping their electric bill streamlined and simple. For the developer, consolidated billing lets the utility take the risk of collecting subscriber payments, which reduces the cost of capital to build and maintain projects. The solar developer’s accounting and subscriber management are also simplified, further reducing O&M costs and revenue risks. For utilities, consolidated billing can help streamline their customer relationship and billing.
4. Create project incentives from existing funding. California’s Clean Energy Commission (CEC) is working on a Clean Energy Reliability Investment Plan, which will come with $1 billion in funding over three years. The community solar program envisioned by AB 2316 would be an ideal recipient of some of these funds, as the distributed generation and storage the program will facilitate would help the state achieve its reliability goals.

About the sponsor:

This episode of Factor This! is sponsored by Heila Technologies, a Kohler company. Heila is changing the way complex microgrids are managed and operated with its EDGE control and optimization platform, which makes each asset in a system smarter while making the whole microgrid more efficient and resilient.

The EDGE helps EPCs and developers simplify microgrid deployment through a flexible approach that ensures systems operate reliably while unlocking new revenue streams.

Heila is a proud sponsor of the 2023 GridTech Connect Forum. Register now at www.gridtechconnect.com to learn more about Heila and the EDGE platform.