Although the odds may not be in their favor, community solar advocates remain cautiously optimistic about a key vote scheduled before the California Public Utilities Commission (CPUC) tomorrow.
And even if it doesn’t go their way, they’ve got a contingency plan.
In case you missed the saga that has played out in the last 18 months, here’s a quick recap. California hasn’t mustered much community solar development, compared to other green-leaning states, which have seen a significant uptake over the last decade.
Community solar advocates saw a chance to turn California around when the commission began re-examining its renewable energy subscription policies as required under AB 2316, a state law passed in 2022.
The Coalition for Community Solar Access (CCSA) proposed a new tariff—Net Value Billing Tariff (NVBT)—that takes a page from New York’s value of distributed energy resources (VDER). Proponents of this approach say it’s an accurate economic measure because it considers multiple value streams produced by distributed energy — including costs DERs may avert. In California, for example, the tariff considers such benefits as avoiding the need for transmission lines and reducing environmental harm.
“One telling sign that it has worked is that New York has a very healthy community distributed generation market,” said Nate Owen, founder and CEO of Ampion Renewable Energy, a software and process management company that serves community solar projects in about a dozen states. New York has become the top state for installation among the 22 states where community solar is now built.
Roadblock to community solar
“Folks that normally wouldn’t have been on the same page all coalesced around this (the NVBT) and supported the legislation. And here we are 18 months later, and instead of projects actually getting built, clean electrons getting generated and people saving money, we’re dithering over this proposed decision,” said Derek Chernow, Western Regional Director for CCSA.
At issue is whether community solar should be treated like distributed energy sold at retail rates or like small power plants known as ‘qualifying facilities’ under the federal Public Utility Regulatory Policies Act of 1978 (PURPA). As qualifying facilities, community solar projects would be compensated for their power based on a wholesale market rate.
Treating community solar as a wholesale transaction means less revenue to the community solar project, less savings for the subscriber, and a withdrawal from California by community solar developers, say NBVT advocates.
According to Chernow, the idea of community solar being subject to PURPA is unprecedented. “We’ve got community solar operating in 20-plus states now across the country. This issue has never come up, and it really threw things in flux.”
The organization hopes the commission will delay the April 18 vote to examine the issue more deeply.
Could Unsettle Markets Nationally
Community solar advocates were buoyed by an April 11 letter to the commission by Neil Chatterjee former chairman of the Federal Energy Regulatory Commission (FERC). Chatterjee warned that the administrative law judge’s decision could have broad national repercussions because it blurs the lines between federal and state jurisdiction.
“Typically, where distributed energy resources interconnect at the distribution system level, there is no intent for the projects to engage in a sale in the wholesale markets,” he wrote.
Track the latest innovations and trends in distributed energy. Subscribe to the free Energy Changemakers Newsletter.
If the commission adopts the proposed decision it “could create substantial uncertainty around federal/state jurisdictional conflicts that FERC itself has declined to initiate. Such conflicts could unsettle markets across the country. I hope that you will consider the far-reaching impacts of this proposed decision and reconsider a result that would be at odds with FERC precedent,” he wrote.
A win — or a loss — for community solar in California could reverberate throughout the country in other ways as well, according to Chernow. The US has the potential to develop nearly one terawatt of community solar, he said, citing an analysis by the National Renewable Energy Laboratory. Meanwhile, the US Department of Energy has set a goal for installation of 20 GW. California represents about 19% of the nation’s community solar. Should the commission vote in favor of the proposed decision, California is likely to achieve less than two percent of that potential, he said.
“Without California, the country is going to have a precipitous drop,” Chernow said. “Conversely, if we get this right, it’ll, it’ll just set the tone for everybody.”
If They Lose?
Community solar advocates already have their next steps mapped out should the April 18 vote go against them. CCSA plans to take the issue to state lawmakers, where Chernow believes the NVBT has bipartisan support. He cited an April 11 letter to the commission from Republican State Sen. Shannon Grove, saying that the proposed decision ignores legislative intent and continues “the state’s practice of failed community solar programs.”
Ampion’s Owen isn’t confident April 18 will bring good news for community solar in California. But he thinks pressure will be on the state to eventually fix its weak program, especially with utility rates rising.
“The model is working in other states. There’s a lot of third-party money that wants to flow into the state of California and build clean generators closer to load,” he said. “We don’t understand the logic behind what’s going on in California right now.”
Owen argued that community solar projects, which are built close to load, would help avoid the construction of transmission lines that threaten to spark wildfires.
“There’s just a massive opportunity being missed,” he said.