California has long been a national leader for rooftop solar installations. However, in a state with abundant sunshine, it is increasingly challenging to own a home with solar. The state stepped up to this challenge with 2022’s Assembly Bill 2316: Customer Renewable Energy Subscription Programs and the Community Renewable Energy Program. The policy opens a new market for solar energy, allowing third parties to develop community solar projects and subscribe customers.
Watch the top state community solar programs progress in our Community Solar Tracker.
Participants will subscribe to a solar garden and receive credits on their electric bill for the electricity it generates. The bill credits will be designed through an “avoided cost” calculator; a combination of the wholesale market price for that electricity, estimated savings on transmission and distribution, and the value of reducing carbon emissions. The credit value will also depend on the demand for electricity at the time of sale. To maximize benefits to subscribers, 51 percent of which must be low-income households, developers are incentivized to pair community solar with battery storage. The state will develop additional rules by March 2024.
California’s Previous Attempts for Solar Inclusion
California has tried several measures to encourage community solar and boost access to renewable energy. These programs have not been very successful. According to Greentech Media, there are hardly any operational community solar projects in California’s investor-owned utility service territories.
The Green Tariff/Shared Renewables program, established in 2015, is divided into two parts: the Green Tariff and Enhanced Community Renewables. By ILSR’s definition, only the Enhanced Community Renewables component of the policy can be called community solar.
As a part of Enhanced Community Renewables, a consumer agrees to acquire a share of a community renewable (usually solar) project directly from a developer in exchange for a credit from their utility. A portion of the Enhanced Community Renewables must serve environmental justice to communities identified by CalEnviroScreen.
The Green Tariff/Shared Renewables program had a sunset date of 2019, but Resolution E-5028 removed it. The California Public Utilities Commission will review the Enhanced Community Renewables program in conjunction with its work developing rules for the 2022 Community Renewable Energy Program.
What Does the New Community Solar Program Offer?
Learning from earlier missteps, California’s new community solar program strives to create a viable community solar market with tangible benefits for subscribers. Customers of Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric will be eligible to participate. Community choice agencies may opt in to the program.
Subscribers will receive credits on their electric bill for the electricity that their subscription generates. Bill credits, which will be determined by the utility’s avoided cost, should be greater than the subscription cost.
Addressing the Needs of California’s Grid: Renewables and Resiliency
California has relatively high solar saturation, an issue that the legislature and public utility commission had to grapple with in their net metering update for residential customers.
The new community solar policy addresses solar intermittency concerns and works to make California’s grid more dependable for all. When power is more valuable to the grid, community solar projects will earn more for delivering it. Subscribers, on the receiving end of those credits, benefit most if the electricity is sold at peak value. To control the timing of delivery, each project is incentivized to include energy storage and maximize savings for subscribers.
A new fleet of community solar plus storage could generate hundreds of megawatts of electricity, stored in batteries, and deliver it when the distribution grid needs it most.
The Question of Inclusivity
California’s new community solar policy requires that at least 51 percent of a project’s subscribers are low-income — the largest low-income carve-out of any state. New Mexico’s community solar program requires that 30 percent of each solar garden serves low-income customers.
It is worth noting that California’s carve-out is per project, while Colorado, Maryland, New Jersey, and Oregon have carved out 12 megawatts, 125 megawatts, 40 percent, and 10 percent of their overall programs for low- to moderate-income subscribers, respectively.
Carving out capacity for low-income subscribers is one way to prevent subscriber inequities. The California policy also requires that workers are paid prevailing wages to construct the projects.
A Challenge to AB 2316: Implementation
While California’s 2022 community solar program is law, many aspects must be worked out before developers can build community solar projects and run them efficiently. The bill text, for example, does not have any specifications around project size. Regulators must review community solar programs, including the Green Tariff/Shared Renewables program, by March 31, 2024.
In the community solar bill, California legislators also recognized the value of federal solar tax credits (expanded by the Inflation Reduction Act). They noted that Californians ought to have access to “time- or quantity-limited federal incentives,” which adds some urgency to program implementation.
A New Hope?
California’s 2022 community solar policy creates a new market for solar energy. The program makes solar more accessible to individuals who were previously unable to install solar panels on their roofs. The rules set in AB 2316 are inclusive, flexible, and promote additive renewable energy generation capacity — three of ILSR’s Principles of Meaningful Community Renewable Energy. While the program’s success is dependent on its implementation, it has the potential to provide tangible benefits to subscribers — all while making the grid more reliable for everyone.
For more on solar in California, check out these ILSR resources:
- Cooperative Ownership Puts Community Solar in the Community — Episode 94 of Local Energy Rules Podcast (2020)
- Visualizing California’s Booming Solar Market (2018)
- California Solar Advocates and Legislature Working to Fix TOU Rate Disincentive (2007)
- California Solar Initiative Adds Performance Based Incentive in 2007 (2006)
Learn more about community solar in one of these ILSR reports:
For podcasts, videos, and more, see ILSR’s community renewable energy archive.
This article was originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter or get the Energy Democracy weekly update.
Featured photo credit: 100% Campaign via Flickr. (CC BY 2.0)
