California set to lower incentives for rooftop solar panels

That has led to criticism that homeowners with solar panels aren't paying their fair share toward the overall energy grid, on which they still rely when they aren't generating solar power in the evening. Power rates include costs like electric transmission and wildfire prevention work, and state regulators give utilities a set amount they can collect from their customer base.

The fight over changes to the program — directed by the state Legislature — has been controversial from the start, pitting the state's three major utilities against the solar industry, with many environmental groups caught somewhere in between.

Any changes would only apply to customers of those three major utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric. They would not affect people who already have rooftop solar, only new customers.

The discussion comes as California pushes forward with ambitious targets for weaning the state off oil and gas. State air regulators are set to vote Thursday on a climate roadmap that says California must quadruple its solar and wind power to achieve carbon neutrality by 2045.

A utility-backed coalition called Affordable Clean Energy for All estimates that $4 billion in costs are shifted from solar to nonsolar customers. The solar industry disputes that number, saying it doesn't account for the benefits rooftop solar provides for everyone, like making the grid more resilient and reducing the need for utilities to build more costly legacy power equipment.

The changes before the California Public Utilities Commission would lessen the financial incentive for selling power back to utilities. It also changes electric rates to try to encourage people to build home storage systems alongside their panels, so they can tap that stored power at night instead of relying on the overall energy grid. Though solar provides a lot of California's power during the day, fossil fuels largely take over in the evening and during the night.

Today about 16% to 20% of the 150,000 households that install solar panels annually in California add battery storage systems, according to industry estimates.

Broadly, solar companies have warned that fewer people will add home solar because the overall incentives are going down.

"The solar and storage industry remains concerned that the transition from net metering to the new net billing structure is too abrupt and threatens to slow the deployment of rooftop solar in California," Sean Gallagher, vice president of state and regulatory affairs for the Solar Energy Industries Association, said in a statement.

The Public Advocates Office, a consumer advocacy group with the utilities commission, has called the proposal a "step in the right direction." The group pointed to commission estimates that show the proposal will still save residential solar customers an estimated $100 on their monthly bills, or $136 a month if they also install storage systems.