The vote last Wednesday at the California Energy Commission to mandate solar on all new residential rooftops may have been unanimous, but energy experts are still definitely divided. Most prominently, UC Berkeley energy economists have been out in force to argue against it as economically inefficient.
First, Severin Borenstein drafted a hasty letter in opposition to the commission, and then his colleague James Bushnell drafted a Sacramento Bee op-ed against it. Bushnell also wrote a longer post explaining his rationale:
As more aggressive and difficult carbon reduction goals loom for California, there seems to be an inclination to grasp at every policy we can think of that can add to the carbon reduction body count. It’s a spaghetti on the wall approach to carbon policy. However, it’s now more important than ever to focus on the efficient tools and policies that can push our carbon reductions in cost-effective ways. We could get away with inefficient policies like net-energy metering and zero-carbon schools when they were relatively small polices. From here on out the costs are going to start to matter.
The points they make similar: rooftop solar is not cost-effective, compared to utility-scale solar, and the policy may actually cost more money than we think because it will leave existing investments in power plants and solar PV facilities essentially stranded as useless during sunny days. It will also force ratepayers without solar to continue subsidizing homeowners with panels.
To sum it all up, Vox’s David Roberts lists all the pros and cons to the policy. For my part, I find two of the “pro” arguments convincing. Especially this one:
Time-of-use rates mean new rooftop solar could drive new storage and demand shifting.
California’s three big utilities are shifting to time-of-use rates for residential customers — meaning ratepayers will be charged more for electricity when it is more valuable. This will also affect net metering; if retail rates are lower during the midday solar surge, net metering compensation will be lower too.
That will give homeowners incentive to shift some of their solar energy around, which they can do with home energy storage — and helpfully, under the new building code, storage counts as compliance with efficiency mandates. That should get a lot of storage, and with it a lot of responsive demand, into California homes, which should help stabilize the grid.
In the long run, California will not be able to maintain net metering as a policy to compensate solar rooftop owners for their surplus production. Like Hawaii, my guess is that the state will move to paying homeowners for excess solar at the wholesale rate, as a cash payment. Combined with time-of-use or real-time electricity pricing, homeowners will then have an incentive to buy home batteries to capture their surplus solar, rather than rely on credits from their utility. The resulting energy storage deployment (and change in electricity demand) will improve the economics of rooftop solar and also the grid profile of these homes, perhaps lessening the negative effect on existing utility-scale power plants.
Second, I find convincing the argument that the rooftop solar boom will drive down prices for solar, which will benefit everyone (including utility-scale installers), as well as help promote demand for clean technology more generally, from batteries to electric vehicles (a variation on the “rooftop solar is contagious” argument).
But perhaps more importantly, we should keep in mind two things about this decision:
- it cannot be viewed in isolation, as the state is trying out all sorts of policies to address climate change (and our housing crunch); and
- because it is a regulation, if facts on the ground change, the commission is well suited to reverse course or alter the mandate in some fashion in a timely manner. That’s the beauty of regulation over legislation.
Given the many potential upsides, it’s worth it for the state to pursue this experimental policy and ideally separately encourage electricity rates that optimize the rooftop solar deployment. And in the meantime, state leaders can monitor implementation and adjust it as technologies and other energy policies change.
