75% Of California Residential PV Companies Designated As High Risk

Solar Insure says California home power plant companies have financial stability issues. Nonetheless, California reaffirmed its anti-solar decision in a recent appeals court hearing.

A year ago, the California Public Utilities Commission (CPUC) approved the New Net Metering Policy NEM 3.0, which goes into effect on 15 April 2023. The policy cuts subsidies for exported residential PV generation by about 80%.

A few months after implementation, the effects of the NEM 3.0 policy are clearly visible. Utility grid-connected sequences show an 80% drop in installed capacity. The California Solar and Storage Association (CALSSA) reports that nearly 17,000 employees working in rooftop solar have lost their jobs this year, about 22% of the workforce.

Solar Insure, a supporter of many of the state's installers, said its data shows that 75 per cent of solar installers are now in the "high risk" category following the CPUC's decision to implement NEM 3.0.

Solar Insure CEO Ara Agopian said, "Recently, we have witnessed a wave of solar installer bankruptcies, and in the first quarter of 2024, there will be another wave of bankruptcies."

The CPUC ruled in favour of large privately owned ground-mounted power plant companies despite public and industry protests and warnings of the devastating effects. These large ground-mounted power plant companies called for fairness and equity in pushing for the implementation of NEM 3.0, saying tenants were being left behind by rooftop solar. Shortly after pushing for the policy, the CPUC revealed that concerns about fairness were just words, and that further rulemaking made it harder for tenants to profit from rooftop solar.

With the help of a CPUC board appointed by Governor Gavin Newsom, Pacific Gas and Electric (PG&E), San Diego Gas and Electric's parent company Sempra, and Southern California Edison (SCE) achieved the market conditions they desired. The three companies, which have a market cap of about $120 billion, have managed to capture the market, punishing small rooftop solar installers in favour of large ground-mounted plants.

In a ruling this week, the First Appellate District Court of Appeals reaffirmed the CPUC's decision to implement NEM 3.0, despite the risk of bankruptcy and supported by unemployment data.CALSSA said this is not surprising, given that the 2013 legislation called for a re-evaluation of net metering, and that the CPUC rulemaking process itself "has been unfavourable to solar energy from the outset "

Job losses, bankruptcies, and an unabashed regulatory moat built around more than $100 billion in corporate profits have raised questions about the legislative foundation of the CPUC board appointed by Governor Gavin Newsom.

Electricity prices in California have risen dramatically over the past three years, far outpacing inflation. Without rooftop solar as an eyesore, the state's large ground-mounted power companies can continue to profit from a virtual monopoly.

Market conditions have led to an increase in "grid defections," where customers cut off power and rely on their own solar assets to power their homes. As the cost of solar equipment declines over time, "grid defection" may pose an existential threat to large ground-mounted private companies. Current legislation makes it very difficult to go off the grid, and the CPUC's support of large-scale ground-mounted private companies could put the practice at risk of being banned by future legislation, further placing Californians at the mercy of rising prices for large-scale ground-mounted private companies.