California — the biggest US solar market — is poised to overhaul its landmark subsidy for rooftop panels to encourage homeowners to also install batteries to help stabilize its power grid and prevent blackouts.
(Bloomberg) — California — the biggest US solar market — is poised to overhaul its landmark subsidy for rooftop panels to encourage homeowners to also install batteries to help stabilize its power grid and prevent blackouts.
A plan unveiled Thursday would give homeowners bigger incentives to install batteries along with solar systems instead of just panels alone.
The plan threatens to slow the pace of rooftop installations, but would strengthen a state grid that has buckled during repeated summertime stretches of extreme heat.
California’s proposal signals a new direction for state-level solar policies across the US.
While subsidies were once designed to move rooftop systems from the niche to the mainstream, panels are now ubiquitous in many communities. Today, state policymakers are focused on the reliability of a grid that’s become dependent on renewable power that fluctuates with the whims of the sky and air.
“All the additional rooftop-solar-and-storage systems will provide more grid stability,” Pol Lezcano, an analyst at BloombergNEF, said in an email.
“The new rates will speed up the transition to solar-plus-storage.”
Read the proposal here
The solar industry recoiled at a proposal issued nearly a year ago that would have required new solar customers to pay monthly grid connection fees, prompting Governor Gavin Newsom and Hollywood celebrities to urge regulators to go back to the drawing board.
The new plan ditches those grid connection charges.
It still reduces how much credit solar customers would get for exporting their excess power. It would also change electric rates to encourage people to store their solar energy during the day and either export it or use it later in the evening when power is more expensive.
Shares of Sunrun Inc., the biggest US residential installer, surged 27% on Thursday.
The stock extended gains Friday, rising as much as 2.1% in New York.
But the state’s plan could be problematic for many solar companies.
While Sunrun, Sunnova Energy International Inc.
and SunPower Corp. “are well-positioned with their storage experience and offerings, our checks suggest half of the California contractors don’t do storage today,” Roth Capital Partners analyst Philip Shen said Friday in a note.
“These organizations will need to adapt, and we expect some to exit the industry.”
California’s proposal calls for a 75% reduction in the credit that new customers would get for exporting excess power to the grid, according to the California Solar & Storage Association, which criticized the plan.
If adopted, “I wouldn’t be surprised to see fewer installations in the market next year than this year,” Meghan Nutting, an executive vice president at Sunnova, said in an interview.
“That’s a big change for the market.”
(Updates with analyst comment in 9th paragraph)
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