California Taxpayers to Foot $8.5 Billion Bill for Rooftop Solar Subsidies

Californians are facing a bill of $8.5 billion in rooftop solar power subsidies following an overhaul of the state’s subsidy scheme for the alternative energy source.

According to a Reuters report, the California Public Utilities Commission two years ago overhauled its subsidy regime for rooftop solar, making the installations less attractive by offering lower rates for the electricity their owners sell into the grid.

Yet those who had signed up for the subsidies before that year will continue to receive their higher rates, while Californians without rooftop solar installations will have to pay higher electricity rates, effectively shouldering the subsidy burden.

The calculation of the costs comes from a report by Public Advocates Office, which is a unit of the California Public Utilities Commission, which offered a few solutions to that problem. These include switching pre-2022 rooftop solar owners to the new, lower rates for feeding solar power into the grid after 10 years or after they sell their house.

Another solution is to set the rates paid to solar owners at the level of electricity rates at the time when they joined the state’s solar scheme rather than current, higher rates, Reuters also reported.

Consumers in California have seen their electricity bills surge in recent years and double over the past decade as utilities are investing more in wildfire prevention and transmission lines to accommodate growing renewable energy output.

California is looking to rapidly shift away from fossil fuels and make its grid more resilient but while power generation costs may be plunging, transmission and distribution costs are rising, leading to higher spending from utilities.

Another problem is so-called curtailment, which comes down to dumping excess electricity output from solar panels at times of low demand. Since solar generates at peak during trough demand periods, and given California’s substantial solar capacity, the amount that gets curtailed is quite substantial. It was part of the reason why regulators overhauled the subsidy regime for solar generators.

By Irina Slav for Oilprice.com

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