Dive Brief:
- The California Public Utilities Commission will vote today on how the state administrates community solar projects, a decision that will affect the financial viability of those projects.
- Solar advocates have criticized how the CPUC implemented the Community Renewable Energy Program, which was created by state law in 2022, and sought changes to boost developer compensation. In April, CPUC Administrative Law Judge Valerie Kao issued a proposed decision rejecting those proposed changes, citing state law and potential impact to the utilities.
- At the same time, the California legislature is weighing Assembly Bill 1813, which would make changes to the program that are supported by solar advocates, including requiring the CPUC to “establish a mechanism to determine whether community renewable energy generators are load-modifying resources consistent with the attributes identified by the [California] Energy Commission.”
Dive Insight:
Some debated aspects of the decision concern whether or not community solar projects are load-modifying resources and therefore qualify for Resource Adequacy credits from the state, as well as whether and how avoided costs are calculated. Solar advocates have argued that additional compensation is necessary after President Donald Trump gutted federal funding and tax incentives for clean energy, including cancelling $250 million in Solar for All funding for the state. California is suing the federal government over that decision.
The Solar Energy Industries Association criticized the proposed decision in an April release, saying that the commission had ignored the legislature’s intent when it passed AB 2316 in 2022, establishing the program.
“Instead of following the law and listening to the broad coalition of Californians who have repeatedly called for a workable community solar program, the CPUC has doubled down on its past bad decisions at the behest of monopoly utilities,” SEIA said, and asserted that the decision “virtually ensures that no community solar projects will be developed at a time when the state is facing surging energy prices.”
Derek Chernow, executive director of Californians for Local Affordable Solar + Storage, said in an interview that the CPUC “basically structured a program that was doomed to fail from the outset.”
Previously, the CPUC determined in 2024 when it established the program that community solar projects do not modify load, “and, without the ability of utilities and community choice aggregators to claim Resource Adequacy credits, a project could not avoid generation capacity costs.”
April’s proposed decision upheld that determination.
The proposed decision also upheld the commission’s conclusion that it is “unable to determine whether a project would avoid any transmission or distribution costs, much less what those avoided costs would be.”
Chernow noted that CPUC has its own avoided cost calculator.
“The PUC is not even using their own calculator to value these types of projects,” he said. “And all we're saying is, use your own calculator and you will see how beneficial these projects are to all ratepayers in California.”
CPUC’s 2024 decision found that [Net Value Billing Tariff] resources “would not reliably avoid costs that ratepayers would otherwise bear for generation capacity, distribution, and transmission,” so it was “unreasonable” to apply avoided cost calculator values.
CPUC Commissioner Darcie Houck, who dissented from the 2024 decision to adopt the program, said in her dissent that the decision relied on California’s SB 43 — which established the Green Tariff Shared Renewables program — to find that the commission’s avoided cost calculator “is not an allowed measure for compensation of a community solar program. But she viewed AB 2316, which established the community renewable energy program nine years later, as the “controlling law,” not SB 43.
“A community solar program can comply with state law using an avoided cost measure to determine compensation,” Houck wrote. “Under AB 2316, the Commission has flexibility to define avoided cost.”
“While avoided transmission and distribution is different for behind-the-meter rooftop solar versus in-front of the meter solar, the Commission has the ability to determine the appropriate mechanism to measure avoided cost and may adjust components or inputs used to determine cost-effectiveness,” she said.
AB 1813 would require CPUC to calculate avoided costs in order to provide bill credits to subscribers, “as determined by the commission’s methods for calculating the full set of benefits of eligible customer-generator distributed energy resources, if the community renewable energy generator is determined to be load modifying resource.”
The bill passed unanimously out of the assembly’s Committee on Utilities and Energy on May 6, and is now being considered by the Committee on Appropriations.
