The move was approved with a 5-0 vote by the California Energy Commission, in what supporters of solar energy are hailing as a monumental moment.

“This is an undeniably historic decision for the state and the U.S.,” Abigail Ross Hopper, the Solar Energy Industries Association’s CEO said in a statement. “California has long been our nation’s biggest solar champion … now, California is taking bold leadership again, recognizing that solar should be as commonplace as the front door that welcomes you home.”

The regulation will go into effect once it receives its expected approval by the Building Standards Commission later this month.

And while proponents of renewable energy may be pleased with the decision, there’s mounting concerns that the requirement will only aggravate the state’s home affordability crisis, as the mandate is expected to add at least $10,000 in additional construction costs.

However, supporters argue that utility savings will balance out that cost in the long term.

“Adoption of these standards represents a quantum leap in statewide building standards,” Robert Raymer, technical director for the California Building Industry Association, told the commission. “You can bet every other of the 49 states will be watching closely to see what happens.”

But Republican leaders are already coming out against the decision, framing it as just the latest example of government overreach in Sacramento.

“That’s just going to drive the cost up and make California, once again, not affordable to live,” Republican Assemblyman Brian Dahle reportedly said of the dangers of the rules.

The mandate will apply to all homes, condominiums and apartment buildings up to three stories high — with exceptions for structures that are covered by shade.

According to the commission’s own estimates, the panels will cost homeowners around $40 a month, but save them about $80 a month on heating, air conditioning and other costs.

“This is great for wealthier homeowners, but for everybody else it’s one more reason to not go to California or to leave ASAP,” American Enterprise Institute economist Jimmy Pethokoukis said on CNBC Wednesday.

More broadly, the move is part of California’s plan to have all residential buildings be “zero net energy,” which means that the the total amount of energy used by the building is the same as the amount of renewable energy it creates.

The Los Angeles Times also reported on how solar subsidies often amounted to a transfer of funds from the state government to very wealthy Californians.

As the understanding grows that green energy policies create political winners and losers, a new U.S. Energy Information Administration report shows how rapidly California is advancing with solar power:

Solar generation from utility-scale facilities (capacity of 1 megawatt [MW] or greater) hit a monthly record high of 2,765 gigawatt hours (GWh) in June 2015. The June 2015 solar generation level represents a year-over-year increase of 35.8 percent relative to June 2014. …

Most of the growth in U.S. utility scale solar generation is in California. In June 2015, well over half (56.5 percent) of total solar generation came from plants in California. Arizona (13.4 percent), North Carolina (6.7 percent), Nevada (6.4 percent), and New Jersey (3.3 percent), respectively, followed California as the largest solar contributors to the grid.

But it’s not the utilities building “utility scale” solar facilities. It’s usually multinational corporations setting up solar facilities in the expectation that Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric will buy their electricity to meet the state’s ever more ambitious goals for renewable-energy generation.

The utilities still have enough influence that they managed to persuade the California Public Utilities Commission to adopt a new pricing structure in July that made individual homeowners and businesses that have installed solar panels pay more toward maintenance of the state’s electricity grid.

Utilities: Part of ‘green industrial complex’ or not?

This would seem to presage a future in which power utilities are part of a “green industrial complex” that conservative publications have long warned of — companies and institutions which seek to profit from government environmental mandates that appear popular in red states and blue states alike.

But that’s not how the nation’s investor-owned utilities think the end game of current green politics are likely to play out. As The Washington Post reported earlier this year, it had obtained secret documents from the Edison Electric Institute, a utilities trade group that believes that the growth of renewable energy is an existential threat — not something that can be gamed by rent-seeking with regulators and state legislatures:

If demand for residential solar continue to soar, traditional utilities could soon face serious problems, from “declining retail sales” and a “loss of customers” to “potential obsolescence,” according to a presentation prepared for the group. “Industry must prepare an action plan to address the challenges,” it said.

That action plan so far has focused on getting state utility regulators to make solar-panel owners pay more toward maintenance of the electric grid — an effort that worked in California but that the Post notes hasn’t worked well in most states.

So whom might the utilities find common ground with in their fight against a solar power future? As complaints from urban Democrats in the Legislature suggest, an obvious candidate is lawmakers who understand that cleaner power is usually costlier power.

So far in California politics, the factions that make up the Democratic coalition have managed to stay on the same page on the biggest issues of the day. But if utilities begin to use their clout to warn that poor people are hurt by AB32-style policies — a potentially potent argument in the state with the highest effective poverty rate — that could roil and possibly recast the politics of the Golden State.

The problem is the new owner, in addition to qualifying for the mortgage, also has to qualify for the lease on the panels. Reported the Washington Post:

“Some would-be buyers balk when they learn that they’ll need to qualify on credit to take over your solar lease payments for the next 15 to 17 years. Others say they like the house but won’t sign a contract unless you buy out the remaining lease payment stream — $15,000 or $20,000 or more — because they’re worried that the solar equipment will become obsolete or won’t save as much on electricity bills as advertised.”

“Issues such as these are popping up increasingly in California and other states and are interfering with sales and closings, according to real estate industry experts.”

As with other areas of technology, solar panels are getting better and cheaper every year. So picking up a long-term lease on a rapidly depreciating asset might not be such a great investment.

The Post’s advice:

“Be aware of the potential complexities that can occur when you lease, rather than buy, solar panels. If you opt for a lease, understand your long-term obligations, and talk to your current utility company about the savings claimed. Most important: If you’ve got a leased system and plan to sell, contact the leasing company well in advance to learn about lease transfer and buyout options. That way, you’ll be ready if prospective buyers have problems with your panels.”

But this rapid growth is slowing as Hawaiian Electric Co., Hawaii’s sole power utility, increasingly objects to policies that require it to buy excess power from these homes at rates it sees as overly generous. This report is from last month:

In a filing with the state Public Utilities Commission last month, HECO argued that solar system owners can end up paying nothing to the utility, yet still rely on its grid daily, drawing electricity at night and when clouds pass. That means grid operation and maintenance costs are “increasingly being shifted from those who have solar to those who don’t,” wrote HECO in the filing.

This foreshadows a big battle that lies ahead in California: whether and/or how much residential solar installations should be encouraged with de facto or direct subsidies. So far, according to the utilitydive.com website tracking utility news around the U.S., California’s regulators appear wary of a commitment to any subsidies, not just long-term ones.

‘Costs should be borne by participants’

Last week, the website took an in-depth look at the latest version of the California Public Utilities Commission’s community solar rule, which has been crafted in response to a state law committing California to establishing 600 megawatts of community solar power generation. The first principle of the regulations is sure to spur criticism from politicians and advocacy groups who want California to shift even more quickly than it is away from fossil fuels:

Careful rate design and procurement can create ratepayer indifference and prevent program costs from being shifted to non-participating utility customers. …

The first finding was central for the IOUs [investor-owned utilities]. “Our program adheres to a principle that program costs should be borne by participants,” noted PG&E Community Solar Program Manager Molly Hoyt. “There is no cross-subsidy paid by non-participating customers.”

But in accepting the utilities’ proposals for rates and contract terms, said VoteSolar Western Region Director Susannah Churchill, it is possible the commission compromised affordability.

“I am worried that affordability is going to be a problem and the limitation that customers can only subscribe to the program for a maximum of one year means that they can’t lock in their credits and charges long term,” Churchill explained. “That is going to create uncertainty and may be a big barrier for program uptake.”

While mid-size solar projects remain more expensive than conventional generation, a small premium for renewables makes sense, she said. Many customers will be willing to pay more for 50 percent or 100 percent renewables-generated electricity.

Friendly to solar homeowners — or to state economy?

As state lawmakers gear up for successor laws to 2006’s landmark AB32 energy-regulation law, and as solar panels come down in price, this debate will grow ever more heated. It can be framed as whether alternative-energy policies and laws should be friendly to homeowners doing the right thing for the environment or whether they should be assessed in a cold, bottom-line fashion about their overall impact on energy costs and the economy.

Germany’s experience with its national Energiewende policy, adopted in 2011, holds lessons for California regulators and politicians. This is from a 2013 Reuters story:

Angela Merkel’s “green revolution” risks becoming a victim of its own success.

Seduced by generous subsidies, Germans are embracing the ambitious project with such fervor — installing solar panels on church roofs and converting sewage into heat — that instead of benefiting from a rise in green energy, they are straining under the subsidies’ cost and from surcharges. …

“Germany’s dilemma is how to keep industry’s energy prices low enough to remain competitive and meet ambitious (green) targets while also maintaining a balanced budget,” said Will Pearson, head of global energy at the Eurasia Group in London. “Addressing these will pose a political challenge.”

So attractive are the incentives, or feed-in tariffs, that the rapid expansion of renewable power has driven up the surcharges which fund them and are paid for by consumers. The charge rose by 47 percent this year alone.

Both households and industry are feeling the pain and exporters complain that the energy shift has driven up power prices so much that their competitiveness is being eroded.

This may portend what awaits California in coming years as environmentalists ramp up their push for renewable energy. If the effort leads to broadly higher prices, a reprise of 2010’s Proposition 23 fight is likely. That ballot measure attempted to suspend AB32 until state unemployment was at 5.5 percent of below for 12 consecutive months. It lost 61.5 percent to 38.5 percent after being depicted as an attack on air pollution laws.

The odds of a successor measure passing would seem likely to be much higher if California residents and businesses faced a Germany-sized green-energy price shock. Supporters of the 2010 initiative didn’t only include oil companies and voters who thought California shouldn’t go it alone in trying to reduce the emissions believed to cause global warming. The State Building & Construction Trades Council backed Prop. 23 on the grounds that AB32 would be harmful to the state’s economy.

MAY 24, 2011

By K. LLOYD BILLINGSLEY

California politicians want to draw 33 percent of the state’s energy needs from “renewable” sources such as wind and solar by 2020, fewer than 10 years away. That plan will be hard to pull off for many reasons, including those outlined by energy expert Merwin Brown, Electric Grid Program Director at the California Institute for Energy and the Environment (CIEE).

“Renewables exhibit behavior for which the grid was not designed, and for which operators are not equipped,” said Brown on Thursday at the University of California’s Sacramento Center, in a lecture on “New Smart Grid Technologies for Renewable Generation Deployment.”

Brown admitted to pulling a “bait and switch” because he wanted to concentrate on “the problems we are trying to solve.” Power outages, he said, were a threat to health and security, and also expensive. He pegged the cost of the 2001 blackouts at $10 billion.

Electrical grids are “the world’s largest machine,” multi-state and even multi-country networks that present “quite a challenge” to renewable sources such as wind, a “variable” source by which he meant “intermittent.”

“Wind is not there when the loads occur,” Brown said. “Wind is abundant when loads are low.”

Such variability calls for backup power measures, but could also result in a situation where “the grid has more electricity than it can sell.” The existing power grid, he said, was not designed for such “back feed,” when generation exceeds load.

Multiple Agencies

Merwin Brown earned a Ph.D. in nuclear engineering from Kansas State University and boasts 40 years of experience in energy, including a stint as Solar Energy Commissioner of Arizona. He noted that the wind blows hardest “far from urban centers,” which calls for “expensive” new transmission lines.

“The biggest impact is approval to build from multiple agencies,” which he said might not approve, along with residents who object to new towers and lines on aesthetic grounds. Brown also cited planning and recovery costs, and raised the question, “Who pays?”

Brown returned to his intermittent theme, noting that “solar has the same problem” as wind, and the obvious reality that “at night the sun does not shine.” He showed charts demonstrating that wind and solar power “do not complement each other.” Together they could “make worse” the increasing demand cycle he called “ramping.” And they could also make worse the “instability” of the grid, which was designed on the basis of “inherent inertia.”

At one point an attendee, who did not identify herself, interrupted Brown and charged that his presentation was “biased” against renewables.  Brown paused to note that renewables do not pollute and are “indigenous,” with no need for importation. Then he continued with the problems to the grid, which include electric cars.

Electric Cars

“Electric cars are an unprecedented challenge,” he said. “Each electric car equals one house” in demands for electricity, and “the system was not designed to meet that demand.” Charging of cars at night was also an issue. “Utilities are not convinced it will be easy,” to adapt for electric cars, Brown said.

California Gov. Jerry Brown recently signed SB 2X by state Sen. Joe Simitian, D-Palo Alto, mandating that 33 percent of the state’s energy come from renewable sources by 2020, an increase of 13 percentage points from the previous mandate of 20 percent.

“It’s about California leading the country,” Gov. Brown told reporters at the signing ceremony. “It’s America potentially leading the world.” At the same event, Simitian said that his new law “will stimulate the economy and improve the environment, while protecting ratepayers from excessive costs.”

Wind and solar power require conventional backup and are also two to four times as costly as conventional power, according to estimates from the U.S. Energy Information Administration (EIA).

Lobbyist Bernadette Del Chiaro of Environment California hailed Simitian’s measure as a huge victory for the environment and said, “California can power itself entirely on clean energy resources like wind, geothermal and solar power.”

Importing Electrons

California has never been able to create enough electricity to meet its needs and now buys 20 to 30 percent of its energy from out-of-state sources.

“Renewable integration adds complexity,” Dr. Brown said Thursday. “Maybe we can build our way out,” but “it will take new technology to make renewable energy less costly and easier.”

The UC announcement for Brown’s lecture also used the future tense for such technologies. “New grid technologies will be needed” it said, “to make renewable generation deployment easier and less costly, especially technologies that make the grid smarter.”