Home Solar Can Thrive in California Without Hurting Low-Income Latinos

La Opinión, October 25, 2021

By Norma J. Quiñones

Our organization is committed to empowering the underprivileged youth of the San Gabriel Valley and supporting initiatives that promote environmental conversation and community development. As part of this mission, we must oppose programs that make it more expensive to achieve a clean energy future and unfairly burden low- and middle-income Californians with a disproportionate share of the cost.

By the end of 2021, a major decision is expected in the California Public Utilities Commission (CPUC) on the state’s home solar subsidy program. This program affects the pockets of millions of vulnerable Californians, many of whom are Latino, renters, low-income and seniors. The one thing we all have in common is that we don’t have solar on our roofs.

The question is whether California should reform the Net Energy Metering (NEM) program to stop making low- and middle-income customers subsidize the home solar systems of overly wealthy customers.

NEM reform will not stop California from making its clean energy future a reality. Rather, reform is critical to ensuring that we are not overpaying for solar and that all electricity consumers pay their share of utility infrastructure and mandatory public policy programs such as energy efficiency and assistance to low-income people.

Since the NEM was established in 1995, the amount homeowners with rooftop solar systems receive for selling excess electricity to the grid has increased every year, even though the cost of renewables has decreased. The cost of home solar systems is also down 70% since the NEM was established. It makes no sense to ask low- and middle-income Californians who don’t have solar systems to pay high prices for a product with decreasing costs.

In fact, the amount of the subsidy granted to homeowners with solar home systems is now so generous that these customers, who are usually more affluent, only pay nominal electricity bills. That means the costs they used to bring to the power grid, on which they continue to depend every hour of every day, have shifted to electricity consumers without solar systems, Californians with much lower incomes, renters and seniors with fixed incomes.

study  by researchers at the University of Berkeley and Tufts University evaluated ethnic disparities in the distribution of home solar energy systems. According to the latest data, 58% of black heads of household and 54% of Hispanics are renters, compared to only 28% of white households.

Currently, the burden of the NEM grant to customers without solar systems is more than $3.4 billion statewide or about $245 per customer per year in some parts of the state. Experts estimate that if the program is not reformed, the additional annual cost paid by customers without solar systems will be more than $10.7 billion annually or about $555 per customer per year.

Severin Borenstein, an energy expert at the University of Berkeley’s Energy Institute, noted that “when a customer installs solar, their share of the fixed costs is passed on to other taxpayers, who are poorer on average.” He also called the NEM a “regressive cost transfer.”

Similarly, The Utility Reform Network called  the current NEM program a “reverse Robin Hood phenomenon in which low-income customers are paying for the solar systems of higher-income customers.”

Among the various organizations advocating for NEM reform include Hispanics in Energy, California Latino Leadership Institute, National Diversity Coalition, California Hispanic Chambers of Commerce, and Latin Business Association. Dozens of other organizations representing the interests of consumers, the environment, low-income people, the faith and the elderly, along with business groups and state utilities are also outlining the need for reform.

It’s no wonder that solar companies that manufacture, sell, and install solar panels oppose even the modest reforms of the NEM. They and their shareholders want to keep the generous subsidies so that more people buy home solar panels. These grants also allow solar companies to maintain higher margins to increase profits and stock prices.

It’s time to return equity to the state’s home solar program and reform the NEM to eliminate this unfair subsidy.