California Solar Companies Hit The Skids After Receiving Huge Handouts From Biden, Dems

California Solar Companies Hit The Skids After Receiving Huge Handouts From Biden, Dems

Nick Pope on January 29, 2024

• California’s rooftop solar industry is facing significant financial distress despite the help of generous state and federal subsidies.  
• A December 2022 reduction to the state’s subsidies for rooftop solar has severely undermined the solar installation industry, which has seen an estimated 17,000 job losses and an 80% drop in demand in the wake of that reduction, according to CalMatters.
• “We have seen a wave of recent solar installer bankruptcies and believe another wave will come in Q1 2024,” Ara Agopian, the CEO of Solar Insure, which backs many of the solar companies doing business in California, told pv magazine USA.

Numerous rooftop solar panel companies in California are staring down bankruptcy despite the industry’s receipt of generous state and federal subsidies.

For many years, the state has generously subsidized the rooftop solar industry to the annual tune of up to $6 billion in order to spur green energy development, a spokesperson for the California Public Utilities Commission (CPUC), the state’s utility regulator, told the Daily Caller News Foundation. Now that state subsidy dollars are starting to dry up, rooftop solar companies in California are struggling mightily, with one insurance company estimating that about 75% of the affected companies in the state are at high risk for collapse, according to pv magazine USA.

Despite the state’s rooftop solar industry receiving subsidies from the Inflation Reduction Act (IRA), President Joe Biden’s signature bill that includes $370 billion in green energy spending, rooftop solar firms across California are struggling to stay afloat.

“We have seen a wave of recent solar installer bankruptcies and believe another wave will come in Q1 2024,” Ara Agopian, the CEO of Solar Insure, which backs many of the solar companies doing business in California, told pv magazine USA.

The state effectively covers the cost of rooftop solar installation, and, until the end of 2022, maintained a program that paid Californians for the excess solar power that their rooftop panels would remit back into the grid at above-market rates. In December 2022, the CPUC voted to reduce that compensation by about 75%, a decision which officials started to actually implement in April 2023, according to CalMatters.

“California has done more for the solar industry than any other state in the nation by providing billions in rebates and incentives since 2006,” the spokesperson for the CPUC told the DCNF. “But this support has come at a cost to California ratepayers, who are paying an ongoing premium to companies and individuals who own rooftop solar systems. To reduce the additional costs that are added to customer bills, the CPUC updated the investor-owned utility Net Energy Metering tariffs in December 2022. This update brought subsidies to rooftop solar customers more in-line with the lower subsidy levels in other states.”

The independent consumer advocate for the CPUC estimates that “the amount customers without solar are already paying to customers with solar through subsidies collected through their electricity bills is almost $6.8 billion annually,” the CPUC spokesperson told the DCNF.

Proponents of the rule change argued that it provided an unfair advantage to the wealthy, who could receive subsidies for expensive solar panels and shift the costs of grid maintenance onto less wealthy segments of the population, according to The New York Times.

Meanwhile, the rooftop solar industry has slammed the subsidy reductions and hold it primarily responsible for the industry’s widespread struggles in the state. Demand for solar installations has fallen by about 80% since the CPUC opted to cut the home solar payments, and the industry may have seen 17,000 jobs lost by the end of 2023, according to CalMatters.

“The market is in the gutter,” Bernadette Del Chiaro, executive director of the California Solar & Storage Association trade group, told CalMatters. “It should be no surprise to anybody. If you are a business and your market took a 80% nosedive, with great pain you have to lay off. Some companies shut their doors.”

California is aiming to reduce greenhouse gas emissions 85% by 2045, but the decision to alter the subsidy guidelines for rooftop solar may undermine that goal if the industry’s struggles continue or intensify, Cal Matters reported.

The office of Democratic California Gov. Gavin Newsom referred the DCNF to the CPUC when reached for comment.