California reduces rooftop solar incentive it says favored the rich

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California households with solar panels will receive lower credits for exporting surplus power to the grid, California utility regulators voted on Thursday, saying the move would be fairer to low-income ratepayers and would still maintain a healthy solar industry.

For decades, Californians with rooftop panels have been credited for excess power at or near the full retail electricity rate. The unanimous vote by the five-member California Public Utilities Commission (CPUC) has lowered the rate, which will be determined by the cost the utility would have spent to buy clean power elsewhere. The rates vary by utility and time of day.

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The decision is a blow to the state’s solar companies, who have said the new policy would slow installations and hamper the Golden State’s clean energy goals.

Supporters say this incentive has been crucial to fighting climate change, but critics contend it has unfairly favored only those wealthy enough to afford solar.

“This decision is significantly more equitable than the status quo,” CPUC President Alice Reynolds said ahead of the vote.

The new policy, first proposed last month, changes the so-called “net metering” policy and will take effect in the first half of next year.

It will also offer new credits to systems paired with batteries that allow homes to keep excess power in reserve when demand is low, then feed it into the grid after dark when solar energy resources stop producing but demand is high. That would help stabilize California’s grid, maintaining reliability during its ambitious transition away from fossil fuels, the CPUC said.

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The vote was being watched nationwide because policies made in California often serve as a template for other states seeking to replace fossil fuels with renewable energy.

The solar industry and environmental groups criticized the decision.

“California regulators just rammed through a plan to make rooftop solar more expensive as the climate crisis spirals out of control,” Roger Lin, an attorney with the Center for Biological Diversity, said in an email.

Utilities and ratepayer advocates supported changing the policy, arguing the existing mechanism pushes most of the cost burden of maintaining the grid onto the shoulders of customers without panels, who tend to be less affluent.

But a utility-backed group, Affordable Clean Energy For All, said the decision did not go far enough.

“This final decision was a missed opportunity that will prolong the harm to low-income Californians and renters for decades to come,” spokesperson Kathy Fairbanks said. (Reporting by Nichola Groom; Editing by David Gregorio and Josie Kao)