Policy & Regulation

California tries a new tack to expand community solar access

California tries a new tack to expand community solar access
(Premier Gardens Zero Energy Home Community in Sacramento. Credit: SMUD)

California’s governor signed AB 2316 into law, creating a community renewable energy program that pairs community solar with storage. The measure is intended to help the state address access barriers that affect nearly half of Californians who rent or have low incomes. 

Community solar projects are smaller-scale installations typically sited on landfills, former industrial sites, or private land. Customers save an average of 10% on their electric bills by receiving credits based on their share of the project’s generation. When paired with energy storage, community solar can help build grid reliability by providing clean power after sunset during peak hours of energy use.

“This new program can set a new standard for clean energy,” said Derek Chernow, Western regional director at the Coalition for Community Solar Access. 

The Biden Administration recently launched a community solar pilot program to generate $1 billion in annual utility bill savings benefitting low and middle-income households. And the federal Inflation Reduction Act (IRA) new incentives for states launching community solar programs with storage benefiting low-moderate income families and paying prevailing wages.

For its part, AB 2316 directs that at least 51% of subscribers be low-income customers, triggering at least a 40% federal tax credit on solar installations under the IRA. It also requires paying prevailing wages for workers, triggering a 30% federal tax credit for storage installations, also under the IRA.

GO DEEPER: Renewable Properties founder and president Aaron Halimi joined Episode 33 of the Factor This! podcast to discuss the future of community solar in California which, to date, has lagged behind other markets, despite the state’s role as a leader of the energy transition. Subscribe wherever you get your podcasts.

The California law is also expected to help builders meet state building codes that require solar systems paired with storage in multi-family housing and nonresidential construction starting in 2023.

Advocates said the new state law should provide affordable clean power options for the almost half of Californians who rent as well as many who have homes that are not suitable for rooftop solar.

The solar access coalition said that California has two programs that to date have “failed to unleash community solar’s potential.” These are the Enhanced Community Renewables component of the Green Tariff Shared Renewables Program. It has no projects in operation after nine years because of unfinanceable rates, the coalition said. 

And the Community Solar-Green Tariff program is expensive, limited to disadvantaged communities, and with a cost-control mechanism that shifts the burden onto non-participants thus limiting the program’s growth.

Responsibility for implementing AB 2316 rests with the California Public Utilities Commission. Regulators are expected to evaluate the existing programs and report to state lawmakers its justification for terminating, modifying, or retaining them.