California’s Renewable Energy Sector Faces Setback, According to Some Businesses

California has been a long-time advocate of renewable energy, but changes in the state’s policies have led to a sharp decrease in the installation of residential rooftop solar. The new policy, which took effect in April, significantly reduced incentives for homeowners to install solar panels. As a result, sales of rooftop solar installations in California fell by as much as 85 percent in some months of 2023 compared to the previous year. Industry groups project that installations will drop more than 40 percent this year and continue to decline through 2028.

State officials defend the policy change, arguing that the old rules were too generous and favored mostly affluent homeowners. They also claim that lower-income individuals, who could not afford panels, were unfairly burdened with the cost of maintaining the state’s electricity system.

The reduction in rooftop solar incentives has affected numerous businesses, with some companies, like Construct Sun, stopping operations in California and focusing their efforts elsewhere, such as in Florida, North Carolina, and Ohio. Even Sunrun, the nation’s largest residential solar company, cut about 2,000 jobs due to the decrease in rooftop incentives.

Solar installers and homeowners say that investing in rooftop solar systems is difficult to justify financially without adequate electricity credits. With the reduced incentive, the time it takes for a solar system to pay for itself has increased. Without federal tax incentives, a solar and battery system costs an average of $33,700 compared to $22,700 for systems without batteries.

Some solar experts argue that the new California policy does not adequately account for the environmental value that rooftop solar panels provide. The policy change could also negatively impact the country’s overall growth in rooftop solar, which was up an estimated 13 percent last year, but could decline by 11.5 percent this year.

Despite the decline in residential rooftop solar installations, it is expected that more Californians might install solar panels and batteries as the state raises electricity rates, which are already among the highest in the country. However, the transition continues to raise concerns about its impact on businesses and jobs within the solar industry.

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