REM: California slashes rooftop solar income

Starting on April 15, California slashed the income homeowners receive for installing rooftop solar when they sell excess electricity to the grid. 

The controversial new set-up was established at the end of December. The unanimous vote by the California Public Utilities Commission (CPUC) may have national ramifications, since other states often follow California’s lead.

California is the US’ biggest solar market and one of the largest markets in the world. More than 1.6mn homes and businesses installed 12 GW of solar on their rooftops under the old scheme.

Starting in mid-April, the daytime compensation for excess solar power – always generated during daylight hours, of course – will be cut by about 75% for new solar customers.

The CPUC had argued that the generous ‘feed in tariffs’ (FiTs) offered under the previous set-up – established 20 years ago – had served their purpose. They helped kick-start the solar industry. The old rules overly favoured those who could afford to install solar panels, tending not to favour those who rent, and did not include enough of a contribution for upkeep and expansion of the grid upon which they rely, said the CPUC.

"It's not designed to last forever," says Matt Baker, director of the commission’s Public Advocates Office. "This incentive is no longer fit for purpose, so we need a new incentive to fit the next problem."

The new policy only applies to new solar rooftop customers.

The new move is highly controversial. The new programme could slash California’s solar market by 50% by 2024, according to a report by consultancy Wood Mackenzie that was released in 2022.