How utilities have impeded community solar projects in the US

A letter written yesterday (12 March) to California Governor Gavin Newsom from the California Coalition – which includes CCSA among others – states that the proposed decision hampers the growth of distributed generation for low-to-moderate income (LMI) households.

“The proposed decision is flawed in numerous ways, but most importantly, it fails to provide the foundation needed for California to build a sustainable, scalable community solar program, which will ultimately leave billions of private investment and matching federal dollars on the table and ratepayers without a choice for more affordable, clean energy,” reads the letter.

CPUC’s proposed decision on community solar was the most recent example of how utilities have worked towards slowing down or even blocking the growth of community solar across the US, according to the CCSA.

“The main argument that the utilities use to oppose community solar is a claim that it shifts costs to non-participating customers. It’s the same argument they’ve been using against rooftop solar and net metering. It’s essentially the same argument they’re using against any competitive non-utility owned or non-utility run alternative,” says Matt Hargarten, VP of campaigns at CCSA, adding that “with utilities, it’s a zero-sum game. They have a monopoly in their territory. They’ll do anything they can to keep it.”

When contacted regarding CCSA and SEIA’s comments, the CPUC directed PV Tech Premium towards the Proposed Decision website and stated: “On March 4, the CPUC issued a Proposed Decision to improve existing community solar programs and authorise a new community solar program that meets legislative requirements.” The PD will be on CPUC’s voting meeting agenda on 18 April 2024.

Washington bill held until 2025

Another state that had a recent setback for community solar was Washington. The state aimed to pass two bills – House Bill 2253 and Senate Bill 6113 – which would have seen the development of community solar in the state, which was home to the first community solar project in the US back in 2006.

Among its key components was the lack of a programme cap, with no limit to building community solar projects but only a 5MW cap on a project’s size. “This is really to take full advantage of the investment tax credit,” explains Derek Chernow, Western regional director at CCSA. The other significant aspect proposed was a 50% minimum of the utilities’ community solar programmes to be for low income households.

“The reason for that is because so many low-income Washingtonians have been left out of that clean energy evolution,” adds Chernow.

Despite being backed by a wide coalition of environmental justice and industry groups, the bill was “hijacked” at the last minute by utilities trying to get rid of third parties, explains Hargarten, who adds that: “What happened in Washington is sort of a microcosm of what happens with these bills nationally.”

“If you look at the market for community solar, it’s all driven by third parties. Utilities will put up a few bespoke projects here and there and charge people more for it, but it’s not really a thing. They’re good at building large utility-scale resources,” adds Hargarten.

Even though the bill did not go through, the idea is to try again next year and make sure that third parties would be able to participate and build community solar projects in Washington. “It’s better to pass nothing than pass something that essentially would stop us from expanding in that state in future years.”

Hargarten explains that having utility-owned utility-scale renewables is an important step; however, relying on it alone would end up hitting many roadblocks. “We’ve seen it in New Jersey where offshore wind projects are cancelled. We’ve seen utility-scale projects get stymied because of siting and nimbyism.”

From 1GW to 75MW in Virginia

Another state that has seen pushback from a utility is Virginia. The goal in the Mid-Atlantic state was to increase its pilot community solar programme to 1GW. However, utility Dominion Energy “squashed” that proposal and greenlit a 150MW programme that only guarantees 75MW, explains Hargarten. The bill is currently moving through the House and the Senate, with the bill expected to pass and be signed by Virginia’s governor.

“This is an example of a utility wielding significant power in the state house. And even when we have a formidable legislative counter to them, they still have the power to water it down and essentially go from big steps forward to baby tiny steps forward.”

PV Tech Premium contacted Dominion Energy for a comment but has not yet received a reply at the time of publication of this article.

Community solar still growing

Despite this major challenge community solar has faced in recent months, a recent report from Wood Mackenzie and CCSA expects this market to add 7.6GW of capacity between 2024 and 2028. Momentum for community solar has kept rising since the Inflation Reduction Act (IRA) was passed, with the government calling the solar industry to treble the installed solar capacity of community solar to 20GW by 2025, up from its current 7GW.

Last month, Bruce Stewart, CEO at Perch Energy, a community solar service provider, told PV Tech Premium that “there’s a lot of investment appetite” in community solar.

Since the start of this year, there has been “significant momentum” for community solar in terms of policies in more conservative states, says Hargarten. Several states have had bills for community solar presented or moving forward through the legislative process. Among these states are Wisconsin, Iowa, Pennsylvania, Georgia and Missouri, all in different phases of discussion.

“That’s in addition to bills that we’re running in Michigan and Ohio. There are a lot of bills from across the country. Ultimately, there’s a lot of education that’s required,” explains Hargarten.

The momentum for community solar is still present and active in over 20 states at the moment, with more in the pipeline to implement a bill or a programme for community solar. “Our biggest barrier to achieving these goals is loosening the stranglehold of utilities on the state legislatures.”