California solar installations are trending massively upward, despite historically low levels of state incentive.
With more than 120,000 commercial and residential solar energy systems now online, California leads the nation’s clean energy economy. As a result of this growth more than $10 billion in private-sector investment has flowed into California’s clean energy sector, and employed more than 25,000. Millions of California’s residents enjoy the benefits of low-priced solar energy delivered by systems installed on homes, businesses, schools and public facilities.
Yet, one important element of this success is often overlooked – California’s rooftop solar industry is rapidly weaning itself from state subsidies and will likely be operating subsidy-free next year, well ahead of schedule.
This success story is largely due to the structure of the California Solar Initiative (CSI), arguably the most successful small-scale solar program in U.S. history. The CSI – a product of former Governor of California Arnold Schwarzenegger’s ‘Million Solar Roofs’ vision and authorized by the passage of Senate Bill 1 in 2006 – was envisioned as a 10-year program to enable the installation of nearly 2,000 megawatts in the service territories of California’s investor-owned utilities. Inherent to the design of CSI were incentives that gradually declined to zero as more solar was installed – sending a clear signal to solar companies that costs must continually decline.
Through economies of scale and innovation, the installed costs of solar have fallen dramatically, even as incentives have been reduced from $2.50 per installed watt in 2007 to just $.25 per installed watt (or less) today. It’s highly likely that CSI will reach end-of-life in certain areas next year, leaving behind a fast-growing solar industry providing jobs, energy independence and clean energy.
California’s solar success story is the epitome of what public-private partnerships should strive to achieve. Government provides initial support and certainty, stimulating private-sector investment and growth which enables industry to achieve scale, innovate and reduce costs, leaving behind a subsidy-free growth industry. While other industries have taken decades to wean themselves off government support, solar has done so in California in just a few years.
It’s a telling indicator of success, in fact, that the discussion regarding solar in Sacramento and elsewhere has quietly shifted from how much (or how little) direct support is provided to small-scale solar, to the indirect support provided via what’s known as net metering. Just as solar crosses the finish-line of the race to be incentive-free, it now faces scrutiny as to whether some cost is borne by other utility customers when a homeowner or business uses solar to substantially reduce electricity bills.
This matter deserves further examination. In the meantime however, it shouldn’t be used as a means to stymie the growth of small-scale solar. To do so would undermine the success of the CSI, and compromise the investments made by both public and private sectors.
Ben Higgins serves as the Director of Government Affairs for Mainstream Energy Corp., where he works closely with company and industry leadership, as well as state and federal policymakers to craft policies that make for a more stable, sustainable business environment for solar. Higgins has over a decade of experience working in the legislative and regulatory arenas.
