Along with advancements in many aspects of technology, we are also in an era where people are adopting cleaner energy options as they can be both cheaper and better for the environment. However, California's new policy is discouraging its citizens from opting for cleaner alternatives.
California's Renewable Energy Business Plummets
Of all the cities in the US, California is among the most advanced when it comes to renewable energy. Unfortunately, the policy change that was approved in April last year has affected the solar energy business in the state, as it lowered the incentives for homeowners.
According to businesses, sales of solar panels for rooftops have seen a massive drop in sales of up to 85% in certain months of 2023. It will continue to drop by 40% in 2024 and more so by 2028, as reported by The New York Times.
The policy change has had such a huge impact that some solar energy-related businesses like Construct Sun, which serves as an installation company, have decided to stop their operations in California and instead focus on other states.
Construct Sun Executive Vice President Thomas Devine said that the company had a "very dismal pipeline and had to make the decision to shut down in California," adding that the rooftop policies have impeded its goal to eliminate greenhouse gas emissions by 2045.
Stanford Woods Institute for the Environment senior research scholar Michael Wara expressed that as solar installations are "off a ton," the result is a "painful adjustment process," which is true for both businesses and homeowners alike.
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California's Renewable Energy Policy
Having solar panels installed on your roof has two positive effects. One is that your electricity bill will be significantly lower since you basically have an unlimited source of power, and the second is that you can sell the excess energy back to the grid for an extra buck.
Before the change, homeowners were able to sell energy back from their systems which could earn them almost as much as the retail electricity rate. However, utility companies say that they can buy electricity cheaper on the wholesale market or if they produce it themselves.
As a result, among other factors, the solar industry is seeing a 75% decrease in payment rates for those who send energy back to the grid. With the substantial decrease, customers may no longer feel like paying to have solar panels installed is worth it.
According to CNBC, over 1.5 million homes, businesses, and other buildings have rooftop solar panels, all of which can collectively produce 12 gigawatts of electricity. With the change, that number may no longer increase as people are discouraged.
State Director for Environment California, Leura Deehan stated: "This misguided decision, which undervalues solar's numerous benefits for all Californians, will dim the lights on the growth of solar in the Golden State."
From a certain perspective, this can certainly be seen as a downside, especially since California has been making progress in clean energy thanks to that previous incentive. People can still use solar panels to save on bills, but they will see a smaller profit from selling the energy back to the grid.
