In a shocking action this past April, the California Public Utilities Commission gutted a policy that was fundamental to the incredible growth and success of our state’s solar power network. The results of this action were both predictable and devastating. In the year since this policy was revoked, new solar installations in California are down approximately 80%. Further, 17,000 direct solar industry jobs are estimated to have been lost, while solar business bankruptcies are rising at rates unseen in the evolution of the industry in California.
It is painful to consider how many projects, large and small, have been lost since April, and how many more will be if we don’t course correct.
For over two decades, the evolution of solar power has been an honorable agreement between our government and its citizens. Households and businesses agree to invest time, energy and resources to add solar panels. In return, our government provides incentives to those investors. Most critically, it offers the ability to earn fair return for the energy – beyond our own use – that is shared back with the power grid to support its reliability and benefit our fellow Californians.
At the beginning of 2023, California has over 43,000 megawatts of total solar installed across 1.9 million installations – more than any other state by a wide margin.
This program benefited everybody, despite some critiques that only the middle- and upper-class landowning Californians reaped the benefits. As with all supply and demand dynamics, greater energy supply means lower costs for everyone across the grid – regardless of socioeconomic status. Beyond that, California has specific programs that benefit disadvantaged communities and individuals, like one that offers a 20% reduction on their electricity bill to lower-income residents.
Economically, the pact between the government and its citizens resulted in the creation of approximately 78,000 new direct jobs and over 2,000 new direct businesses throughout California, not to mention the employers and employees who have benefited from the positive impact on the broader energy supply chain and varied support businesses. This dynamic produces economic ripples that exponentially lift up many throughout the state and beyond.
Defying all reason, this very policy is the one the commission chose to eviscerate.
Expanding the solar network has benefits
We have seen firsthand the incredible benefits of expanding California’s solar network. As we continue to build out our ocean research and technology campus, AltaSea installed more than 4 acres of solar on our rooftops. These 4,753 panels generate enough electricity to power the entire 35-acre campus – from concrete 3D printing and carbon sequestration to regenerative aquaculture and educational programs – and still send additional energy back to the grid. This would not have been possible without the state’s support.
This is truly the best of both worlds – allowing us to accelerate collaboration to advance sustainable and climate-positive technologies while still being a net zero emissions operation.
The facts are clear: this should be an obvious investment for our state policymakers to continue and grow.
The decision seems incredibly shortsighted, and the consequences are not insignificant. All the benefits of the once-thriving program are now in extreme peril. The damage is not just financial, but a severe blow to our decades-long fight for cleaner air and a lost opportunity in our state’s efforts to slow the progress of climate change, which has become a real and present danger to Californians. We now face raging wildfires and ferocious storms that bring loss of life and quality of life all too often and at a more intense pace.
It’s a simple equation – we must reduce emissions to fight air pollution and climate change in our state through a varied and reliable portfolio of alternative energy sources. Solar power is a pillar of this comprehensive energy strategy. If it is not strong, efficient and reliable, we will lose potential emission reductions and risk longer-term reliance on fossil fuels. In a battle between economic and environmental benefit, solar power proves this a false choice, offering significant positive impact to both important goals.
If the saying “As California goes, so goes the nation” is still true, this decision by the California Public Utilities Commission spells trouble for our country’s future. It’s the policy equivalent of paving over paradise to put up a parking lot. By disincentivizing the introduction of clean energy to our grid, California is losing momentum in our efforts to move away from fossil fuels.
California has always led by example. Now is the time to set another good example by admitting that this policy was a mistake and reversing it as soon as possible.
Matt Horton is a senior adviser at Milken Institute Finance. He is also a member of the AltaSea board. Terry Tamminen is a former CalEPA Secretary under Gov. Arnold Schwarzenegger and current president and chief executive of AltaSea at the Port of Los Angeles.