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How California’s new rooftop solar rules will affect you. New house solar

How California’s new rooftop solar rules will affect you. New house solar

    What to know about buying a house with solar panels

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    california, rooftop, solar, rules

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    If you’re looking for a new roof over your head, you might also be thinking about whether what’s actually on that roof can help the planet. According to the National Association of Realtors’ (NAR) “2022 REALTORS and Sustainability Report”, more than 50 percent of real estate professionals say their house-hunting clients are interested in sustainability. They’re finding plenty of options to match their needs, too: 77 percent of Realtors indicate that there are homes with solar panels available in their local markets.

    Currently, solar energy produces over 4 percent of all electricity in the U.S., according to the Solar Energy Industries Association (SEIA). But that figure is going to increase with new legislation that just made it through Congress. According to estimates from the White House, approximately 7.5 million more households will be able to install solar panels on their roofs thanks to the tax incentives in the Inflation Reduction Act of 2022.

    If you’re thinking about getting ahead of the curve and buying a house with solar panels, here’s what you need to know.

    What are solar panels?

    First, a quick primer: Solar panels (not to be confused with solar shingles or tiles) are devices that collect sunlight and convert it into energy, which can be used for electricity or stored in batteries for later use. As much of the world looks for renewable energy to help replace fossil fuel consumption, solar panels – also known as photovoltaic, or PV, systems – harness the natural, “clean” power of the sun in the sky and help negate the effects of driving gas-guzzling cars and relying on coal-fired power plants.

    Interest in such environmental concerns is figuring more and more in residential real estate transactions. Half of agents and brokers in the NAR study indicate they helped a client buy or sell a property with green features during the past 12 months — a notable jump compared with 32 percent who did so in 2021. specifically, the presence of solar panels on a property roof bumps up its perceived value, one-third of Realtors say.

    questions to ask before buying a home with solar panels

    When surveying a solar-paneled home, be sure to ask these key questions.

    Who owns them?

    While you might assume that buying a home means buying every piece of it, that’s not always the case with solar panels. In some cases, there is a lease arrangement where the owner of the home pays the company that owns the panels. Justin Baca, SEIA vice president of markets and research, says that around 25 percent of homes have third-party-owned solar panels, meaning the owner of the home pays a company a fee to use them.

    “Homebuyers should ask whether the solar system is owned outright by the seller or whether they would have to take over a lease,” Baca says. “If there is a lease, they should check the terms to make sure they understand the costs and any options to buy out the lease. Either way, solar panels on the home are a great feature.”

    Who installed the solar panels?

    Make sure you ask whether a licensed professional installed the solar panels. There are plenty of self-installation kits available for DIY homeowners who aren’t afraid to get on their roofs. However, if the homeowner (or any non-professional) installs them, these panels may not qualify for protection under a warranty if the equipment fails.

    What’s the condition of the roof?

    With any home purchase, you want to know what sort of shape the roof is in. With a roof that has solar panels, the condition becomes an even more critical factor. If the roof is in bad shape, the panels have to be taken off before the roof can be repaired or replaced, and then reinstalled. This can add to the complexity, cost and length of any re-do. So, “the most important questions to ask are about the condition of the roof and panels themselves,” Waheed Akhtar, broker and owner of RE/MAX Dream Homes in Sacramento, California, says.

    What will the maintenance needs be?

    Like everything else in your home, solar panels may need to be cleaned or serviced from time to time to ensure they’re in the best condition possible.

    “If you own the system in a place that gets a decent amount of rain, you likely won’t have to think about it for years,” Baca says. “I haven’t done a thing to my five-year-old system [in Syracuse, New York], and it’s performing as new.

    However, “in places with more dust and less rain, cleaning based on local conditions isn’t a bad idea but should be done by an installer or other professional qualified to be on a roof safely,” he notes.

    If you don’t own the panels outright, Baca points out that you won’t have to worry about the maintenance responsibilities. “If you have a lease, you likely have a performance guarantee, which will lower your lease payments unless the system performs to a certain level,” he says. “That makes maintenance the leasing company’s responsibility.”

    california, rooftop, solar, rules

    What’s their average output versus the home’s average usage?

    The main reason you’re buying a home with solar panels is to cover most – if not all – of your home’s energy needs. So, you’ll need to research the home’s average usage and compare it with the typical solar output. You can ask the seller for figures from the past year, and you can also use the National Renewable Energy Laboratory’s calculator to get a sense of how much energy you can expect to produce based on the location and the type of system.

    After you understand how much of your own energy needs will be satisfied by the solar panels’ output, you’ll want to know if you have options with any surplus energy that you don’t use. Net metering, which involves selling the energy you don’t use back to other customers who need it, can provide additional financial benefits for you. This varies based on where the home is located (SEIA offers a map of states with net metering rules in place as a starting point). Be sure to ask your real estate agent for assistance in understanding if net metering is available for you.

    What is the production guarantee?

    In addition to knowing whether you can benefit if your system produces more than you need, it’s important to have an understanding of what happens if it produces less. Most companies offer production guarantees, which will reimburse you a designated amount if the system fails to deliver. For example, you might be guaranteed 12,000 kilowatt-hours in a year. If the system only produces 9,500 kilowatt hours, the company may need to issue you a check. Look at the contract to determine what, if any, guarantees are offered.

    than one-third (36 percent) of Realtors feel that having solar panels on a home increased its perceived property value, according to the NAR’s “2022 REALTORS and Sustainability Report.”

    How California’s new rooftop solar rules will affect you

    The seismic shift coming to California’s rooftop solar market in 2023 has been brewing for nearly a decade.

    A bill overwhelmingly approved by state lawmakers in 2013 ordered the California Public Utilities Commission — which regulates investor-owned utility companies — to rework a solar incentive program called net metering. Lawmakers directed the agency to ensure that the “total benefits” of the program were “approximately equal to the total costs” — meaning utility customers without rooftop solar panels weren’t paying more to subsidize their solar-powered neighbors than they should be.

    But the bill also ordered the Public Utilities Commission to ensure that the solar market “continues to grow sustainably,” and to adopt incentives targeted at low-income families who might not be able to afford solar otherwise.

    “We required the [commission] to design a program that does two things: create certainty for rooftop, and at the same time address the cost shift for non-solar customers,” then-Assemblymember Henry Perea, who wrote the legislation, told me in 2015. “It’s not an easy task.”

    Most certainly not. The commission’s long-awaited decision, which I wrote about for The Times last week, spurred all sorts of fiery reactions. Solar installers and environmental activists said it would crater the market and put clean energy out of reach for far too many Californians, lower-income households in particular. The big utility companies — Southern California Edison, Pacific Gas Electric and San Diego Gas Electric — said it didn’t go far enough to reduce incentive payments, and would result in continued bill increases for their non-solar customers.

    If you live in California, you may be wondering: What does this mean for you? If you already have solar, will you find yourself paying more? If you’ve been thinking about investing in solar — or adding a battery to your existing solar system — how have the economics changed? If you just want your monthly electric bill to stop going up, how much relief can you really expect?

    I’ve got answers below. Take a read if you’re interested, or scroll down for this week’s top stories from around the West.

    Watch L.A. Times Today at 7 p.m. on Spectrum News 1 on Channel 1 or live stream on the Spectrum News App. Palos Verdes Peninsula and Orange County viewers can watch on Cox Systems on channel 99.

    I want to go solar. Is it still a good idea?

    You can definitely still save money with a rooftop system. It just might take longer than it did before.

    Under the old rules, the expected “payback period” for homes served by Edison and PGE was five to six years, according to an industry trade group. That means Edison and PGE customers who bought solar panels — a purchase typically in the 20,000 range, once federal tax credits are taken into account — could expect to make back their upfront investment in five to six years through lower electric bills. After that, they’d continue to accrue bill savings for as long as their systems lasted.

    SDGE customers could expect an even shorter payback of four years, due to the utility’s especially high electric rates.

    Starting in mid-April, when the new rules take effect, the calculation will change. The Public Utilities Commission has estimated a payback period of nine years for Edison and PGE residential customers who go solar after April 13, and six years for homes served by SDGE.

    Solar installers say that’s too long for households that don’t have money to burn. They also think the commission used a lowball figure for the cost of solar, and thus underestimated how long it will take consumers to make back their investment.

    Commission members have made the opposite argument, saying payback periods will probably be shorter than they’ve calculated. That’s because the agency’s calculations don’t account for the near-inevitability that electric rates will continue to rise, leading to higher monthly bill savings than they’ve estimated.

    Are there extra incentives for low-income households?

    Yes. Under the new rules, low-income homes enrolled in subsidized electricity programs known as CARE or FERA will receive higher payments for solar energy they export to the power grid — about 9 cents per kilowatt-hour above base payment rates for qualified Edison and PGE customers who go solar during the first year after the new rules kick in. Higher-income Edison customers will get an additional 4 cents per kilowatt-hour, and higher-income PGE customers will get just 2 cents.

    But payback periods for low-income homes served by Edison and PGE will still be an estimated nine years — no shorter than for higher-income homes. That’s because lower-income homes pay lower electric rates to begin with, and thus have less room to save.

    Low-income SDGE customers will see an estimated solar payback of 8.5 years, much longer than the six years projected for everyone else in the San Diego region.

    Those numbers are a sore point for activists and companies focused on bringing clean energy to non-wealthy communities. In a written statement, the nonprofit solar installer Grid Alternatives said state officials are “gambling on a complicated incentive structure that uses a conservative estimate of project installation costs in order to achieve a targeted nine-year payback.”

    “It remains to be seen whether this approach will truly achieve more environmental and economic justice,” the installer said.

    In a last-minute change approved by the Public Utilities Commission, the higher payments to low-income homes won’t be available only to CARE and FERA customers. All homes on tribal lands and in communities considered “disadvantaged” will be eligible.

    Activists applauded the change but said it wasn’t enough. Some had urged the commission to expand the higher payments to all households that earn 80% or less of area median income. But the agency declined to adopt that proposal, which Grid Alternatives criticized as “inconsistent with the [commission’s] own definition of environmental justice communities.”

    What if I want a battery?

    Then you’re in luck — at least if you can afford it.

    The new rules are designed to encourage solar systems paired with batteries, which can relieve strain on the power grid by banking energy for hot summer evenings when the state has had trouble keeping the lights on. Southern California homes and businesses that export power to the grid on a September weeknight at 7 p.m. could be paid 2.58 per kilowatt-hour, according to a a solar industry trade group, compared with just 2 cents on an April afternoon at 3 p.m., when the state is often awash in cheap electricity.

    The Public Utilities Commission’s estimated payback period for solar-plus-storage is 6.5 years for Edison and PGE customers and less than five years for SDGE customers. For low-income homes, the estimated paybacks are closer to nine years in Edison and PGE territory and seven years in SDGE territory.

    Batteries add 10,000 or more in upfront costs once federal tax credits are taken into account. And installers warn that although costs have fallen dramatically over the last decade, the energy storage market is challenged by supply-chain constraints, labor shortages, inflation and other factors that could keep costs relatively high — and installations slow — in the near future.

    california, rooftop, solar, rules

    “Permitting and interconnection times for solar-only projects are around 58 days on average,” said Mary Powell, chief executive of leading solar installer Sunrun. “Adding a battery means that same timeline goes to about 113 days on average.”

    Just 14% of Californians who installed solar over the last year also added batteries. Whether that number rises significantly in the next few years will be a key indicator of the success — or failure — of the new rules.

    What if I want solar but don’t have tens of thousands of dollars?

    About two-thirds of the 1.5 million rooftop solar systems in California are customer-owned, either purchased with cash or financed via a loan. The rest are leased, or paid for through “power purchase agreements” in which customers buy energy from the company that installs and maintains their panels. You can save more money long-term owning rooftop solar panels outright. But leases and PPAs are an option for families that don’t have the cash or credit score for a purchase.

    It’s not yet clear how companies that FOCUS on leases and PPAs — such as Sunrun — might change their offerings to respond to the new rules. But lower payment rates for solar are expected to result in lower monthly bill savings for customers.

    New rebates from the state could help offset the lower savings for customers who lease or buy their systems. The Public Utilities Commission’s decision refers to an expected 900 million in new rebates or other incentives for rooftop solar and batteries, with 630 million set aside for low-income homes. But lawmakers still need to allocate those funds next year.

    If net metering and upfront rebates don’t pencil out for you, there are other ways to improve the economics of solar, if you happen to live in the right spot. Some solar and storage companies have partnered with utilities or government-run “community choice” energy providers to build “virtual power plants,” where homes are paid for allowing their rooftop panels and batteries to be operated as part of a larger network that supports the grid as a whole.

    Larger-scale “community solar” facilities that are serve entire neighborhoods are another option for renters, although California has lagged behind other states in this area. The Public Utilities Commission declined to address community solar in last week’s decision but is developing a new incentive program in a separate proceeding, as required by state law.

    Also worth noting: Under an existing regulation, all new homes built in California are required to come with solar. Last week’s decision doesn’t change that.

    I already have solar. Am I in trouble?

    Nope. Under an earlier proposal from the Public Utilities Commission, many solar customers enrolled in net metering would have been switched to the lower incentive rates 15 years after their systems were installed. Now everyone who already has solar — or goes solar by April 13 — will get to keep operating under the old rules for the 20 years they were originally promised.

    Also not in trouble: anyone whose electric utility isn’t Edison, PGE or SDGE. Existing solar incentives will remain in place at the Los Angeles Department of Water and Power, Sacramento Municipal Utility District and other utilities.

    And what if you buy power from a government-run “community choice” energy agency such as Clean Power Alliance?

    In that case, the new net metering rules still apply to you, because those agencies transmit power over the poles and wires owned by investor-owned utilities such as Edison. But some community choice agencies offer additional solar incentives.

    What if I want solar panels for my business?

    Then the economics look a little tougher for you. Businesses that go solar during the first five years after the new rules take effect will receive lower payments than homeowners for electricity they export to the power grid. Schools and other non-residential utility customers will also receive lower payments than homeowners.

    california, rooftop, solar, rules

    It’s another sore point for the solar industry. Installers are also unhappy that businesses that submit net metering applications between now and April 13 will need to have their systems completely installed within three years to maintain eligibility for the old rules. That may seem like a long time, but solar installers say there can be lengthy delays.

    I don’t have solar. Will my electric bills go down?

    As I wrote last week, almost certainly not.

    Yes, the new rules are meant to reduce the “cost shift” being paid by non-solar homes to support their solar-powered neighbors. The Public Utilities Commission’s internal ratepayer watchdog estimates those payments at 4.6 billion this year.

    But electric rates are being driven higher by all sorts of factors, including utility investments to reduce wildfire ignitions, upgrade aging transmission infrastructure and replace fossil fuels with cleaner energy. And rooftop solar advocates question whether the cost shift is nearly as big as some experts have estimated, or if it really exists at all.

    Either way, rates are expected to keep rising significantly. But utility companies and ratepayer advocates hope that by cutting back on net metering, monthly bill increases won’t be as bad as they otherwise would have been.

    “Realistically, rates will continue to increase. The big question is whether we can hold those increases to less than inflation,” said Matt Baker, director of the Public Advocates Office, the independent watchdog arm of the utilities commission.

    In a separate regulatory proceeding, the Public Utilities Commission is considering a broader restructuring of electricity rates that could result in new monthly charges for solar-powered homes — and most other utility customers. Those charges would help pay for the costs of upgrading the power grid, and could be higher for higher-income homes.

    OK, hopefully that answers your questions! And now, here’s what’s happening around the West:


    “Why don’t we recognize a water right for the Grand Canyon ecosystem? Why don’t we operate Glen Canyon Dam like a flood-control structure? Why don’t we clean out the sediment behind Lake Powell, and designate Glen Canyon National Park?” Those were the questions that one legal expert posed to my colleague Ian James in Las Vegas last week, at the annual conference of the Colorado River Water Users Assn. Ian wrote about growing fears of “dead pool” at Lake Mead, and about federal officials urging California and other Colorado River Basin states to agree to voluntary water cuts by Jan. 31. You may also be interested in the view from Arizona, where water plans being considered include desalination, raising the height of dams and investing in wastewater recycling in Southern California. Details here from the Arizona Republic’s Brandon Loomis.

    Native American tribes filed a civil rights complaint against the California water board, arguing that the historic water-rights system barred them from inclusion and has allowed the fragile ecosystems of the Sacramento-San Joaquin River Delta to deteriorate. “As they divert our water, part of our culture is dying without us having a say,” one tribal leader told my colleague Hayley Smith. Elsewhere in the Central Valley, environmentalists are suing Bakersfield in hopes of restoring the flow of the Kern River through the city, Ian James reports. And in a beautiful final story for The Times, Diana Marcum writes about an enchanted botanical garden at the foot of the Sierra Nevada, not far from farm fields stricken by drought.

    A new satellite that launched from California’s Vandenberg Space Force Base last week is expected to give scientists an unprecedented understanding of Earth’s rivers and seas, and how they’re being affected by climate change. “It turns the world’s water from 2D to 3D” is how one hydrologist explained the satellite’s purpose to The Times’ Corinne Purtill and Rosanna Xia. From 553 miles above Earth’s surface, they write, the satellite “will be the first to survey almost all the world’s surface water, allowing researchers to consistently track the volume and movement of every ocean, river, lake and stream on the planet.”


    Beloved Los Angeles mountain lion P-22 was euthanized due to severe injuries, a decade after the puma managed to cross the 405 and 101 freeways and take up residence in Griffith Park. “Many Angelenos saw themselves in P-22, an aging bachelor who adjusted to a too-small space in the big city, waiting for a mate who might never arrive,” my colleagues Laura J. Nelson and James Queally write in their obituary for the cougar. James Rainey wrote about how P-22 changed many Angelenos’ relationship with nature, and how the city reacted to his death. Our photo staff compiled some amazing images.

    New legislation in Congress would create Range of Light National Monument, protecting 1.4 million acres of roadless Sierra Nevada wilderness between Yosemite and Kings Canyon national parks. The name “range of light” comes from John Muir’s writings, per Kurtis Alexander at the San Francisco Chronicle. Farther north, environmentalists in the Pacific Northwest hope they’ll finally succeed in protecting vast swaths of wilderness outside Olympic National Park and Olympic National Forest during the lame-duck U.S. Senate session. They’ve been campaigning for decades, the Seattle Times’ Gregory Scruggs writes.

    “A single therapy walk cannot erase the anguish of escaping the Camp fire. But those who have returned to the forest over and over say the program has been critical to their healing process.” Four years after the Northern California town of Paradise was mostly destroyed by flames, the Washington Post’s Sarah Kaplan has a gorgeous story about survivors working through their trauma by spending time in nature. The Post’s Joshua Partlow, meanwhile, wrote about the British Columbia town of Lytton, which burned to the ground last year one day after setting an all-time temperature record for Canada. After the fire, local leaders pledged to rebuild as a sustainable, fire-resistant community powered by climate-friendly energy. But the process has been so slow that some residents are working to scrap those plans in favor of faster rebuilding.


    California officials approved the state’s latest long-term climate plan, which envisions a massive build-out of solar and wind power but which critics say includes too much reliance on carbon capture. Details here from Sophie Austin at the Associated Press. State officials also approved 2.9 billion to build 90,000 electric vehicle chargers. These moves are a big deal — in part because whatever California does on climate change, it’s likely others will follow suit. Just this week, Oregon adopted the Golden State’s ban on the sale of most new gasoline cars by 2035, as the Oregonian’s Gosia Wozniacka reports.

    Nevada’s major electric company wants to spend 827 million building batteries, geothermal plants and gas turbines to meet energy demand on the hottest summer days. Warren Buffett-owned NV Energy says California’s electric-grid troubles are among the factors driving its plans, because the Golden State’s huge demand for power has led to fewer supplies available on the western market at peak times, Sean Hemmersmeier writes for the Las Vegas Review-Journal. wind turbines in gusty New Mexico could help solve the problem. But some conservationists are fighting a planned electric line that would bring wind energy from the Land of Enchantment to California, saying the project would irreparably damage the Lower San Pedro River Valley, a wild refuge for birds and other animals. Here’s the story from Henry Brean at the Arizona Daily Star.

    Billion-year-old rock in the Idaho Cobalt Belt could help fuel electric cars and solve the climate crisis. But environmental concerns abound in and around the Salmon River, a wild waterway known as the River of No Return, as Ian Max Stevenson and Kevin Fixler report in a fabulous deep dive for the Idaho Statesman. They dig into the global companies looking to mine huge amounts of cobalt, the political support they’ve secured and the delicate balance being sought by conservation activists.


    A celebrity-studded enclave in western Los Angeles County is investing in wastewater recycling. The area served by Las Virgenes Municipal Water District — home to Kim Kardashian — is almost entirely dependent on water imported from Northern California, but it should eventually be able to source 20% of its supplies locally, The Times’ Hayley Smith reports. Out in the Mojave Desert, thirsty bighorn sheep are getting their own water lifeline. California officials have given a nonprofit permission to install dozens of watering stations for the at-risk species, Brooke Staggs reports for the Orange County Register.

    “If you thought the industry would slink away and accept its loss in Sacramento, you don’t know our oil drillers.” L.A. Times columnist Michael Hiltzik wrote about the fossil fuel industry’s campaign to overturn a newly enacted ban on drilling near homes and schools — and how it’s only the latest of example of deep-ed businesses bankrolling ballot measures to get rid of regulations they don’t like. Some drilling is still on the way out, though. A conservation nonprofit finalized the purchase of a coastal oil field in Orange County, with plans to preserve the property as open space, Hannah Fry reports.

    “Delayed breaths and pauses for long, healthy growing years. Tighter sequences in years strained by drought or cut short by a passing wildfire scarring the bark, pausing progress.” I loved this story by the Arizona Republic’s Joan Meiners about scientists bringing tree rings to life with music, and trying to find harmony in the otherwise discordant work of studying climate chaos. I also enjoyed this profile by my colleague Jeanette Marantos of a photographer-turned-researcher documenting California’s endangered native bees. I had no idea there are bees as small as the size of a letter on a quarter!


    I wrote earlier this year about Southern California Gas Co.’s plan to spend billions of dollars building a huge hydrogen pipeline known as Angeles Link. The company told me the project could help L.A. transition away from fossil gas, and possibly allow for closure of the controversial Aliso Canyon gas storage field, which sprung a record-breaking methane leak in 2015.

    In an early victory for SoCalGas, the California Public Utilities Commission voted last week to let the utility begin tracking the costs of planning the green hydrogen pipeline — not a guarantee that SoCalGas will be allowed to charge customers for those costs and eventually build the pipeline, but a necessary first step.

    In a press release lauding the commission’s vote, the utility company said Angeles Link would “support significantly reducing greenhouse gas emissions from electric generation, industrial processes, heavy-duty trucks, and other hard-to-electrify sectors of the Southern California economy.”

    Some climate activists are cautiously optimistic. But others are highly skeptical about green hydrogen. For a rundown of why, see this story by the Orange County Register’s Brooke Staggs, about students at UC Irvine protesting a SoCalGas plan to test hydrogen blending in pipelines on campus, citing safety concerns. SoCalGas canceled an interview for ⁦⁩the story.

    It’s also worth keeping in mind that the utility is a subsidiary of San Diego-based Sempra Energy, a Fortune 500 company heavily invested in natural gas. Just this week, the Biden administration agreed to let Sempra send gas to Mexico for export to Asia in exchange for Sen. Ted Cruz (R-Texas) lifting holds on four Energy Department nominees, Reuters’ Timothy Gardner reports.

    I wrote last year about Sempra’s request to ship gas to Mexico, saying the Biden administration’s decision “could offer an early preview of how aggressively it will confront the climate crisis.” A lot has happened on climate since then — most notably passage of the Inflation Reduction Act — but when it comes to greenhouse gas emissions, all the pieces matter.


    Tony Barboza, a member of The Times’ editorial board, wrote a heartbreaking, heartfelt commentary on the difficulty of talking with his kids about the climate crisis. It’s not easy reading. But it’s worthwhile, heading into the Christmas holiday.

    “As an environmental reporter, I have written over and over about how the pollution we keep dumping into the air is hurting people, threatening ecosystems and endangering our future. But at home, I’ve struggled to explain this to my own daughters,” Tony writes. “Because being a father helped me grasp that humanity’s failure to address climate change is transgenerational violence against our own children and their future children and grandchildren.”

    If you’ve got kids, or other young people in your life, Tony’s lessons and suggestions are worthwhile. Take a gander.

    We’ll be back in your inbox next week. If you enjoyed this newsletter, or previous ones, please consider forwarding it to your friends and colleagues. For more climate and environment news, follow me on @Sammy_Roth.

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    Sammy Roth covers energy for the Los Angeles Times and writes the weekly Boiling Point newsletter. He previously reported for the Desert Sun in Palm Springs. He grew up in Westwood and would very much like to see the Dodgers win the World Series again.

    Solar power can boost your home’s value — especially in these 10 states

    California will be the first state in the U.S. to require solar panels on all new homes starting 2020, but the legislation’s passage did not end the debate over a key question: Does the cost of installing solar pay off for homeowners?

    Some developers are not even waiting for 2020 and are pressing ahead with solar-powered homes for what they say is the best reason: it is simply what best serves the homebuyer market matching energy demands to efficiency and cost. The state estimates the new solar power rule will help homeowners save about 19,000 in a 30-year period. Others say the mandate will push up housing costs too much for many homebuyers.

    There’s another way to look at the question: Does adding solar power increase a home’s value at time of sale? According to real estate information company Zillow, in some states the answer already is yes. Zillow’s research indicates that in the same way homeowners are willing to pay thousands of dollars for renovations like a new kitchen or finished basement, they need to evaluate the return on investment from investing in solar energy.

    Installing solar panels in a home not only helps to reduce current monthly utility bills; it can potentially increase the home’s value by up to 4.1% more than comparable homes with no solar panels, according to recent solar research done by Zillow — or an additional 9,274 for the median-valued home in the U.S.

    Green houses

    Recent natural disasters like the California wildfires, heat waves throughout Europe and extreme melt events have inspired many to seek more eco-friendly lives, including home buyers.

    There is increased demand for green living. than 80% of buyers now say energy-efficient features are important in selecting their home, said Sarah Mikhitarian, Zillow senior economist. We are increasingly finding that these attributes are important to prospective homebuyers. This is part of the reason that there is a premium associated with it. The other piece is that there is true value provided by solar panels — namely, future energy savings.

    The energy savings depends in part on how a specific home consumes energy. For example, a home that features heated floors might see a greater premium from the addition of solar (though this was not a correlation Zillow specifically researched).

    For homeowners who know they consume a lot of power, those future savings are worth spending a bit more money up front, Mikhitarian said.

    To identify the solar premium in each state, Zillow compared the sale of homes with and without solar-energy systems listed for sale and sold within the research period — March 2018 and February 2019. The company examined all transactions that occurred and identified which homes featured solar panels in their listing descriptions, controlling for observable attributes including size, age, location, and market value at the time it was listed for-sale. Zillow also controlled for local market dynamics and the time of the year that the home sold.

    In New Jersey, homes with solar panels can sell for 9.9% more than homes without solar-energy systems. That is a profit of 32,281 for the median-valued home in that state.

    Here’s the top 10 states with the highest solar premiums, according to Zillow’s findings:

    • New Jersey: 9.9% or 32,281 for the median-valued home.
    • Pennsylvania: 4.9% or 8,589 for the median-valued home.
    • North Carolina: 4.8% or 8,996 for the median-valued home.
    • Louisiana: 4.9% or 7,037 for the median-valued home.
    • Washington: 4.1% or 15,916 for the median-valued home.
    • Florida: 4% 9,454 for the median-valued home.
    • Hawaii: 4% or 24,526 for the median-valued home.
    • Maryland: 3.8% or 10,976 for the median-valued home.
    • New York: 3.6% or 10,981 for the median-valued home.
    • South Carolina: 3.5% or 5,866 for the median-valued home.

    However, solar premiums can vary within state lines.

    While the solar premium for the state of Florida is 4%, it increases to 4.6% in Orlando, Florida.

    In New York City the solar premium is 1.8% more than it is statewide, which translates to 23,989 more in value for the typical home in New York.

    And in California there are major fluctuations within metro areas: while the solar premium statewide is 3%, in San Francisco, it increases to 4.4%, in Los Angeles to 3.6%. but in Riverside, the solar premium declines to 2.7%.

    Other states like Utah, did not have enough homes with solar-energy systems installed to identify the solar premium.

    There’s been a widening of reasons why people are going solar, said Evelyn Huang, chief customer experience officer at Sunrun, the biggest solar installation company in the U.S. — it competes directly with Tesla, which acquired its main competitor SolarCity. One of the reasons is savings, I think that’s the obvious one. The second one is control, Huang said, referring to monthly expenses.

    Our utility companies are needing more and more money to maintain, and they pass on that cost to the homeowner. But that is pretty unpredictable for a homeowner. You just don’t know how much your are going to increase, Huang said. I think that is another reason why customers are considering solar. They want to know how much they are going to pay every month. If you’re on a fixed income, you need a budget. You need to know what to expect.

    Homeowners who made the solar switch

    Lisa and Jerry Chretien, a couple from Cape May County, New Jersey, decided to lease solar rooftop panels from Sunrun a year ago. High utility bills and the desire to live cleaner and greener lives inspired them to make the decision. Since going solar in June 2018, the Chretien’s electric bills have decreased, especially in the summertime.

    As soon as we would open the pool and turn on the air conditioners in May … our electric bills would run close to 800, sometimes more, said Lisa Chretien. Saving money, especially with kids in college, has been a big help and a big saving. And there are a lot of incentives, tax wise you get a break. It has just been a plus all the way around.

    For Kerrie Lane, owner and operator of a cleaning service and resident of South Jersey, the experience was similar. After moving into her new home, she received her first electric bill: a staggering 1,100. Kerrie knew she needed to do something to make her electric bills affordable.

    I’m 60 years old, so I’m getting up there. I do a physical job for a living but I can’t do it forever So having my bills being manageable was very important to me, Lane said. My first electric bill in this house was 1,100. I knew I needed to correct this situation and make it manageable and Sunrun gave me the consistency that I was looking for.

    A Sunrun spokesman said that assuming annual utility rate increases —the current national average utility rate increase per year is around 3% — solar customers see an average utility bill savings of anywhere from 10% to 40%. Solar contracts include a fixed price of energy per kilowatt/hour that is typically lower than utility rates in most regions across the U.S.

    The Sunrun spokesman noted that customers still must pay basic utility infrastructure charges separate from the power generation cost, for wire maintenance, for example, and may also still use some power generation from the utility’s sources, depending on the size of their home and level of energy use, as well as the season. Seasonality is an issue for utilities too. In the summer, for example, tend to be higher to meet the demand, according to the U.S. Energy Information Administration.

    Depending on their deal with Sunrun — which offers service plans, loans, prepayments and cash purchases — customers may also pay monthly charges to the company. Sunrun says that more than 85% of customers do not buy the system outright but pre-pay a set amount and then make monthly service plan payments.

    We saw that there was an opportunity here to try and give the best of both worlds to our home buyers.

    Residential home construction company De Young Properties in California built its first net-zero energy building in 2013 — that means it has the potential to produce as much clean energy as it would consumer on a yearly basis.

    De Young began redesigning its traditional home prototype in 2008 in order to find a way to build comfortable, energy-efficient homes, at an affordable price. We wanted to build better homes. We didn’t want to stagnate and just build the same home that my grandfather used to build because we felt that it was important to continue to progress, said Brandon De Young, executive v.p. of the company, which has three decades of history.

    Basically, you either have to sacrifice your comfort for your energy bill or your energy bill for your comfort. And we saw that there was an opportunity here to try and give the best of both worlds to our home buyers, said De Young.


    Many homeowners lease solar panels from companies including Sunrun and Tesla, meaning at time of a home sale the seller needs to buy out the lease or the seller needs to find a buyer who is willing to take over that lease. Solar leasing companies do provide services for transferring the lease. If the previous owner was entitled to state or federal tax credits related to the solar project, that financial incentive would not transfer to the new owner.

    Like any home improvement, solar energy systems have a limited useful life. After 20 years or more, solar panels do generally start producing less energy and that would take away some of the value associated with the solar panels, which would likely be reflected in its premium for a specific home. But Zillow noted that this is similar to many other attributes of a home. For example, HVAC systems often need to be replaced after about 10 to 15 years, but people still highly value having air conditioning and are willing to pay a premium for it.

    Investment tax credits offered by the federal government to invest in renewable energy projects including solar are scheduled to be phased out for residential homeowners in 2022, but the lobbying fight over this tax credit — currently as high as 30% — is ongoing. If phased out, it would take away one incentive for a homebuyer to purchase a solar system, though costs are coming down at the same time. Bill Gates recently remarked that solar and wind no longer need the support that other sources of renewable energy do and government incentives should be phased out, and he added that solar and wind companies should now be large enough to drive down costs through economies of scale.

    What Do Solar Panels Cost and Are They Worth It?

    Consider solar panels for your home if you have a high utility bill, live in a prime location and qualify for tax breaks or other savings.

    Lauren Schwahn is a writer at NerdWallet who covers debt, budgeting and money-saving strategies. She contributes to the Millennial Money column for The Associated Press. Her work has also been featured by USA Today, MarketWatch and more. Lauren has a bachelor’s degree in history from the University of California, Santa Cruz. She is based in San Francisco.

    Tommy Tindall Lead Writer | Consumer debt, saving money, gig economy

    Tommy Tindall is a personal finance writer who joined NerdWallet in 2021, covering consumer debt, practical ways to save money and the gig economy. Before NerdWallet, he worked on the marketing and communications team at Fannie Mae. Today, Tommy strives to make the topic of money approachable for all. His work has appeared in The Washington Post, The Associated Press and on MarketWatch. Tommy is based in Bel Air, Maryland.

    Courtney Neidel is an assigning editor for the core personal finance team at NerdWallet. She joined NerdWallet in 2014 and spent six years writing about shopping, budgeting and money-saving strategies before being promoted to editor. Courtney has been interviewed as a retail authority by Good Morning America, Cheddar and CBSN. Her prior experience includes freelance writing for California newspapers.

    Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here’s how we make money.

    The rising cost of electricity from traditional sources and government incentives to go green make the idea of installing solar panels more attractive for many homeowners.

    But the true cost of solar panels, and whether they’ll help you save money. depends on a few key factors.

    How much do solar panels cost for homes?

    On average, solar panel installation and the system together can run from 15,000 to 25,000, according to the latest information from the Center for Sustainable Energy. Home services booking site Angi bumps that up, putting the normal range for solar panel installation in the U.S. from around 18,000 to 35,000 based on its database of completed projects.

    Before you make the leap, learn how your electric bill. location and incentives can impact your wallet over time. Here are five steps to take to determine whether you’ll save more than you spend on solar panels.

    Review your electric bill

    Solar panels generate their own power and can therefore greatly offset your monthly electricity bill. if not eliminate it. The higher your bill, the more likely you’ll benefit from switching. But be aware that electricity rates and usage — the main charges on your statement — are volatile.

    If a utility’s electricity fluctuate, so could the amount of savings, says Garrett Nilsen, deputy director for the U.S. Department of Energy’s solar energy technologies office. Similarly, if energy consumption changes, the amount of savings can also vary.

    Electricity rates vary by location. The national average is about 15 cents per kilowatt-hour, according to year-to-date 2022 data from the U.S. Energy Information Administration [0]

    Visit the EIA website to view the most recent per state.

    Evaluate your sunlight exposure

    sun means more energy produced and a greater potential to save with solar. Certain states, like Arizona and California, average more sunlight hours per day.

    Your home’s orientation toward the sun, the amount of shade it gets, and its roof type also affect a solar system’s output. You can estimate the efficiency of panels on your home using this solar panel cost and savings calculator from SolarReviews.

    Estimate and compare the cost of solar panels for homes

    The brunt of the expense with solar panels is in installation and the purchase of the actual panels.

    Minimal long-term costs can make up for the upfront costs. “Most systems don’t require much maintenance and are designed to last for 20 years or more with little change to the amount of electricity produced,” Nilsen says.

    When calculating the total price, consider how much energy you regularly consume — your usage is listed on your monthly utility bill — and what size system will generate the amount needed. Some tools, like the SolarReviews calculator, estimate the system size for you.

    With installation, an average residential 5-kW system costs from 3 to 5 per watt, according to the CSE, which results in the 15,000 to 25,000 range. That cost is before any tax credits or incentives.

    If you know your current energy usage, you can calculate how much you’ll need to pay for solar panels.

    Then comparison shop for solar panels as you would other big-ticket items, such as a car or TV, says Vikram Aggarwal, CEO of the solar marketplace EnergySage. Some companies reduce installation costs through rebates and other programs.

    Aggarwal recommends getting quotes from three to five contractors. EnergySage compiles solar companies’ customer reviews, certifications, Better Business Bureau profiles and other information to help you find reputable providers.

    Take advantage of government incentives

    A federal law passed in 2022 incentivizes consumers to make clean energy enhancements, like installing rooftop solar. A substantial update to an existing energy-related tax break that was set to expire at the end of 2023, the Residential Clean Energy Credit allows taxpayers who have solar (and other approved clean energy equipment) installed to recoup 30% of the cost in the form of a federal tax credit.

    What that means: A solar setup that costs 15,000 would yield a 4,500 credit (30% of 15,000) that you can take advantage of come tax time to reduce any federal taxes owed. The credit isn’t refundable though, meaning any money left over after your full tax bill is covered won’t be paid out to you. But you may be able to apply the remainder of the credit toward taxes owed in subsequent tax years.

    The credit applies to eligible equipment installed after Dec. 31, 2021, and remains in effect at the 30% rate through 2032. It decreases incrementally after that.

    Depending on your state, you may receive extra incentives like cash back, property tax exemption, waived fees and expedited permits. In some states, homeowners with solar panels can sell excess power to their local utility companies. Look up credits available in your state by reviewing the database of state incentives for renewables and efficiency.

    Keep an eye on trade policy

    Changes in government trade policy also impact prices. There have been varying tariffs on imported solar cells and panels over the last decade affecting costs and supply. For example, tariffs resulted in a 16-cent-per-watt increase for the average consumer in 2018, which translated to an overall increase of 960 for a 6-kW system, according to EnergySage.

    President Biden placed a two-year pause on new tariffs on the solar industry in June 2022.

    Is solar panel installation right for your home?

    If you live in an area with high energy rates and a suitable solar rating, and if you can afford the initial investment, it’s worth installing solar panels on your home while the 30% tax break is in place — for the good of the environment and your wallet. But don’t expect to eliminate your power bill overnight.

    If you decide to purchase solar panels, shop around and search for incentives. Consider financing with a solar loan if you’d rather spread out the cost over time. Keep in mind that you don’t have to buy solar panels — you can lease them, too. Leasing offers a lower upfront cost, though since you don’t own the panels, they won’t raise the value of your home, and you may not be eligible for incentives.

    Going solar isn’t the only potential way to save money. Learn more about what you can do to lower your bills.

    What to expect from California’s new rooftop-solar plan? batteries

    California is about to dump its net-metering regime and adopt a new system that emphasizes home batteries. Here’s how companies are preparing.

    Canary Media’s Down to the Wire column tackles the more complicated challenges of decarbonizing our energy systems.

    This is part one of a three-part Down to the Wire series this week digging into a new rooftop-solar policy expected to be adopted by the California Public Utilities Commission on December 15. 2022. [ UPDATE : The policy was adopted by the CPUC as anticipated.]

    Vincent Battaglia, CEO and founder of Renova Energy, isn’t shy about expressing his feelings on California’s looming decision to end the net-metering regime that’s driven a nation-leading 12 gigawatts of rooftop-solar installations in the state and helped his company grow from a sole proprietorship in 2006 to more than 300 employees and 65 million in annual revenue today.

    “ Bullshit” is how Battaglia characterizes the ​ “ cost-shift” argument made by California utilities and consumer advocates contending that existing net-metering policy has unfairly shifted the costs of maintaining the state’s grid from people rich enough to buy or finance rooftop-solar systems to those who can’t afford them. He blames utilities for the lion’s share of rising electricity costs instead.

    And he thinks the new structure proposed by the California Public Utilities Commission, which would reduce compensation for exported rooftop solar power based on hourly measurements of its value to the grid, is ridiculous for being based on an ​ “ asinine set of incremental adjustments of every frickin’ hour of every day.” He fears the structure will make the cost-effectiveness of every new solar system a mystery for homeowners, installers and financiers alike.

    But no matter how Battaglia feels — and his point of view is far from unique among California rooftop-solar industry players, even if it is more colorfully expressed than most — he’s still planning for how to keep his business growing once net metering goes away in California next year, as it will if the CPUC approves its proposed structure at its meeting this Thursday. And there’s more to his plan than expanding into neighboring states like Nevada and Arizona, he said.

    First, ​ “ we’ll be adjusting our pricing so that our customers are not looking at a nine-year payback,” he said. Under the current net-metering structure, a homeowner who installs a new rooftop solar system can expect to recoup the cost in five to seven years through reduced electricity bills and credits for exporting their excess power to the grid.

    The CPUC ’s new structure has set a target of nine years for customer payback, but Battaglia wants to get that number closer to seven for his customers.

    “ In 18 months, when the utility does another double-digit rate increase” — an offhand reference to California’s spiraling retail electricity rates, which have risen between 15 and 33 percent since January 2020 — ​ “ that pricing will look even better,” he said.

    Second, Renova will double down on selling batteries alongside new solar systems, he said. Those batteries can store solar power generated at midday, when it’s worth little to customers or to California’s grid, and save it for the evening ​ “ peak” hours after the sun goes down, when the state faces increasing threats of power demand exceeding supply.

    Renova is sourcing batteries from SunPower, a minority investor in Battaglia’s company. ​ “ Those batteries are very clever with their software,” he said, capable of forecasting when they should store power and when they should discharge to lower a home’s grid draw or export power back to the grid. And because the CPUC ’s proposed new structure would offer extra-high value during a relative handful of hours of the year, being able to predict that is vital to make up for the big drop in compensation they’ll face almost every other hour of the year.

    Those are also the hours when the CPUC and other state agencies hope that solar and batteries can support all the other grid-powered devices — electric vehicles are a big one, as are heat pumps for space and water heating — that Californians must adopt to reduce carbon emissions and meet the state’s mandate to achieve net-zero carbon by 2045.

    In this respect, Battaglia’s plan largely aligns with broader state policy. The CPUC ’s stated goal with its net-metering replacement plan is to shift a largely solar-only market to one dominated by solar panels plus batteries — plus EVs, plus electric heating and appliances — all responding to and being rewarded for acting in ways that shift and shape their generation and consumption of power to support the grid at large.

    Renova’s roadmap also mirrors the strategies being developed by a host of other companies whose businesses will be affected by the coming policy change, including nationwide solar installers Sunrun, Sunnova and SunPower, solar-inverter providers Enphase and SolarEdge, and battery vendors such as Tesla, LG Energy Solution, Panasonic, sonnen and Generac. They’re all looking at the still-uncertain details of how California’s new regime will work, both in isolation and in conjunction with multiple other policy shifts underway in the state.

    “ We’re kind of in the Wild West of this new form of customer adoption,” said Walker Wright, vice president of public policy at Sunrun, the country’s leading residential solar installer. ​ “ How can we get ratepayer value, resiliency value, out of a solar-plus-storage future in California?”

    Moving beyond net metering

    To understand why batteries will be so important as the rooftop-solar market changes under the CPUC ’s expected decision, it’s important to know how rooftop solar makes money for homeowners. In simple terms, that happens in two ways: by reducing how much electricity customers buy from utilities and by allowing customers to sell excess solar power back to utilities.

    Today, both of those values are based on the retail rates that customers pay for utility power. Customers avoid paying those retail rates for every kilowatt-hour of rooftop-solar power that replaces a kilowatt-hour they would have used from the grid. They also get paid the retail rates for every kilowatt-hour of solar generated in excess of their usage that feeds back to the grid. (In the end, they pay for their ​ “ net” usage of electricity, hence the term net metering.) According to the California Solar and Storage Association ( CALSSA ), the payback on most net-metered solar systems in the state is split pretty evenly between those two value streams.

    Retail electricity rates are much higher in California than in other parts of the country, due to a number of factors. And, like everywhere in the country, they’re also much higher than the for power on wholesale power markets. That’s because retail rates encompass costs for lots of things beyond electricity, like the expenses of building transmission lines and other grid assets, hardening the grid against the threat of sparking wildfires, investing in energy-efficiency programs and offering subsidies to low-income customers.

    It’s that gap between the portion of rates that pays for the cost of generating electricity and the portion that pays for all those other things that causes so much strife and confusion over net metering.

    Utilities in California and across the country — and some consumer advocates and environmental groups — argue that net metering at full retail rates allows people with rooftop solar to avoid paying their fair share of all the costs for things that they still benefit from, starting with the grid that provides them power when their solar systems don’t. That, critics of net metering say, forces an unfair and unsustainable share of those costs onto people who don’t have solar.

    Rooftop-solar advocates and their environmental and community allies argue that those costs are outweighed by the benefits of widespread rooftop solar. Those include tapping private-sector investment to replace fossil-fueled power faster than utilities would do on their own, reducing the need for new grid infrastructure by generating more power closer to where it’s used, and giving customers who want to switch to electric vehicles and heating a resource that can help cover the higher costs of making that switch, among others. They also argue that utilities are overestimating the so-called ​ “ cost shift” from solar to non-solar customers in the service of a more fundamental interest: protecting their monopoly over the generation and provision of power.

    We’ve written multiple articles and hosted a debate on the fractious arguments over these ​ “ cost-shift” calculations, and won’t spend more time on them here. Suffice it to say that the CPUC has agreed with utilities and their allies that full retail-rate net metering is causing a cost shift, and its proposed decision aims to correct it. The CPUC ’s solution, which will apply to new solar customers starting as early as April 2023 (existing customers are exempted), is to change both the rates that solar-equipped customers pay for power and the rates they earn for exporting power, to more accurately reflect the costs and benefits of each. And both of these changes make energy storage an integral part of a moneymaking rooftop-solar proposition.

    Why batteries are central to navigating California’s rooftop-solar future

    For the power that new rooftop-solar owners buy from the grid, the CPUC ’s plan would require them to pay ​ “ electrification rates,” dubbed as such because they’re intended to help homeowners move away from fossil gas and electrify their homes. In general, those are rate structures that charge more for power during peak hours (evenings from about 5 p.m. to 9 p.m.) and less during off-peak hours (the rest of the time). The aim is to encourage customers to use less energy during peak hours and then, during non-peak hours, store up solar power in batteries so it can be released during peak hours to lessen demand and strain on the grid.

    Here’s a chart of current electrification rates for California’s big three investor-owned utilities — Pacific Gas Electric, Southern California Edison and San Diego Gas Electric.

    Most of the customers of these utilities are already on ​ “ time-of-use” rates that charge more during peak hours. But electrification rates have higher on-peak and lower off-peak prices, which reward customers who can control their consumption and generation to maximize value, but punish customers who can’t.

    For the power that new solar owners export and sell to the grid, the CPUC would replace retail-rate compensation with compensation on an ​ “ avoided-cost” basis — a complicated structure meant to reflect the value of exported power from hour to hour across different months of the year and different climate zones across the state. The following charts show how those values will shift over months of the year and hours of the day in a temperate climate zone within PG E’s service territory, indicating the wide variation in values that exported solar power can expect to receive over time. (The items listed in the legends are ​ “ costs” that the state can avoid by tapping into rooftop solar power.)

    The problem with both of these changes, solar advocates say, is that they replace stable and predictable values with changing and unpredictable ones.

    That’s less of a problem for the power that rooftop-solar owners buy from the grid. The three utilities’ electrification rates are fairly comprehensible and predictable for homeowners and solar companies looking to game out their potential savings. Still, each utility’s electrification rate is different, so there’s a lack of consistency across the state.

    What’s more, an ongoing CPUC proceeding to ​ “ advance demand flexibility through electric rates” could well alter those rates in future years by changing the hour-by-hour structures on offer to solar customers or by adding new monthly charges in an attempt to spread fixed utility costs more evenly across all customers.

    But those concerns pale in comparison to solar advocates’ anger over the changes proposed on the export side of the equation. First, the avoided-cost rates the CPUC would have solar-equipped customers earn for their exported power are far lower on average than today’s retail rates — about 75 percent lower, according to CALSSA — which cuts deeply into roughly half of a rooftop-solar system’s total economic value.

    Get Caught Up

    Can the US manufacture enough solar panels to meet its surging demand?

    Managing that load shape will spell the difference between earning a reasonable payback on your investment in a solar array or not. While Jammal hopes that the CPUC will alter its proposal to enable standalone rooftop solar to achieve reasonable economic rewards, ​ “ ultimately we think solar-plus-batteries will be the direction the market will go,” he said. ​ “ What we are going to see — and we’re all going to learn this — is how our partners on the installation side start combining batteries and start combining these electrification products that have their own incentives and their own impacts on whole-home energy use.”

    Is the industry ready for a boom in demand for batteries?

    All of these changes add up to huge opportunities for battery vendors and the host of companies that are integrating batteries into residential solar.

    Sunrun was ahead of most installers in marketing batteries alongside solar systems. It’s had particular success in California, where existing rate structures have already been encouraging home storage, and the risks of wildfire-prevention blackouts have made many customers seek out batteries to serve as backup power sources. The company says batteries are added to about 20 percent of the residential solar systems they install in California, compared to an industry average of about 14 percent in the state.

    The CPUC ’s forthcoming decision, meant to supercharge adoption of batteries with solar systems, could quickly drive those adoption rates far higher, said Sunrun’s Wright. But it’s unclear whether the state’s utilities, regulators and permitting agencies are ready to efficiently support the shift to a far greater number of solar-battery systems than the state has seen before — and whether the broader battery industry and supply chain is geared up to support it.

    California has deployed more than 530 megawatts of residential battery systems over the past five years, and demand is growing, Wright said. In fact, ​ “ there’s far more demand for batteries than the industry can deliver right now, due to well-known battery shortages,” he said.

    Solving those supply bottlenecks will be the first challenge for a post-net-metering California market. Recent market signals do indicate that a long-running shortage of batteries for grid energy storage, caused by Covid-related supply-chain disruptions and booming demand for lithium-ion batteries for EVs, may be easing, said James West, senior managing director and head of sustainable technologies and clean energy research at Evercore ISI.

    “ We had a time there where the companies that were financing a lot of this, like Sunrun and Sunnova, and the technology providers like Enphase and SunPower, were short on batteries,” he said. ​ “ Now they’re able to provide the batteries, at least in a reasonable amount of time.”

    Once they can get the batteries, the next question for solar companies is whether they can get them permitted and interconnected in a timely fashion, Wright said. ​ “ How quickly can you ramp up what is a profound change in the types and…volumes of applications that are coming in?”

    Industry data indicates that it takes about 50 percent longer to permit and interconnect battery-solar systems than it does for solar systems alone, he noted. Many city and county permitting offices are still learning how to process these requests, although efforts to standardize solar permitting processes, including the Department of Energy’s SolarApp, could be adapted to support solar-plus-battery installations.

    Another challenge is that adding batteries is more likely to trigger the need to upgrade a home’s main electrical panel, a process that can add months of additional permitting and interconnection time, Wright said. And customers who install rooftop solar are likely also to be ​ “ in the front of the pack in terms of electrifying their homes and having EVs in their garages,” which will add complications to interconnection and permitting.

    EVs and electric heating could add significant new loads to the utility grid — and rooftop solar panels could offer significant relief to those stresses, he said. But ​ “ how can we get there, and can the system digest that change, and at what speed?”

    Making solar-battery systems make economic sense

    It’s also important to remember that batteries cost thousands of dollars on top of the cost of a typical home solar installation. Earning back the cost of a battery is far more complicated than plugging it in, programming it to store power at midday and discharge when peak begin, and walking away.

    That’s why almost every solar-plus-battery system now being sold in California comes with a variety of options for actively controlling and adjusting the interplay of solar generation, energy storage and home electricity use to maximize the overall value of that ​ “ load shape.” Just what that optimization will look like depends, of course, on a number of factors.

    Some of them are starting to become clear — the need to limit exports during off-peak hours and save up energy to discharge when the value of energy exports spike, for example. But others will only emerge in the future, which means that these systems have to be ready to react to change.

    That’s the idea behind sonnenConnect, the new ​ “ grid-interactive” solar-battery program from sonnen, the German battery vendor owned by Shell, and Baker Electric Home Energy, a subsidiary of electrical contractor Baker Electric. It’s one of a growing number of ​ “ virtual power plant” offerings that are promising customers increased value for their solar-plus-battery systems, in exchange for letting the installing company control how those batteries operate on a moment-by-moment basis.

    “ This is about harnessing solar and harmonizing it into grid operations in order to enable the energy transition,” said Blake Richetta, CEO of sonnen’s U.S. business. ​ “ To become a firm grid asset, you have to develop this kind of mechanism. Otherwise, you have tens of thousands of batteries doing nothing, sitting in backup-power mode.”

    Sonnen has been operating these kinds of residential solar-battery virtual power plants in Germany since 2015. and it has structured similar arrangements in Utah with utility Rocky Mountain Power and in California for some apartment complexes.

    SonnenConnect’s value proposition for homeowners and the grid at large is only partly defined at present, Richetta said. The most obvious value will come from balancing a home’s load shape against time-of-use rates and electrification rates, which is a relatively simple matter of scheduling when batteries charge up and discharge against known daily cycles.

    But those daily schedules can change unexpectedly, he said. One major example of that is when California’s grid is on the verge of collapse, as happened in the summer of 2020 and again in September of this year, when grid operator CAISO had to institute emergency measures to reduce electricity consumption to prevent heat-wave-driven electricity demand from outstripping available supply.

    During these emergencies, stored battery power is far more valuable to the grid at the tail end of a 5 – 9 p.m. peak period, after the sun goes down, than at the beginning, when the grid hasn’t yet reached its highest point of stress, he noted. But battery systems that aren’t programmed with this fact in mind might start discharging power at 5 p.m., leaving them depleted later on when they’re really needed.

    Companies including sonnen, Sunnova, Sunrun and Tesla are already signing up customers willing to let those companies actively control their batteries to manage these later-evening demand spikes. The avoided-cost rates for energy exports would offer more money for those key hours, which could make it worthwhile to save up as much energy as possible and inject it into the grid at those precise times, he said. That’s just one of a growing number of ways that centrally controlled and orchestrated solar-battery systems can boost their value for their owners and the grid, Richetta said.

    There’s clear value in a future of rooftop-solar-and-battery systems that can deliver that power when the grid needs it most, he said. That value shows up in modeling that indicates that the right combination of distributed solar-plus-storage systems can reduce the costs of getting to a 100 percent carbon-free grid by tens of billions or even hundreds of billions of dollars, compared to relying solely on utility-scale clean energy and batteries and high-voltage transmission grids.

    “ If there are aggregations of future solar-plus-storage systems across the state, the system should be able to find value from them during peak times,” Sunrun’s Wright said — ​ “ and they should be able to compete on the market for the value they provide the grid.”

    How can solar-battery systems compete for that value? That will be the subject of part two in our three-part series on California’s post-net-metering future.

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    Jeff St. John is director of news and special projects at Canary Media.

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