Solar Power in California Still a Smart Investment Despite Regulatory Changes

solar power in california still a smart investment despite regulatory changes.jpg Business

Navigating the complexities of rooftop solar installation has become even more challenging for California homeowners, as a major incentive for the technology has been significantly cut. Factors such as roof size and shape, as well as monthly electricity costs, have always played a part in the decision-making process. However, recent changes to the fees paid by utilities for surplus electricity generated by solar panels have added a new layer of complication. As of April 15, these fees, which were a significant incentive for many to adopt solar, have been slashed by approximately 75% by order of the California Public Utilities Commission.

This shift comes as a blow to the solar industry, with Bernadette Del Chiaro, executive director of the California Solar & Storage Association, stating "The value of solar did just drop overall". The alteration in fees, known as "net metering", will impact customers of Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric. The commission justified the change by arguing that the previous system forced millions of Californians without solar panels to subsidize those who had them. Now, the debate centers around whether the value in investing in solar energy remains high enough for consumers to continue with installations, amidst concerns of rising electricity prices and ongoing blackouts.

New Regulations Change The Game For Rooftop Solar In California

The feasibility of rooftop solar for homes has always been a complex issue, factoring in the shape and size of your roof, as well as your monthly electricity bill. However, a new development has added another layer to this complexity. Starting April 15, the fees that three of the biggest utilities paid homeowners for the extra electricity their solar panels produced – one of the main incentives for rooftop solar – dropped by approximately 75%.

The Value of Solar Drops

This shift, ordered by the California Public Utilities Commission, has resulted in a significant drop in the value of solar according to Bernadette Del Chiaro, executive director of the California Solar & Storage Association. She notes, however, that there is still value in the investment, especially considering ongoing blackouts and rising electricity prices.

The new rules mean that it will take longer to recoup the money spent on rooftop solar, but adding a storage battery to your system could improve the economics. This would allow you to draw less power from the grid during costly peak hours after sunset. However, like solar panels, batteries aren’t cheap.

New Deal Terms and Battery-Powered Life

Under the new rules, known as Net Energy Metering 3.0, utilities will pay a wholesale rate for the excess power generated by rooftop solar. This new rate is much higher during the early evening when solar panels have little to offer. The old system forced utilities to pay more for excess power than what it was worth to them, resulting in excessive costs of transmitting electricity and improving grid safety being pushed onto people who did not have solar panels.

Adding a high-capacity battery to store excess power generated during the day is seen as one solution. Batteries, such as the Tesla Powerwall, start at around $7,500, excluding the 30% federal tax credit. However, the PUC estimates that adding a battery to your rooftop solar system could increase your savings by over a third on average, from about $100 a month to at least $136.

Determining Your Roof’s Power Generation

Before deciding on solar panels, it’s important to understand how much electricity your panels could generate. This depends on the amount of sunlight received by your roof and the available space for solar panels. There are various resources available to help estimate your roof’s generating capacity, such as Google’s Project Sunroof.

The average homeowner usually has enough roof space to meet 60% to 80% of their electricity needs with solar panels, which is often enough to make the investment worthwhile. However, the panel’s lifespan and the potential changes in electricity use in the future should also be considered.

Financing Your Solar Investment

The average electricity usage by California households ranges between 500 and 600 kWh per month. A 5-kilowatt rooftop solar system could generate this amount of electricity, costing about $15,000 in California. With the 30% federal tax credit, the cost drops to around $11,000. However, adding a battery could double this cost.

For low-income homeowners, financial incentives are available to help cover the cost of solar panels. For those ineligible for subsidies, the choice lies between owning a rooftop system or letting a third party install one on your roof.


While the new rules have made solar power less financially attractive, the potential savings and benefits to the environment still make it a viable option for many homeowners. The addition of batteries to the system can also help offset the initial investment costs. However, it’s essential for homeowners to carefully consider their unique circumstances, including their roof’s capacity, potential changes in energy consumption, and financial situation before deciding to invest in rooftop solar.

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