The Future of Solar in California: “It’s like the new gold rush”

Talk to anyone in solar, and they’ll tell you California’s solar industry leads the nation. That part is largely true, but being on the leading edge comes with challenges. 

Speaking with Scanifly, five contractors—Jim Jenal, co-founder of RunOnSun Solar; Kurt Ames, President of KW HOUR ENERGY; Micah Breeden, CFO, and Alyssa Traub, Project Development Manager, both at Allterra Solar; and Jennifer Kemme, the Owner of Vision Civil Engineering—explained the complex landscape of solar energy in California.

Image by vanitjan on Freepik

A quiet evolution into a national leader

Solar was pretty quiet in 2006 when Jim Jenal started RunOnSun. The California Solar Initiative—one of the first state-backed bills supporting solar energy—wouldn’t even be out for another year. 

Jennifer Kemme said it was similar in 2009 when she expanded her construction company, Vision Civil Engineering, to take over her father’s small solar contractor business. Solar at the time was increasing in popularity but it was still the “new thing,” she said, and homeowners required a lot of convincing.

Fast forward over a decade and things are much different. 

In 2021, solar accounted for 17.31% of electricity generation in the state with numbers projected to rise even more as new construction now often features solar from the start. Further, as electric vehicle ownership increases in the state, there will be even more demand for electricity and for solar.

Micah said in the past, sales visits for all contractors were a lot longer because you needed to educate consumers. Now, consumers know about things like net metering and how solar works in general, so their questions are more practical and focus on the financials of their investment. Alyssa added that people know solar is a good investment now, which makes initial conversations more about how it will work for their specific site rather than if it will work at all.

As for how popular solar is in the state now, Kurt sums it up: “It would be hard to live in California and not know about solar now.”

With growth comes regulation and newcomers

Along with the growth of solar’s popularity—including more tax incentives and government pushes—California added more regulations and saw new contractors entering the state. 

Having worked in solar for over a decade, Jennifer is not convinced that the additional regulations make projects any better off than they were in 2009—increases in efficiency are owed to technology innovation, not regulation, she remarked. That said, not everyone is upset about regulations. Kurt feels the regulations are doing a good job at keeping consumers as safe as possible. He noted he’s seen how some installations happen in other states with limited safety regulations, and it makes him worried for those customers. 

Now that solar is fairly saturated in California, Kurt said there are lots of opportunities and with that comes some bad actors. He noted some contractors use aggressive sales tactics, pressure outsourced local contractors to accept lower pay, and in some cases companies will even declare bankruptcy to avoid completing a job, operating under a slightly different name a few weeks later.

“These large companies don’t have a love of the industry and don’t care about customers,” said Kurt. “It’s kind of like the gold rush—they are just here to collect some gold then leave.”

From Jim’s perspective, it’s not the regulations or big players that are the problem, but the lack of standardization. He works in different areas across greater Los Angeles and noted that not only are regulations not standardized, but the opinion of one individual can alter the whole project. He’s had multiple instances where a permit file was rejected with multiple notes. However, when he addressed the issues and re-submitted them to a different person, they didn’t even acknowledge the changes or agree with the original complaints.

Despite new incentives pushing jurisdictions toward a standard permitting process for small solar projects, something that gives Micah hope for the future, the current reality is frustrating to contractors operating in multiple regions.

“Dealing with the lack of standardization is maddening, frankly,” said Jim.

NEM 3.0 and the future of solar in California

On top of increasing regulations and bad-faith corporations playing the sales game, one major threat is looming for the future of solar in California: NEM 3.0, the proposal by utility companies to alter net metering in the state. 

While the 2021 proposal to eliminate net metering and charge an $8 per kWh access fee per month was quashed by the state government, utility companies are set to deliver another proposal in late 2022. If net metering is eliminated, it poses a threat to solar demand as homeowners will no longer be able to over-generate electricity in high-sun times (like throughout the day and all summer) to cover them in low-sun times (overnight and throughout the winter). Without this structure, the ROI of solar installations drops, potentially driving many out of the market and causing both financial and environmental repercussions. 

Jim added that while the California government largely supports renewable energy, many lobbying groups for utilities are leveraging unions to make their arguments for them. While the lobbying didn’t work with the first NEM 3.0 proposal, Jim is worried this new approach might succeed the second time around. 

“Utilities are hiding behind unions, getting them to make the argument that net metering shifts the costs of energy from wealthy homeowners to the working poor who can’t afford to install solar,” said Jim. “This gets more traction with some lawmakers, but it’s the same argument utility companies made the first time—all they want to do is preserve their monopolies, and with it, their profits.”

As NEM 3.0 unfolds—both the second proposal and the passing or failure of it—the nation will be watching. For over a decade, California has been a leader in solar and a national accelerant for the solar industry. Yet it’s also at risk of losing that status. Texas, for example, installed nearly two times the amount of solar in 2021. So regardless of how the government ultimately decides on NEM 3.0, there’s a bigger issue at play. If the industry isn’t streamlined and made easier for both contractors and consumers, California may lose its leadership spot.