Data Source: American Census Survey, Public Use Microdata Sample (PUMS).
Analysis by CEC Economics
Analysis by CEC Economics
Highlight
- California has been a pioneer in the adoption of rooftop solar energy, with some jurisdictions adopting it as early as 2015. The emergence of rooftop solar for owner-occupied housing began slightly earlier than in renter-occupied housing. Among owner-occupied households, San Diego County (Carlsbad, Poway, Encinitas, and Escondido), Central California (Fresno, Clovis, and Bakersfield), and inland Northern California (Vacaville, Davis, and Roseville) have some of the highest solar adoption rates.
Challenge
- Solar adoption among renter-occupied households still lags far behind owner-occupied households. In 2022, only the Livermore and Dublin areas of Alameda County (4.2%) and Victorville and Adelanto areas of San Bernardino County (4.0%) have exceeded 4%. Growth of rooftop solar adoption is slowing in both owner-occupied and renter-occupied households. The new version of the Net Energy Metering policy (NEM 3.0)122 that took effect on April 15, 2023, impacts how solar customers are compensated for their excess energy production and has already influenced the future adoption of rooftop solar in the state. These changes may make solar adoption less financially attractive for some customers, potentially leading to a slowdown in the rate of rooftop solar adoption.123
122 Net Energy Metering (NEM) is a policy that allows customers who generate their own electricity through solar or other renewable sources to receive credits for any excess energy they produce and send back to the grid. These credits can then be used to offset the cost of electricity they consume from the grid when their renewable energy system is not producing enough power.
123 For example, under NEM 3.0, the value of the credits that customers receive for excess energy they produce may be reduced, and there may be additional charges for using the grid to send excess energy back. The changes to California’s net metering policy will cut the value of solar energy credits by about 75 percent for PG&E, SCE, and SDG&E customers. Energy Sage: NEM 3.0: what does it mean for you? January 11, 2023. Accessed June 22, 2023. Available at: https://news.energysage.com/net-metering-3-0/
Opportunity
- However, new tax incentives for residential solar in the federal Inflation Reduction Act (IRA) could help offset the reduced compensation for homeowners following the NEM changes. The Solar Investment Tax Credit (ITC) in the IRA provides a federal income tax credit, worth 30% off the entire system cost, for homeowners who install designated solar systems between January 1, 2022 and the end of 2032.124 Several state-funded solar power rebate programs are also still available in California to help further reduce the cost of installing solar, such as a program that will cover the entire cost of a solar system for low-income and at-risk households. Some municipalities in California also offer their own incentives.125
124 “IRA Updates to the Solar Investment Tax Credit (ITC).” University of Cincinnati News. January 18, 2023. Available at: https://www.uc.edu/news/articles/2023/01/gc-ira-updates-to-the-solar-investment-tax-credit-itc.html
125 “California Solar Tax Credits, Incentives and Rebates (2023).” MarketWatch. Updated July 20, 2023. Available at: https://www.marketwatch.com/guides/home-improvement/california-solar-tax-credits/
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