SMUD Wins In Giving Builders Solar Options, Advocates Say It Sets A Dangerous Precedent

The California Energy Commission unanimously voted to allow the Sacramento Municipal Utility District to offer builders and homeowners an option for community solar, in addition or instead of rooftop solar on new homes. But opponents say giving SMUD permission sets a precedent that other utilities will follow threatening the future of rooftop solar in California. 

This comes a couple months after that state began requiring all new homes to have solar electricity. SMUD’s plan will allow customers to either have rooftop solar or to purchase power from a community solar project. The power will come from several solar farms in the utility’s territory.

“This program provides options to builders and a net benefit to potential homebuyers, all while providing clean power to our community,” said SMUD CEO and General Manager Arlen Orchard in a statement. “The state of California and the Sacramento region are facing an affordable housing crisis and our low-cost solar option provides a valuable tool to lower the construction costs of new homes while supporting carbon reduction goals.”

SMUD touts the Neighborhood SolarShares Program as a legal alternative with benefits for homeowners. When they sign up they are locked into the program for 20 years. Officials with SMUD also note customers can purchase rooftop solar even after enrolling in the community solar program. The company is about 50 percent carbon-free and says it plans to become 80 percent by 2030. 

The local utility also refers to a Legislative Analyst's Office report that shows solar farms in the past cost the state less as a way to meet its climate goals. The price of rooftop solar for a home can cost anywhere from $10,000 to $15,000. 

Drew Bohan, executive director for the California Energy Commission, presented findings at the meeting saying the program gives customers another option “and to some homeowners it's going to be very attractive. It's set it and forget it."

He admitted that the net annual savings of community solar for the customer are around $28, but the same for rooftop panels either leased or mortgaged are in the $70 range. He says the idea is to give customers options.

But opponents, like state Sen. Scott Wiener, say that giving SMUD this permission sets a precedent that other utilities will follow and those fights can already be seen playing out at the Capitol.

“There is no attack on rooftop solar and storage that [utilities] will not engage in because they want it to go away and they view it as competition,” Wiener said at the meeting.

At least one entity, Redding Electric Utility, said they want to use SMUD’s model as an example of how they could follow a similar path. Utilities like Pacific Gas and Electric submitted letters in support of SMUD. 

But on the other side advocates like Dave Rosenfeld, executive director of Solar Rights Alliance, say the decision is a “blow to customers.” 

His group says the vote will have negative results for Sacramentans like fewer homes will be built with solar and they could have higher energy costs. 

Opponents, including many solar groups and residents, view this decision as a way to bury efforts to increase rooftop solar and to separate themselves from the utility companies. 

“SMUD’s proposal had the opportunity to set a high bar for complying with the rooftop solar mandate … but it failed to address issues around developing new local solar resources, environmental justice concerns, and appropriate criteria and benefits for eligible solar projects,” said Shiva Patel, an energy justice campaigner with the Center for Biological Diversity.

Dan Jacobsen, state director for the advocacy group Environment California, said allowing SMUD to opt-out undermines the state’s climate goals.

“Let’s move to 100 percent clean energy before the law mandates it,” said Jacobsen. “There’s just no other way to get the reductions that we need to stave off the worst impacts of climate change if we don’t think boldly.” 

But the commission says the decision is bold and creates more options for solar in the Sacramento Region.

“This first round may not be perfect, but I don’t think we should let the perfect be the enemy of the good,” said Commissioner Janea A. Scott.  

The commissioners said the program meets their six requirements, including enforcement, energy performance and energy savings. Commissioner J. Andrew McAllistar said that they expect other proposals to come in and they welcome other forms of solar. 

“Other community solar proposals will look different,” he said. “Openness to diverse cost-effective solutions is a hallmark of California’s innovation economy and key to meeting our goals for clean energy, climate, and resilience.”

Correction: A previous version of this story misspelled Commissioner J. Andrew McAllister and misidentified Commissioner Janea A. Scott. Both have been updated.

We've also updated this story to clarify the California Energy Commission vote was to give builders and homeowners in the SMUD territory another solar option in the form of community solar.