North American state cut benefits by 75% for those who use solar panels to stop increases in other people’s bills
The sale of solar panels in California plummeted in 2023 after the country cut subsidies for those who produced solar energy at home and injected it into the system. In December 2022, the North American state reduced credit by 75% for Californians who installed solar panels in their homes.
The measure caused sales of new equipment and the average number of permissions for installing panels to fall in 8 of the 11 months analyzed by the energy research company Ohm Analytics. According to the company's monthly report, there was an average reduction of 73.5% in sales volume from April to November 2023. Here is the complete of the report (PDF – 1 MB, in English).
The study also shows that June was the month that saw the most drastic reduction, 85% compared to the same month the previous year. In the comparison between the 11 months of 2022 and 2023, the average number of permits issued for installing solar panels on residential roofs fell 11%, from 1,206 per day to 1,079 per day.
The results up to November led Ohm Analytics to reduce the projection of a drop in equipment sales from 38% to 42% in 2024.
NEW LEGISLATION
In December 2022, the CUPC (California Public Utilities Commission) unanimously decided to cut the subsidy for those who produce solar energy at home by 75%. The new policy came into effect in April 2023.
According to the commission, the new rule aims to control the increase in electricity bills for Californians who do not have solar panels.
“The subsidy left an incredible legacy and brought solar power to hundreds of thousands of Californians, but it is also profoundly expensive for non-solar customers and was long overdue for reform.”stated John Reynolds of CUPC in December.
The change is not retroactive, therefore it does not impact those who had already installed panels in their homes. Therefore, the months of January to March saw an increase in the number of sales and installation permits.
Until April 2023, Californians earned a $0.30 credit per kW (kilo-watt) produced by their solar panels. This benefit has been reduced to US$0.08 per kW.
In CUPC's understanding, the measure will also encourage the installation of panels with batteries to store energy. The implementation of panels with batteries allows the use of energy produced when the sun is no longer shining.
“The future needs a solar program designed around the value of solar power to the grid and that encourages true carbon reductions at peak power times, which are after sunset, creating better incentives for customers to combine solar power with batteries”said Reynolds.
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