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Clean energy journalism for a cooler tomorrow

California bill would undo rules making it hard for schools to go solar

State regulators slashed solar programs that school districts rely on to cut energy bills and finance sustainability projects. A new bill could fix that.
By Jeff St. John

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Students at a school in Merced, California use handheld solar sensors to check power output from a carport solar canopy
Students at a school in Merced, California, stand next to a carport solar canopy while they learn how solar power works by holding solar cells that power small fans. (TerraVerde Energy)

California regulators’ hostility to rooftop solar may have hit its political limit, at least when it comes to the impact on public schools.

In the past few months, a host of bills seeking to reverse or amend California’s regulatory push against rooftop solar have faltered in the state Capitol. The exception, so far, is Senate Bill 1374. The bill would amend the November California Public Utility Commission (CPUC) decision that prevents schools, farms, apartment buildings, and other types of customers from using the solar power they generate to offset their power purchases from Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric, the state’s three major utilities.

In April, SB 1374 passed through the California Senate Energy, Utilities and Communications Committee, which is chaired by an avowed opponent of solar net metering. Last week, the bill successfully emerged from a Senate Appropriations Committee process that’s held back hundreds of bills on the grounds that the expenses they would incur conflict with Governor Gavin Newsom’s (D) tightened state budget plan. And on Monday it passed the Senate on a vote of 287.

State Senator Josh Becker (D), SB 1374’s author, emphasized that the bill does not treat schools, farms, and other multi-metered utility customers differently from single-family homes subject to the CPUC’s new regulations on solar net metering. It would simply allow those customers to use their own solar power to offset their utility bills, just as residential customers do.

School districts save on average between $200,000 and up to $3 million [per year] from installing solar,” Becker told Canary Media in an April interview. Their costs are going up dramatically — and they have space that we would want to encourage them to use for solar. Saying schools can’t consume their own solar that they generate on their own parking lot? That makes no sense to me.”

A broad coalition of clean energy groups, affordable-housing proponents, farming groups, school districts, and more than 135 local elected officials shares Becker’s view.

That decision really disproportionately and unfairly impacted schools and other customers” that use those solar accounting regimes, said Stephanie Seidmon, program director of nonprofit advocacy group Undaunted K12.

The CPUC’s November decision went even further than the agency’s controversial net-metering decision in December 2022, which reduced the value of solar power delivered back to the power grid for customers of the state’s three biggest utilities — namely single-family homes and businesses served by one utility electrical meter. That policy has led to a dramatic drop-off in solar installations in the state and is threatening progress on the state’s climate goals.

But those single-meter customers may still use the solar power they generate to offset their own utility power purchases — an important cushion against utility rates that are now much higher than almost anywhere else in the country. Electricity rates at California’s three big investor-owned utilities are double the national average, have been rising much faster than the broader inflation rate, and are expected to keep climbing for the foreseeable future.

For schools and other customers with multiple electric meters, by contrast, the CPUC’s November decision dealt a blow to two long-standing programs for virtual” and aggregated” net metering. These customers must now sell all the solar power they generate back to utilities at avoided cost” rates that are much lower than the retail rates they pay for electricity, and then buy back that energy at the retail rate, which is much more expensive,” Seidmon said. That’s despite the fact that the solar power being generated is on school properties and feeding their electric meters.

The many benefits of schools going solar

Energy costs are second only to staff salaries for many schools’ budgets — and schools across the country have installed solar panels to cushion the impact of rising energy bills, freeing up scarce dollars for teachers, programs, and building improvements. According to nonprofit group Generation180, nearly one in 10 U.S. school districts had installed solar as of early 2022, enabling them to save hundreds of thousands to millions of dollars per year on energy costs.

These savings can also help schools invest in energy efficiency, replace fossil-fired heating with electric heat pumps, and power electric school buses, Seidmon said. But under the CPUC’s rules, which went into effect for new solar installations in February, going solar is simply no longer a cost-effective proposition for school districts served by California’s three major utilities.

Data on how the CPUC’s program has affected solar plans across the state’s roughly 10,000 public school sites is hard to come by, said Nancy Chaires Espinoza, a legislative advocate for the School Energy Coalition, a nonprofit group representing school districts that want to transition to clean energy. But many larger districts have told the CPUC that they won’t be able to carry out their existing solar plans under the new regime.

Michael Johnston, associate superintendent of the Clovis Unified School District, said the solar projects the district has installed at most of its 44 school campuses have allowed it to manage our costs more effectively as we move forward. We know what our rates are going to be, we know how that’s going to impact us in future years.”

As a result, Clovis Unified has been able to finance LED lighting replacements, HVAC efficiency retrofits, and a handful of electric school buses, he said. About 41 percent of U.S. school districts needed to update or replace HVAC systems as of 2020, a report from Undaunted K12 and decarbonization think tank RMI noted. (Canary Media is an independent affiliate of RMI.)

But the CPUC’s limitations on the value that school districts can get from new solar installations changes the reality for us,” Johnston said. Why even bother having those panels anymore?”

Meanwhile, Chaires Espinoza said, many smaller school districts don’t have the bandwidth to know what’s coming at them” with the CPUC’s new rules, which are going into effect at the same time that California schools are being mandated to make major investments in electrifying their buildings, purchase electric school buses, and meet building code requirements to include solar panels on new construction.

Schools are very willing participants in that transition,” Chaires Espinoza said. We honestly just need a modicum of support, and for things to not be stacked against us.”

Utilities versus schools 

Arrayed against school districts, environmental justice groups, and other backers of SB 1374 are California’s utilities, which argue that reversing the CPUC’s decision will lead to higher costs for utility customers at large.

In a joint letter to the California Senate Energy, Utilities, and Communications Committee, Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric urged lawmakers to reject SB 1374 on the grounds that it would reverse recent protections for non-solar customers. We believe that creating equitable rates for all customers is crucial, and this bill fails to account for the increased cost to serve customers with multiple meters.”

Utilities across the country have argued that solar net-metering programs unfairly shift costs from solar-equipped customers onto the remainder of utility customers. Supporters of rooftop and distributed solar have challenged this thinking, which they say overestimates the costs that rooftop solar imposes on utilities and underestimates the broader economic, environmental, and social justice benefits.

But even the CPUC’s current stance on the cost shift” caused by rooftop solar does not justify its November decision, Seidmon said. In a rebuttal letter, Undaunted K12 and the School Energy Coalition pointed out that the CPUC’s standing analysis of the impact of solar net-metering policies has found that solar programs for nonresidential customers have not caused a cost shift.

This means that, whether or not one agrees with the underlying logic of the CPUC’s cost-shift analysis, it shouldn’t be applied to schools, farms, and other nonresidential customers, she said. They took arguments that were questionable — and made for the residential sector — and then based their policy for the commercial sector on the cost-shift argument that only applies to the residential sector.”

In its November decision, the CPUC also stated that federal tax credits and incentives for solar installations could make up for the reduction in utility credit values. Those tax credits are valuable, said Chaires Espinosa of the School Energy Coalition. But school districts rely on both energy savings and federal incentives to finance the cost of installing solar systems, she said. If the CPUC’s policy remains in place, California school districts won’t be able to afford the costs of installing solar, and thus will miss out on harnessing those federal tax credits.

Public K–12 school districts’ energy bills add up to about $8 billion per year, according to White House figures. Generation180 estimates that if those districts could build enough solar to meet their energy needs, they could offset about 60 million metric tons of power-sector carbon emissions per year — roughly the equivalent of closing 16 coal-fired power plants.

School solar can also be a valuable resource for the power grid, said Rick Brown, founder and board chair of TerraVerde Energy, an energy advisory firm that designs and manages solar and battery projects at schools, municipal buildings, and other entities affected by the CPUC’s November decision.

Most schools reduce their operations at 3 or 4 p.m., and the sun’s still shining,” he noted. Encouraging schools to install solar and batteries that can store and shift that power for use during hot evenings, when California’s grid faces its greatest stresses, could provide a significant benefit to the grid at large, he said.

Then there’s the summer season, when schools are closed, he noted. When does the grid have the most stress? In the summer. When do schools have the least load and the most opportunity to help the grid? In the summer. You don’t want to discourage schools from going solar.”

California’s largest school districts are significant power users. The Los Angeles Unified School District, which serves more than half a million students, uses about 325 megawatts of electricity on an annual average basis, said Christos Chrysiliou, the district’s chief eco-sustainability officer. The district has installed 21 megawatts of solar systems, and plans to install 50 to 60 megawatts more to meet its goal of reaching 100 percent clean electricity by 2030, he said.

Chrysiliou said the CPUC’s November decision could make those plans less viable. While most of the district is served by municipal utility Los Angeles Department of Water and Power, which is not subject to the CPUC decision and has different structures for accounting for customer-sited solar, about 20 percent of its sites are served by Southern California Edison.

The impact on us was that now we can’t get the benefits of the power we’re producing” at those sites, he said. We have to buy back power at a retail price. That’s not a good deal for our school district, or anyone else.”

In a May interview, Becker noted that the arguments for reviving the value of distributed solar for school districts also apply to farms, local governments, and other users of the multi-meter solar programs the CPUC undermined in its new rules.

Apartment owners are not going to build solar. It’s not going to pencil out for them if they cannot net out their own usage in common areas. Do we want solar on multifamily? I think we do,” he said. Farms and wineries are part of the coalition too. Do we want farms to put up solar to power their operations? I think we do.”

The CPUC is trying to balance a lot of things and are rightly focused on affordability. I just think in this case they drew the line in the wrong place,” he said.

Jeff St. John is director of news and special projects at Canary Media. He covers innovative grid technologies, rooftop solar and batteries, clean hydrogen, EV charging and more.