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California’s largest-ever solar cut could cost the state $300 million over 10 years

California’s largest-ever solar cut could cost the state $300 million over 10 years

California pushes a new plan to cut rooftop solar incentives

California is proposing the largest-ever cut to its solar incentives, which could cost the state hundreds of millions of dollars over the next decade while also creating a huge, new class of consumer who will pay a lot more for solar panels.

California’s current policy, which has been in place for four years, would take a massive haircut: For commercial customers, the current system rewards them with 2.2 cents per kilowatt-hour for an array that generates 5,000 kilowatt-hours of electricity. California’s current residential rules — which started in 2014 and sunset in 2020 — reward residential customers with 2.3 cents per kilowatt-hour for 5,000 kilowatt-hours of electricity.

California would move from 5 cents to 3.3 cents per kilowatt-hour for commercial customers when the state’s current rebate program expires in 2022. Solar customers in California would only be left with 3.2 cents per kilowatt-hour — 1.3 cents less than residential customers, who now receive even less electricity than businesses.

“There’s going be a lot of pain,” said John Duncan, president and chief executive officer of New West Bank Solar, which operates a 1.5 megawatt solar project in Fairfield, California. “It’s going to be a lot of pain no matter what.”

California is only the latest state to cut its incentives. South Carolina is also moving to cut residential solar incentives, and Maine, Hawaii and Oregon are also considering or have already taken similar measures.

California’s move may make the state more attractive to investors. New West Bank Solar estimates that its project could generate $2.6 million in revenue, all of which would go to the state.

The cuts — which are the result of a change in solar rebate laws — would cost the state about $300 million over 10 years, said Kevin McKeown, an economics professor at California State University, Fresno, who has studied the state’s incentives.

“In the long run, no matter whether you have a utility or a third-party system, you’re going to suffer,” McKeown said

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