Solar stocks collapse over proposed changes to California rules

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Federal grants have made installing solar panels on your roof more affordable over the past decade. But state-by-state rules are also important, and a potential change in California solar rules could hurt solar installers and developers who do business in the state.

Inventories of several of those installers fell on Tuesday over concerns that a proposal in the Golden State might scare some solar customers.


Sunrun

(ticker: RUN), the industry leader, fell 4.7%.


SunPower

(SPWR) and Sunnova (NOVA), two other installers, lost 5.7% and 3.7% respectively. Solar has cooled this year after a very hot 2020.

On Monday, three major California utilities offered new fees and a reduction in a key benefit for solar customers.


PG&E

(PCG), Southern California Edison, and San Diego Gas & Electric have asked the California Public Utilities Commission (CPUC) to allow them to charge monthly fees to customers who have solar panels: both a package and “access to solar”. network ”per kilowatt. For the average 5 kilowatt system on a California home, the grid access charge could be over $ 50 per month, and the fixed monthly charge would vary from $ 12.02 to $ 24.10 depending on the service. public.

Grid access charges alone could completely eliminate the financial benefits of solar power, Morgan Stanley analyst Stephen Byrd notes after reviewing a Sunrun presentation that estimates the price for a Southern California customer. . While a traditional utility bill would be $ 258 per month, Sunrun’s solar and battery-powered storage system would cost the same customer $ 200, according to Sunrun’s presentation. About 40% of Sunrun’s customers are in California.

And that’s not all. Utilities want to reduce the cost of a system known as net metering that pays solar energy users for the electricity they send back to the grid during the day. A reduction in these fees would also hurt the solar energy economy and make it harder to convince customers to shy away from traditional utilities. The new net metering rules would be imposed on new customers, not existing customers.

The solar industry and its supporters retreated, with the Save California Solar Coalition saying that if the utilities “are successful, they would essentially eliminate the market in California, just like they did in Nevada a few years ago.” In 2015, Nevada cut payments for net metering, causing facilities to drop sharply. The state legislature reinstated payments in 2017.

The hard line taken by utilities may portend similar fights from other utilities across the country who want solar panel owners to pay them more money for basic grid services. Utilities have argued that it is complicated to bring new forms of energy into the grid and that solar owners do not pay enough for infrastructure upgrades, forcing other customers to utilities to pay more.

So far, these are only proposals, and solar operators have also presented their own plans. As Byrd notes, “earlier efforts by California utilities to impose significant grid access charges were rejected by the CPUC.”

The committee is expected to vote later this year.

Write to Avi Salzman at avi.salzman@barrons.com

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