Grappling with California’s solar market crash

California down solar market

A survey of California solar and storage companies found 17,000 jobs have or will be lost by the end of 2023 due the recent net metering changes. The massive job loss represents 22% of all solar jobs in California and is the largest loss of solar jobs in U.S. history.

I’ve been in the solar industry since 2011, and this has been one of the biggest plunges in the solar coaster that I’ve experienced in our fledgling industry.

I was lucky enough to get my first steps into the clean energy market with a global solar company that was taking an aggressive step to moving its business model up the value stream from distribution to manufacturing. I was excited about the opportunity to be transitioning my career and dedicating my talents to an industry focused on shifting away from fossil fuels, and to be part of the company’s strategic move.

While this position provided me significant knowledge and experience that set me up for my continued career in the industry, I was about to experience my first ride on the solar coaster – panel dumping.

With solar panel prices plummeting below the cost of production, it was increasingly difficult for panel manufacturers to maintain profitability. To combat this, countries began introducing tariffs and anti-dumping and anti-subsidy duties. This not only lead to a rapid decline in imports, but also job losses. This period still haunts the industry, and currently in Europe as module prices are again declining, the warehouse stock continues to increase, with those panels losing value every day.

However, in the long run, the downward pressure on panel pricing did help the industry grow and evolve. Solar reached grid parity faster to became financially accessible to more people. It led to manufacturing innovations and efficiencies. It made adding module level power electronics to PV systems not only economically feasible, but financially attractive. Looking back, it is easy to see how times of constraint can help the solar market flourish.

But there are other types of market dynamics that have proven to be particularly difficult for the industry to recover from, such as lurches in incentive structures. While it is natural for solar markets to advance from feed-in tariffs (FiT) to net metering (NEM), and then to some form of self-consumption such as time of use (ToU), these changes need to be gradual to ensure a soft landing.

An excellent case study of how not to transition the incentive structure comes from the UK when it drastically reduced its FiT for smaller residential PV systems. Following this change, the market dropped from over 500 MWDC in 2015 to under 200 the following year. This led to many local solar companies constricting, going out of business, and the industry losing talented people. The UK residential solar market remained low for at least five years.

Unfortunately, this is exactly what California has done with its recent switch to NEM 3.0. And then further exacerbated with CPUC’s recent ruling that rooftop solar owners will no longer be credited at the retail rate of electricity for excess energy produced, but instead only be paid at the actual avoided cost.

These changes created a hard landing scenario for residential solar, resulting in what feels like a crash that has reverberated throughout the national market. And further exacerbating the problem, the new Californian incentive structure does not create a strong enough value proposition for solar batteries. These changes are the exact opposite of what California should be doing to combat the duck curve.

While often used to demonize solar, the duck curve presents more of an opportunity than a problem – and it can be dealt with the same way over production is managed at the micro level. Residential solar energy systems in self-consumption markets are often intentionally designed to produce excess solar energy during the day so that it can be stored in a battery to meet demand from dusk until dawn.

There is no reason that the grid should not be designed for the over build out of solar. Instead of preventing the duck’s belly from growing, the utilities should continue to feed the duck with solar, while also incentivizing the massive deployment of batteries to store that excess energy for use during the evening – often referred to as putting the duck to sleep.

Unfortunately, utilities, wanting to maintain their monopoly over power production, will continue to push back against solar. But fortunately, solar is an unstoppable force. Because unlike utilities, solar has continuing innovation, improving efficiencies, and decreasing prices on our side. So, they may be able slow down the solar wave, they can’t prevent it from happening. And that’s why I’m not going to get off this ride.

Jessica Fishman is a strategic marketing professional with nearly 20 years’ experience, including seven years as head of global public and media relations at inverter maker SolarEdge. Passionate about addressing climate change by accelerating the clean energy transition, she has worked at leading renewables companies, building marketing and communications departments.

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  • Jeff Antman
    January 6, 2024 01:19:10

    The utilities aren’t against solar. They love 2 cent electricity. They just want to make all of it themselves and sell it to you for 12 to 30 cents. They don’t want you to make it on your roof, use most of it, and sell the rest for 12 to 30 cents like you were the utility.