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New California Solar Market Report from DG+Design Offers Insight Amidst Net Metering Battle

January 25, 2022

New California Solar Market Report from DG+Design Offers Insight Amidst Net Metering Battle

CA Solar Sector Strong, but Net Metering Changes Loom Large

Ahead of the California Public Utilities Commission’s (CPUC) decision on net metering policy changes anticipated for early February, a new report from DG+Design dives into the details of California’s solar market with pricing estimates, market share data, and policy details.

California once again secured the number one position in the nation for total installed solar capacity, surpassing 33,000 megawatts (MW) in 2021. The annual production of this new capacity represents the greenhouse gas emissions equivalent to taking roughly 8 million cars off the road for a year. But the net metering changes under consideration by the CPUC may significantly impact the state’s solar trajectory.

Despite a tough year marred by global supply chain issues and uncertainty around the COVID-19 pandemic, analysis indicates a robust long term outlook for solar in the state, with an expectation of continued growth. 

Solar development was especially concentrated in Kern, Kings, and Tulare counties, taking advantage of the region’s abundant sunshine and flat landscape. From Q4 2020 through Q3 2021, California’s largest solar project was developed in Kern County by Cupertino Electric, the third largest non-residential solar developer in the state by market share. Major projects were also developed by Coldwell Solar and SunPower, the first and second largest non-residential developers in California by market share, respectively. For the residential market, California’s solar sector was led by Vivint, followed by Tesla and SunPower.

Kathleen Gill, Director of Clean Energy at DG+Design, remarked, “Despite an absence of state-level solar financial incentive programs, some regions of California still boast favorable solar pricing. California’s high retail electricity prices, progressive RPS and solar-friendly policies, and the region's well-established solar supply chain are contributors to this sustained growth and development.”

In line with its record of leadership on renewable energy development, the California energy sector is also operating a number of programs designed to improve access to the benefits of clean energy for low-and-moderate income residents. CPUC programs such as Solar on Multifamily Affordable Housing (SOMAH) and Single-Family Affordable Solar Homes (SASH) helped to facilitate broader solar adoption in 2021. Given data showing low income groups are disproportionately exposed to air pollution and other climate impacts, the solar sector has shown an increased focus on these groups in recent years.

However, the CPUC is currently finalizing changes to California’s solar net energy metering (NEM) policy that will make solar more expensive for solar owners. This has been met with an uproar from the solar industry, environmentalists, and even California Governor Gavin Newsom.

The vote, which is expected to take place on February 10th at the earliest, will determine the financial feasibility of distributed solar for millions of California homeowners and businesses, who are currently being paid for the solar they feed to the grid at a rate set out in existing net energy metering policy. The experts at DG+Design warn that if the CPUC’s vote yields a less favorable outcome, California could see an immediate rush in new solar development, as homeowners and businesses rush to qualify for current rates before the new policy takes effect, but a decline in the long term as the solar cost calculus is rendered untenable.

David Ganske, CEO of DG+Design and veteran of the clean energy industry remarked, “In 2022, we expect a continuation of California’s strong track record of solar development in the commercial and utility sectors. However, the possibility of unfavorable changes to California’s net metering policy could negatively impact the booming small-scale solar industry in the state over the long term.”

As California saw another year of devastating fires threatening its power system, many Californians are calling for additional state and local investments to combat climate change. Based on the state’s track record, we anticipate these calls to action will translate in the long term into a regulatory landscape that increasingly favors solar and other renewables over fossil fuels.

For a more detailed analysis of the California solar market, including pricing, regulatory policy, and detailed forecasts, check out the Q1 2022 California Solar Market Report from DG+Design.

About DG+Design

DG+Design is a marketing and creative agency with a focus on clean energy and sustainable brands. Our work is founded on the passion to uniquely combine clean energy expertise, creative skill, and marketing strategy to provide unrivaled value. From market research and energy marketing to documentary filmmaking, DG+Design is focused on empowering others to grow the clean energy economy. Work includes projects with utilities, electric vehicle companies, solar and wind developers, non-profits, international organizations, and more. For more information on DG+ and available market reports, visit the company's research page.


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