In a first-of-its-kind proposal that will get a public hearing Wednesday, Sacramento’s electric utility is trying to take advantage of an exemption to state rules that will soon require solar panels on newly built homes.
Last year, California made headlines by requiring rooftop solar power on new homes starting in January. The Sacramento Municipal Utility District, a publicly owned electric service provider with more than 1.5 million customers, wants to provide homeowners with centrally generated solar energy at a modest annual savings rather than meet the mandate through rooftop panels.
The proposal, to be heard at the California Energy Commission’s Wednesday meeting, could set a precedent for other utilities if approved. It has triggered a debate about the most cost-effective way to reach California’s climate change goals and who gets to benefit from the green economy, set against the backdrop of growing concern over power outages and calls to revamp the very structure of the state’s electric grid.
Economists say generating power through solar farms — which is sometimes called community solar — is cheaper than rooftop panels in the long run. The California Solar & Storage Association and other rooftop-solar advocates argue that putting panels on top of homes increases the grid’s resiliency and delivers savings to consumers.
The association, whose roughly 500 members include solar-panel installers, financiers and project developers, argues that the exemption was intended for shaded homes and apartment buildings that can’t install panels, and that the Sacramento utility’s proposal won’t lead to the new solar capacity the rules envision.
California Energy Commissioner Andrew McAllister, who led the building code changes, said that flexibility was built into the mandate and that SMUD’s proposal is “not a shell game.”
“It’s all additional solar linked with new construction, either rooftop or community solar helping us decarbonize,” McAllister said. “This is not letting our foot off the accelerator for solar adoption.”
Tim Tutt, who oversees state regulatory affairs for SMUD, said home builders asked for community solar. Sacramento’s public housing agency said in a supporting brief to the Energy Commission that it will be effective in constructing affordable housing units and “may well be the most practical and low cost approach to compliance.”
Economists also say large-scale solar is more cost-effective, even adding in costs of environmental permits and construction for new facilities. David Rapson, economics professor and co-director of the Davis Energy Economics Program at UC Davis, said the rooftop solar mandate involves taking one of the most expensive ways we know to make electricity “and forcing more of that to happen.”
“I’m sure that it’s lucrative for the companies that end up getting those contracts,” he added. “If you’re a rooftop solar installer, then you’re very happy about that mandate.”
Centrally generated solar does add the cost and risk of transmitting the energy. SMUD has acknowledged that it, like PG&E and other utilities, has power lines that go through areas of high fire threat that it may need to shut off during wildfire season. And some critics say the proposal stretches the term “community.”
“Sacramento is definitely pushing the boundaries,” said Anthony Kovscek, Stanford University professor of energy resources engineering. “I think some of their proposed sites are pretty well removed from the neighborhoods they’re going to serve.”
The Energy Commission doesn’t define community solar — how big or how close to homes it has to be. In the utility district’s proposal, 87% of community solar farms are in its service area, Tutt said. Two new sites are under construction, one at the shuttered Rancho Seco nuclear power plant site. The remaining 13%, described as bridge or backup power, are up to 150 miles away.
Opponents to the proposal said the distance belies the idea of local solar power — and would cost customers more. The average homeowner with rooftop solar saves about $40 a month, including purchase or rental payments rolled into their mortgage plus a lower electricity bill, said Ed Smeloff, director of grid integration at advocacy group Vote Solar and a former SMUD board member.
SMUD’s program would save households about $20 a year. Although the benefit is lower, Tutt said the savings are more reliable, because centrally generated solar minimizes the unpredictability of cloudy weather and malfunctioning systems.
One hitch in the SMUD plan is whether homeowners would be able to store solar power delivered over utility lines with in-home battery storage.
Lee Miller, who installed solar panels when she bought her south Sacramento home two years ago, said she was looking into adding solar storage that could help her stay off the grid during outages. But even with state and federal incentives, the $8,000 to $10,000 cost is too much for her and her husband, both retired on fixed incomes.
Under the district’s proposal, Tutt said, customers could purchase their own storage. But without rooftop solar, homeowners aren’t eligible for federal tax credits, said Benjamin Davis, a policy associate with the California Solar & Storage Association.
Experts agree that for California’s ambitious climate change goal of zero carbon emissions by 2045, diverse solar solutions are critical.
“Global warming is the biggest threat we have ever faced, and we should be doing a full-court press to invest in clean energy and we should be doing that today,” Davis said. “That means utility scale solar, rooftop solar, real community solar and other forms of clean energy.”
“If we’re going to get to 100% clean energy, which is mandated by law, we’re going to need to do things large scale and near to where energy is consumed,” Smeloff said.
Industry leaders and other utility companies are undoubtedly watching Wednesday’s vote, experts said.
Correction: An earlier version of this story omitted some words from a quote by David Rapson of UC Davis. He said rooftop solar mandate involves taking one of the most expensive ways we know to make electricity “and forcing more of that to happen.”
Mallory Moench is a San Francisco Chronicle staff writer. Email: email@example.com Twitter: @mallorymoench