Rooftop solar power is an essential tool for California to meet its ambitious climate and clean energy goals. California has become the nation’s solar energy leader by adopting policies that have nurtured and grown the state’s market for distributed solar panels on homes and businesses consistently, year after year.
Today, however, utilities and their allies are pushing for major rollbacks to the state’s key policy for compensating solar panel owners for the surplus energy they share back to the electric grid – called “net metering.” Such a rollback would likely slow down rooftop solar adoption dramatically, threatening California’s continued clean energy progress.
Evidence from California and around the United States shows that the pace of solar adoption is dependent on the level of compensation provided to solar panel owners. The case studies in this report, taken from states from Hawaii to Missouri and from across California, show that policy changes like sharply reducing net metering payments and imposing high, solar-only fixed charges that reduce the economic viability of solar power can slow its growth – and, in the most extreme cases, can cause solar installations to plummet.
California cannot afford a “solar cliff” and still meet its climate and energy goals. The California Public Utilities Commission (CPUC) must adopt an approach to net metering (NEM 3.0) that facilitates the continued growth of rooftop solar power.
California needs rooftop solar to meet its ambitious climate and energy goals.
Figure ES-1. Historical and projected customer-sited solar in California
California’s strong and consistent net metering policies have helped facilitate the growth of solar energy.
Figure ES-2. Increase in net metered residential solar capacity, preceding 12 months, California IOUs 
Reducing compensation to solar consumers reduces solar adoption – often dramatically.
The experience of California’s publicly owned utilities and other states around the country illustrates the impact of compensation changes on solar adoption.
Figure ES-3. Change in net metered residential solar capacity, previous 12 months
The CPUC must adopt a new version of net metering that assures the continued growth of rooftop solar in California.
Photo: Simone Hogan via Shutterstock
 Modeling conducted for the SB 100 Joint Agency Report assumes California will have 39 GW of customer-sited rooftop solar by 2045: California Energy Commission, California Public Utilities Commission and California Air Resources Board, 2021 SB 100 Joint Agency Report, 15 March 2021, p. 104, downloaded at https://www.energy.ca.gov/sb100; California had 10.5 GW of net metered rooftop solar as of the end of 2020: U.S. Energy Information Administration, Form 861-M Detailed Data: Net Metering (Excel file), downloaded from https://www.eia.gov/electricity/data/eia861m/, 23 April 2021; California would need to install 28.5 GW in 25 years, which is slightly greater than 1.1 GW/year; in 2020, California added 1.4 GW of net metered solar, per U.S. EIA Form 861-M as cited above.
 Historical: U.S. Energy Information Administration, Form 861-M Detailed Data: Net Metering, downloaded from https://www.eia.gov/electricity/data/eia861m/, 23 April 2021; projected: based on SB 100 RESOLVE Model Outputs, Total Resource Summary for SB 100 Core Scenario (Excel file), supplemental data to California Energy Commission, California Public Utilities Commission and California Air Resources Board, 2021 SB 100 Joint Agency Report, 15 March 2021, accessed at https://www.energy.ca.gov/sb100; projected figures based on linear interpolation between current, 2027, 2030 and 2045 results.
 Bryn Huxley-Reicher and Laura Deehan, Frontier Group and Environment California Research & Policy Center, The Environmental Case for Rooftop Solar Energy: Protecting California’s Climate and Land, July 2021, accessible at https://frontiergroup.org/reports/fg/environmental-case-rooftop-solar-energy.
 Small-scale PV capacity from U.S. Energy Information Administration, Form EIA-861M Detailed Data: Small Scale PV Estimate (Excel file), downloaded from https://www.eia.gov/electricity/data/eia861m/#solarpv, 9 May 2021. Data for Georgia were unavailable and therefore excluded; electricity consumption: U.S. Energy Information Administration, Retail Sales of Electricity by State by Sector by Provider (EIA-861) (Excel file), downloaded from https://www.eia.gov/electricity/data/state/, 16 June 2021.
 Eric O’Shaughnessy, State and Local Policy Impacts on the Residential Solar PV Installation Industry, National Renewable Energy Laboratory, January 2019, p. 12, archived at https://web.archive.org/web/20210521162146/https://www.nrel.gov/docs/fy19osti/72149.pdf.
 See Methodology.
 North Carolina Clean Energy Technology Center at North Carolina State University, A Review of Net Metering Reforms Across Select U.S. Jurisdictions, February 2021, p. 4, as part of: Steven W. Frank, Before the Public Utilities Commission of the State of California: Joint Proposal of Pacific Gas and Electric Company (U 39-E), San Diego Gas & Electric Company (U 902-E) and Southern California Edison Company (U 338-E): R.20-08-020, 15 March 2021, archived at https://web.archive.org/web/20210521142944/https://static1.squarespace.com/static/54c1a3f9e4b04884b35cfef6/t/605120343d32dd18332462a2/1615929399865/R.20-08-020_Joint%20Proposal_3.15.2021.pdf.
 Ben Sigrin and Easan Drury, “Diffusion into new markets: Economic returns required by households to adopt rooftop photovoltaics,” Energy Market Prediction: Papers from the Association for the 2014 Advancement of Artificial Intelligence Fall Symposium, 2013, archived at https://web.archive.org/web/20150509235825/http://www.aaai.org/ocs/index....
 Ana Dyreson et al., Effects of Salt River Project’s Demand-Based Rate Change on the Rooftop Solar Market in Maricopa County, Arizona, 2017, p. 35, archived at https://web.archive.org/web/20210321204254/https://emp.lbl.gov/sites/default/files/uwisconsin-srp_solar_event_study_final051117.pdf.
 See Figure 10. Source: U.S. Energy Information Administration, Form 861-M Detailed Data: Net Metering, downloaded from https://www.eia.gov/electricity/data/eia861m/, 23 April 2021.
 U.S. Energy Information Administration, Form 861-M Detailed Data: Net Metering, downloaded from https://www.eia.gov/electricity/data/eia861m/, 23 April 2021.