“My house is solar powered. I tell Republicans, you can hate the subsidies – I hate the subsidies too – but you can’t hate solar panels. These are rocks that make electricity, so they are incapable of receiving your hate.”
– Rep. Thomas Massie (R-Kentucky)
With over 150,000 commercial and residential solar power systems now online, California leads the nation’s clean energy economy. As a result of this growth more than $10 billion in private-sector investment has flowed into the clean energy sector, and solar today employs more than 25,000 professionals in the state. Millions of Californians enjoy the benefits of low-priced solar energy delivered by systems installed on homes, businesses, schools and public facilities.
Yet, one important element of this success is often overlooked – California’s solar industry is rapidly weaning itself from state subsidies and now operating subsidy-free in many portions of the state, well ahead of schedule.
This success story is largely due to the structure of the California Solar Initiative (CSI), the most successful small-scale solar program in U.S. history. The CSI – a product of former Governor Schwarzenegger’s ‘Million Solar Roofs’ vision and authorized by the passage of Senate Bill 1 in 2006 – was envisioned as a 10-year program to enable installation of nearly 2,000 megawatts of commercial and residential solar in California’s investor-owned utility territories. Inherent to the design of CSI were financial incentives which gradually declined to zero as more solar was installed – sending a clear signal to solar companies that costs must continually decline.
Through economies of scale and innovation, the installed costs of solar have fallen dramatically, even as incentives have been reduced from $2.50 per installed watt in 2007 to just $.25 per installed watt (or less) today. Indeed, as of mid-2013 CSI program goals have been reached in three areas – for PG&E residential, PG&E non-residential, and SDG&E residential solar systems – and despite operating sans incentive, solar remains economically attractive for businesses and homeowners in these regions.
California’s solar success story is the epitome of what public-private partnerships should strive to achieve. Government provides initial support and certainty, stimulating private-sector investment and growth which enables companies to achieve scale, innovate and reduce costs, leaving behind a subsidy-free growth industry. While other industries have taken decades to wean themselves off government support, solar has done so in California in just a few years.
It’s a telling indicator of success, in fact, that the discussion regarding solar in Sacramento has quietly shifted from how much (or how little) direct support is provided to small-scale solar, to the indirect support provided via what’s known as net metering. Just as solar crosses the incentive finish-line, we now face intense scrutiny as to whether some cost is borne by other utility customers when a homeowner or business uses solar to substantially reduce electricity bills.
This matter deserves further examination, and as noted around the web, policymakers are actively considering means to support commercial solar’s continued growth while balancing utility concerns. Consider it a growing pain in solar’s rapid development as a mainstream energy source.
A version of this post originally was originally published by AOL Energy.