OPINIONATED: Setting the Record Straight on SMUD’s Community Solar

17 Mar 2020

Editor’s Note: SMUD responds to criticism of its Solar Shares program raised in a March 2 editorial by local solar advocate Dave Rosenfeld. SMUD’s community solar program was approved by the California Energy Commission last month. 

California’s 2019 Building Standards took effect on Jan. 1, 2020, and included a requirement for the use of solar on all new home construction in the form of either rooftop solar or community solar. The Sacramento Municipal Utility District wholeheartedly supports the new standards.

Importantly, the California Energy Commission recognized that optimizing solar energy requires flexibility in its implementation and welcomed innovative ideas to make that happen.

As a long-time leader in supporting clean energy, we developed our Neighborhood SolarShares program as one option to help home builders and consumers comply with the requirement for solar on all new homes. It’s an innovative solution that recognizes that rooftop solar isn’t sensible or even possible in all cases, and it will help home builders provide more affordable housing solutions while achieving the same carbon reduction.

Neighborhood SolarShares is an off-site community solar program from sources 20 MW or less within our service territory. Furthermore, we will supply its renewable power from new resources that come online after Jan. 1, 2020. This program guarantees a net benefit to consumers and will maximize solar production in support of the state’s carbon reduction goals. This 20-year financial guarantee is something rooftop solar can’t provide.

Our program was unanimously approved by the Energy Commission because it met all the requirements in the 2019 Building Standards.  Our program enjoys broad support from 33 legislators, the Natural Resources Defense Council, labor unions, business groups, low income and affordable housing advocates, local elected officials, urban forest supporters and developers because they recognized that having different solar options will accelerate carbon reduction while supporting affordable housing.

To reach our net-zero carbon neutral goal by 2040, we must utilize every tool in the toolbox, including both rooftop and utility-scale solar. To focus on rooftop solar as the only solution is misguided and will result in higher costs for all consumers.

Contrary to claims made by the rooftop solar industry, SolarShares is not a death knell for rooftop solar. Our program simply provides builders with a choice. Builders appreciate and value that choice. Many developers have indicated that market demand for rooftop solar is strong so they will continue to include rooftop solar as the standard in their development. While others value the opportunity to offer a lower cost alternative to consumers in a state where affordable housing is now a recognized crisis. 

The reality is that solar delivers the same carbon-free environmental benefits regardless of where it’s produced and utility-scale solar does so at a much lower cost to consumers, according to a report by the California Legislative Analyst’s Office. Rooftop solar is on average two to five times more expensive than utility-scale solar. Utility-scale solar delivers more energy per dollar spent on the generation system – effectively maximizing a community’s clean energy investment and minimizing costs to our customers.

Neighborhood SolarShares provides benefits rooftop can’t: 1) Continuous monitoring of the system to optimize its performance; 2) Guaranteed financial value to consumers; 3) Perfectly sited to maximize and follow the sun for peak performance; 4) Allowing consumers to choose to enjoy a large tree canopy to shade their home; 5) and, not having homeowners own, lease or maintain it.  

The rooftop solar industry has falsely asserted that our program prohibits customers from installing solar or battery storage when in fact SMUD currently offers incentives to encourage customers to install battery storage. Customers participating in the SolarShares program can install rooftop solar to meet increased demand associated with things like purchasing electric vehicles or installing a pool as examples. They are still eligible for Net Energy Metering, as long as the system is sized to their energy needs. That’s a fact. We will also continue to work with developers to offer customers a choice of solar at the point of purchase of the new home.

Rooftop solar has benefits for those who can afford the up-front cost of rooftop solar, lease payments or the increased mortgage.  However, when it isn’t feasible, customers can enjoy solar through our program at no increased cost to them and still receive a net benefit of $10 per kW per year, with an average benefit of $40 based on a 4 kW system. While those benefits don’t equal rooftop solar’s monthly benefits, these customers don’t have to pay an upfront cost, increased mortgage payment or lease payment. They also don’t have to worry about maintaining the system.

We have a long history of supporting the rooftop solar industry. In fact, to date SMUD and its customers have subsidized the rooftop solar industry to the tune of $250 million for the approximately 25,000 solar customers we have today.  The annual subsidy for our 25,000 rooftop customers is $30 million a year. By comparison the subsidy for our 75,000 low-income customers is also $30 million a year.  With the number of rooftop solar customers continuing to increase, so will the subsidy paid by our non-rooftop solar customers; this simply isn’t financially sustainable. 

We are working to right size our continued support for rooftop solar in a way that is fair and equitable for all our customers. To that end, we created a working group comprised of a broad range of stakeholders, including the rooftop and utility-scale solar industry, labor, low-income advocates, academics and environmental advocates to help develop the technical requirements for an independent study to determine the benefits and costs associated with solar and solar/storage in the SMUD service territory.  We will then use the study results to equitably allocate the benefits of solar and storage among all our customers–those that have adopted the technologies and those that have not.

At SMUD, we recognize addressing climate change isn’t a one-size-fits-all approach, and we will continue to wholeheartedly support all forms of renewable energy. To date, 210 MW of customer-owned rooftop solar has been installed in SMUD’s service area, and our energy portfolio includes over 170 MW of utility-scale solar.  Over the next three years, SMUD will bring nearly 270 MW of new utility-scale solar online. And over the next 20 years will install nearly 1,000 MW of utility scale solar in our service territory and another 1,500 MW remotely. Today SMUD’s energy portfolio is more than 50 percent carbon free and will grow to 80 percent carbon free by 2030. By 2040 we will be carbon neutral.

With this program, SMUD will provide a cost-effective choice for builders and consumers to expand solar, support choice, reduce carbon emissions and advance affordable housing. 

The future of solar is bright and we look forward to powering Sacramento together.

SMUD Chief Executive Officer and General Manager Arlen Orchard

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