Employees of Citadel Roofing & Solar, a partner company of Solar Roof Dynamics, install solar panels on an existing roof assessed to last the lifetime of the system.

Daylight Savings

As financial incentives get phased out, local utilities and industry experts grapple with the future of solar power

Back Longreads Jun 20, 2017 By Russell Nichols

The biggest issue with solar panels on roofs has nothing to do with electricity.

This revelation came to Aaron Nitzkin back in 2012, after he had been laid off from Dow Solar. He had been in the industry for nearly 10 years at that point, and it was hard for him to watch from the sidelines as early solar business models crumbled under bad roofing contracts.

“I’ve seen so many problems with these solar companies,” Nitzkin says. “Some installed two or three systems in a day. Some were putting solar panels on a 15-year-old roof knowing that roof would need to be replaced in the next 5-10 years, costing customers thousands of dollars extra to remove the system and replace it. It was real sketchy stuff.”

It dawned on Nitzkin that the best time to install solar panels would be when a new roof is first put on. This would align the lifecycles of the roof and the solar system. With this basic concept, Nitzkin created Solar Roof Dynamics in 2013, putting solar in the hands of roofing contractors already thriving in the trade, and providing comprehensive solar training, products and services. Four years later, this small Davis-based startup is going national.

In January, Solar Roof Dynamics announced a strategic partnership with GAF, the largest residential and commercial roofing manufacturer in North America. Nitzkin’s company is enhancing GAF’s residential Solar Elite program, offering its vast network of roofing contractors an array of solar services, such as engineering and design, installation, sales and project management training. He believes this type of collaboration will be the model of the future.

“Ten years from now, the majority of roofing contractors will offer solar,” Nitzkin says. “It will be no different than ordering a burger and being asked if you want fries with that. ”

This year marks the deadline for California’s 10-year bet on solar roofs. In 2006, the state launched the “Million Solar Roofs” vision, pumping $3.2 billion into incentive programs. The plan was to build one million solar roofs, or the equivalent thereof, generating 3,000 megawatts of renewable energy by 2017. California currently has almost 700,000 solar projects, but the state surpassed the wattage target in 2015 (more than 5,000 megawatts installed as of March 2017), according to California Distributed Generation Statistics.

The impact was huge, creating 100,000 jobs, catalyzing California’s solar industry and expanding beyond homeowners to businesses and schools (Related: Plumas Lake school district takes advantage of Prop 39 for energy-efficiency projects). Now, with most incentive programs phased out, the next few years will determine how the market sustains itself as local utilities try to solve cost inequities and answer questions about solar energy storage.

Raising the Roof

In California, the push for solar power goes back decades. In 1995, California passed the net-metering program, allowing customers with a solar panel to send surplus energy back to the grid for credits. In 1998, the state passed a deregulation bill, offering rebates to customers investing in rooftop solar. Still, in those days, the solar market was almost nonexistent and climate change wasn’t a mainstream topic.

Then came the blackouts.

In the California electricity crisis of 2000 and 2001, illegal shutdowns of pipelines by Enron and market manipulations created a shortage of electricity in the state. Businesses were hit hard by rolling blackouts and, suddenly, the idea of customers generating their own electricity made much more sense, says Bernadette Del Chiaro, executive director of the California Solar Energy Industries Association.

Related: Aaron Nitzkin on the future of solar energy

But a solar panel wasn’t just something you could pick up at Home Depot. With a price tag of $50,000 or more to install a system, this was a luxury that only a select few could afford.

“We employ 100,000 people throughout the state of California. That’s twice the number of people that work for all the state’s electric utilities combined.” Bernadette Del Chiaro, executive director, California Solar Energy Industries Association

“Only extremely wealthy tech lovers were going solar — and more power to them, but that’s not going to solve any problems or create meaningful jobs,” Del Chiaro says.

Working with former State Senator Kevin Murray, Del Chiaro developed the Million Solar Roofs initiative. Former Gov. Arnold Schwarzenegger won the recall and supported the idea. The Democrat-controlled Legislature passed the unprecedented law. By creating this demand and giving certainty to the marketplace, California became ground zero for innovative solar business models and has since become a global leader.

“We employ 100,000 people throughout the state of California,” Del Chiaro says. “That’s twice the number of people that work for all the state’s electric utilities combined.”

Ten years ago, the market was small, with only early-adopters (the so-called “backwoods hippies” and “Malibu millionaires”) going solar. But when rebates were put in place with the new law, non-residential customers (businesses, schools, municipalities, etc.) took advantage and made it more mainstream. The industry was able to lower prices.

The rebates stopped in 2015 when California reached its target. Federal tax credits for solar installations (which now cost around $15,000 to $17,500, before incentives) still exist, but those will also be phased out in the next five years. But Del Chiaro says the market has continued to grow despite the absence of incentives for the vast majority of the marketplace.

Equity vs. Subsidy 

The system isn’t perfect.

Low-income customers and those who rent generally do not have access to rooftop generation. These classes are among those most vulnerable to the net-energy metering cost shifts, says Mario De Bernardo, state government relations and external affairs manager of Northern California Power Agency, an association based in Roseville that oversees regional utilities.

In addition, customers without rooftop solar end up footing other users’ electric bills. For example, under net energy metering, homeowners with solar panels may earn subsidies from the utility and non-solar customers where they don’t have to pay for electricity at all. In brief, net energy metering is a billing arrangement where customers with solar panels receive financial credits for any extra electricity they generate and give back to the grid. But these homeowners still draw from the grid at night once the sun goes down. They’re benefiting from the distribution system without paying.

Those costs, in theory, get passed onto other non-solar ratepayers, De Bernardo says. “Some customers can’t invest in rooftop solar,” he says, “but under the traditional net-energy metering system, they’re still paying into the program to support those who can.”

This is why jurisdictions across the country are looking to reform their rooftop solar programs to allow solar to grow more sustainably, says Jonathan Changus, NCPA member services manager and regulatory affairs. Roseville Electric, recently ranked No. 9 by the Smart Electric Power Alliance in providing the most solar to customers, is a prime example. The utility is pursuing a plan to build a community solar pilot project that allows customers to opt-in and get benefits from a large, centrally located solar farm in the city. The project is ideal for residents who cannot install solar because they live in an apartment, condominium or rent a home. Also, unlike rooftop solar, the benefits of the program move with the customer, as long as the person stays within the utility’s service territory. The utility hasn’t yet entered into a contract with a vendor, and the project is in the preliminary stage.

“It makes more sense for municipal utilities because their local governing boards, which are usually city councils, like to see the renewable investments in their communities,” De Bernardo says. “These local officials are also looking at ways to help lower-income ratepayers in their communities.”

The Sacramento Municipal Utility District has been a solar pioneer since the 1980s, building one of the world’s first utility-scale solar arrays at Rancho Seco in 1984. Its Solar Shares program allows customers to take advantage of owning solar without the hassle of buying and placing panels, and “helps businesses deliver on corporate renewable goals while saving on capital costs,” according to Brent Sloan, SMUD’s solar expert.

On the business side, Sloan says companies started installing solar panels for many reasons, such as reducing emissions or boosting their competitive advantage by calling themselves “green.” But in the past few years, many have actually begun integrating solar for the energy savings. It may be only cost-effective in a certain timeframe instead of year round, but even that time period could help deliver net savings, Sloan says.

“I think you’re moving now to where businesses are seeing it as a way to affect their energy portfolio and lower time-of-use charges,” he says. “I do calculations to try and get them to look past that one time period and look at the larger picture of yearly energy usage and charges.”

Battery Life

California imports the vast majority of its fossil fuels. This means a percentage of every dollar derived from fossil fuels must be sent outside of the state for importation. By contrast, the sun is a free and inherently local energy resource, so a higher percentage of every dollar spent on solar energy goes to the person who did the installation, Del Chiaro says.

The next big challenge is storage. Or, as Del Chiaro says, “putting a battery in everyone’s garage to make the sun shine all day long.”

Customers would be able to draw from the battery at night instead of the grid. This would give them another tool to control energy usage and operate independently. Del Chiaro notes that these customers would not go off the grid completely, but would be protected from price spikes. Still, solar batteries may be too expensive for some customers, with price estimates between $5,000 to $7,000.

Currently, there are two bills aimed at transforming the energy storage market on the consumer side, and making the economic, environmental and grid support benefits more mainstream:

AB 1030 establishes state goals of creating a marketplace for energy services and achieving market transformation for the storage industry. The bill directs the California Public Utilities Commission to make a number of policy and programmatic changes to achieve those goals.

SB 700 would jump-start the energy storage market by reducing technology and installation costs through a tiered rebate program, similar to the California Solar Initiative program, but for storage.

Del Chiaro insists the objective isn’t to make utilities obsolete, but to help the energy model evolve to meet future demand, including an influx of electric cars.

“We have this 19th century grid and we’re adding 21st century technology,” she says. “The idea to build a huge power plant and transmission lines, and pipe them into a large city and sell them at full retail, that’s a thing of the past. We want the sun to shine at night. This will enable us to truly achieve a 100-percent, carbon-free energy economy.”