Can California Be Trusted with Solar? Gavin Newsom's Flip-Flop Threatens Billions in Rooftop Solar Investments
“Penalizing homeowners for generating their own power is like charging someone who grows vegetables at home extra to support grocery stores. It makes no sense.” - Economist Richard McCann
California has long positioned itself as America's solar powerhouse. But if you've been paying attention lately, you've noticed Governor Gavin Newsom and state regulators repeatedly pulling back the very incentives that built this billion-dollar solar economy.
Just two years ago, Newsom’s appointees gutted incentives for new rooftop solar installations. Now, they're doubling down, threatening to reduce energy credits for the 2 million Californians who invested in solar early—people who built their finances and business models around these promises. If enacted, those cuts mean soaring energy bills for customers who've already put their faith—and their cash—into solar.
Utilities claim this harsh rollback is necessary. They argue rooftop solar incentives, especially net metering, caused an $8.5 billion "cost shift," forcing non-solar customers to pay higher rates to maintain grid infrastructure. But let's dig into that number for a second.
According to Mike Campbell from the Public Advocates Office, this $8.5 billion figure reflects losses utilities experience from reduced electricity sales. Economist Richard McCann calls this number "embarrassing" and argues that nearly $4 billion of that isn't an actual cost shift at all—it's simply lost utility revenue. Penalizing homeowners for generating their own power, McCann says, is like charging someone who grows vegetables at home extra to support grocery stores. It makes no sense.
"Utilities knew exactly what would happen when rooftop solar took off. They knew grid sales would decline as more people generated their own power. This wasn’t a surprise—it was part of the deal from day one."
Here’s the deeper truth: utilities knew exactly what would happen when rooftop solar took off. They knew grid sales would decline as more people generated their own power. This wasn’t a surprise—it was part of the deal from day one. But now they're punishing homeowners for doing exactly what was incentivized, shifting blame instead of building a smarter, more flexible grid that integrates solar and battery storage.
And speaking of batteries—California’s solar flip-flop underscores exactly why battery storage is no longer optional; it’s essential. As state incentives evaporate, the economics shift rapidly. Homeowners must store power themselves to protect against rising energy bills and diminishing incentives. For solar professionals, this means rapidly adjusting our strategies toward integrated solar-plus-storage solutions.
But there’s a bigger problem here.
By constantly reversing course, California erodes trust. Solar businesses and professionals made massive investments based on state commitments. Median incomes of solar households have dropped significantly—from $141,000 in 2010 to $115,000 in 2023—meaning solar isn’t just for wealthy households anymore. Yet, the state is punishing precisely those families who've embraced sustainability.
The political lesson for Newsom is clear: undermining rooftop solar is both politically and economically reckless. California needs rooftop solar to achieve its aggressive climate goals, especially as climate-related threats grow. The ongoing fight, largely instigated by utility interests, isn't just wasting time—it’s threatening thousands of jobs and billions in industry infrastructure.
As solar professionals, we’ve learned the hard way not to trust political promises blindly. When the state keeps moving the goalposts, it doesn't just hurt our bottom lines—it undermines the entire clean energy transition.
It’s time California stopped playing games with solar. We need clear, reliable policy leadership—not political flip-flopping at the expense of an industry crucial to our economic and environmental future.
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