New California Law Allows Customers to Elect to Purchase Renewable Energy from the Utilities

by Best Best & Krieger LLP
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Pilot Project Aimed at Those Who Lack Ability to Build Their Own Renewable Energy Projects

Gov. Jerry Brown’s signing of Senate Bill 43 (SB 43) on Saturday launched one the nation’s largest community solar programs. SB 43 creates a pilot virtual net-energy metering program allowing millions of customers of Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric the opportunity to purchase 100 percent of their energy from renewable energy projects. 

SB 43 enables schools, cities, commercial property owners, renters, or others who may lack the ability to install solar panels and other renewable energy facilities on their own property (due to tree-shading, for instance) to purchase energy generated by renewable sources. The new law allows these utility customers to “virtually” net-energy meter (receive a bill credit) from a renewable energy project, as if they had opted to construct a renewable energy project on their own property. To address the ongoing solar “subsidy” debate within California, SB 43 prohibits costs from being shifted from participating customers in the program to non-participating ratepayers.

The concept is not a new one. In 2008, the Sacramento Municipal Utility District (SMUD) launched its Solar Share program, which similarly allows customers to purchase electricity generated from a 1 megawatt solar installation in nearby Wilton, California. More than 670 SMUD residential customers participate in the program. 

SB 43 sets aside 600 megawatts (MW) of total electricity for such programs, with at least 100 MW for residential renters and another 100 MW for clean energy projects that will be built in the most disadvantaged communities, as identified by California’s Environmental Protection Agency. Renewable energy projects participating in the SB 43 program cannot exceed 20 MW and facilities located in impacted and disadvantaged communities cannot exceed 1 MW in capacity.  

If the pilot program finds success in fostering customer participation in large-scale renewable projects, it may create the framework for future expansion that would allow similar investment in other renewable projects and lead to more Californians having the opportunity to be powered by renewable energy sources.

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