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California Policy Change
Solar installers in the United States are anticipating a slowdown in residential solar installations due to California’s decision to reduce the subsidy for rooftop solar panel owners. The state has been the pioneer and largest market for residential solar, with more than 1.5 million homes equipped with solar panels.
The subsidy reduction will lower the amount of money credited to rooftop solar owners for excess power sent back into the grid. Solar companies fear that this will hamper California’s efforts to decarbonize the grid by 2045 and slow down installations, but state regulators argue that the reform will promote power reliability by encouraging homeowners to buy batteries that store clean energy.
The reform is set to take effect on April 15, leading to a surge in California installations this year as homeowners rushed to connect before the policy change. Under the new policy, solar owners will be compensated based on the utility’s clean energy purchasing cost, leading to a longer payback period for homeowners.
The residential solar industry in California is expected to experience a slowdown as the state reduces subsidies for panel owners. The policy change will see a reduction in the money credited to rooftop solar owners for sending excess power to the grid, which critics argue is unfair to those without panels. California currently boasts 38% of the nation’s residential solar capacity, making it a critical market for national installers.
Analysts predict a consolidation in the rooftop market this year due to higher interest rates, tighter available credit, and the new policy. However, companies expect the policy’s incentives for battery storage to boost sales of those systems, which can cut two to four years off the nine-year payback period for solar systems.
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