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On Jan. 1, California became the first state in the nation to require solar power for almost every new home. Now, in a controversial decision, the California Energy Commission has voted to allow builders to satisfy the mandate by subscribing to a utility-created off-site solar farm. The decision was applauded by builders who say it provides needed flexibility, and will help control costs in a state plagued by a severe crisis in housing affordability and availability. But the idea has met criticism from opponents ranging from rooftop solar installers to environmentalists, who call it a setback in the effort to combat climate change.

The decision came in response to an application by the Sacramento Municipal Utility District, a community-owned electric utility serving more than 600,000 ratepayers in Sacramento County and parts of Placer County. SMUD's original application, which involved a large solar farm outside the utility's service area, was shot down by the commission. But on the second attempt, SMUD promised to use smaller, newly built local solar farms, and the commission was satisfied.

Critics said the decision would serve as a precedent that would roll back the newly adopted solar mandate statewide. But according to Amber Beck, a public information officer at CEC, the commission's latest decision applies only to SMUD. "SMUD is a very different utility than others across the state," says Beck. "If others want to implement this, they’re going to have to get approval. If PG&E or SoCal Edison or some of those larger utilities want to do a community solar program, they’ve got other requirements that they will have to follow from the Public Utilities Commission. And so the program is going to look very different from what SMUD proposed."

"Community solar" installations were a feature of the California solar mandate from the beginning. The idea is to make solar practical for developments where the roofs aren't suited for solar panels, or for multifamily buildings that don't have enough roof area to serve the electric demand of all the units. But proponents originally envisioned small-scale arrays of ground-mounted solar panels sited near the neighborhood, not a multi-megawatt off-site power plant located at a distance and serving multiple neighborhoods.

But will the SMUD decision really open the floodgates to a new surge of large-scale off-site solar farms built to satisfy the new mandate? It's hard to say, but Beck says that any proposed community solar installation, whether it's built on a large scale by a utility or on a modest scale by a developer, has to be individually permitted by CEC. By contrast, a developer or builder who plans to meet the mandate by installing solar arrays on individual buildings only has to get the usual permits from the local building department. And thus far, says Beck, SMUD is the only entity to apply for community solar in any form. No other utility and no developer has tried to get a project approved by CEC.

For utilities or developers that want to apply to provide a community solar option, Beck says the project has to meet six criteria:

  • Enforcement: "What they’re proposing will exist at the time the home is permitted."
  • Energy performance: "The savings have to match that of a rooftop solar system."
  • Dedicated energy saving: "Any generated solar must be dedicated to the building."
  • Durability: "The proposed community solar facility has to be operational for at least 20 years."
  • Additionality: "The solar that is generated can’t be counted for other programs."
  • Accountability and record keeping: "The applicant has to keep records and make them accessible for 20 years."

Going forward, California is trying to hit some very ambitious targets for carbon reduction, aiming to be carbon-neutral by 2045. To that end, advocates of SMUD's approach argue, community solar and rooftop solar are both necessary. SMUD has set its own goal: carbon-neutrality by 2040. Steve Lins, director of government affairs at SMUD, said this to the CEC board at the business meeting where the SMUD proposal was approved: "That’s an audacious, aggressive goal, and we’re going to need every tool in the toolbox to get there. We’re going to need rooftop, we’re going to need community solar, we’re going to need electrification, we’re going to need all this stuff."

Bob Raymer, senior engineer and technical director for the California Building Industry Association, told the CEC board, "This carbon-free home is going to need roughly three to four times the amount of renewable energy that is currently required by today’s state code. We can do this. But we don’t have enough space on most of our two- and three-story single family dwellings, and definitely on top of multifamily, to accommodate all the solar that’s needed. This means we’re going to need a combination of both community solar and rooftop solar. We like both of these, but we need both of these tools to go forward."