Pulling the Plug

State Regulations Force Bankruptcy of California Solar Company

Thanks again to the California globe for running this piece. You can visit the website at: https://californiaglobe.com/

credit - www.energy.gov

On the one hand, the state of California has decided that it shall become an all-electric, all-renewable power state by, well, for practical purposes, next Thursday.

On the other hand, the state gives utilities a massive break on how much they pay home solar generators for their excess power, leading to the just announced bankruptcy of California-based solar system installer SunPower.

Welcome to schizophrenic Sacramento.

Monday, former industry leader SunPower filed Chapter 11 and said its remaining assets will be purchased by Complete Solaria for $45 million.  Complete will also take over an undisclosed amount of SunPower liabilities as part of the deal.

"For nearly 40 years, SunPower has made solar energy more accessible to Americans, driven by our mission to change the way our world is powered,” said Tom Werner, Executive Chairman at SunPower. "In light of the challenges SunPower has faced, the proposed transaction offers a significant opportunity for key parts of our business to continue our legacy under new ownership. We are working to secure long-term solutions for the remaining areas of our business, while maintaining our focus on supporting our valued employees, customers, dealers, builders, and partners."

The failure of SunPower, say industry experts, is directly related to the changes made by the California Public Utilities Commission in December, 2022.  Those changes involved, in part, cutting the rate new home solar system owners would be paid for their excess power by 75%, completely eliminating the financial incentive to install new systems (much of the industry’s appeal was the ability to say that household solar would eventually pay for itself.) 

That is no longer the case.

Bernadette Del Chiaro, Executive Director  of the California Solar & Storage Association,  acknowledged that heightened competition and internal SunPower issues played a role in the bankruptcy but that it was California’s regulatory environment that was the main cause for the company’s demise.

The CPUC has “policies that disproportionately favor monopoly utilities like PG&E at the expense of solar businesses, consumers and the environment,” Del Chiaro said.

“SunPower is the largest solar company to fall in the past year, but it is far from the only casualty. Dozens of companies have gone bankrupt or left California since the start of the “net billing tariff” in April 2023,” Del Chiaro said.  “In total, 17,000 jobs have been lost, sales are down 60%, and 81% of California solar companies remain concerned about their ability to stay in business.”

The reduction in the reimbursement was made, in theory, to maintain grid reliability as homes with solar, the utilities claim, do not pay their fair share to cover the “fixed costs” of operating the statewide grid.

“All this (was) in the name of a utility lie about a so-called ‘solar cost-shift’ which scapegoats California families and businesses who embrace energy independence and clean energy,” Del Chiaro said.  “The truth is, PG&E, Southern California Edison and San Diego Gas & Electric allow their spending to get out of control, ballooning their profits, and driving up electric rates.”

The utilities’ argument was similar to “why give electric cars a tax break when the use the roads as much as regular cars and don’t pay fuel taxes?”

But there is a difference – a big difference:  cars do not generate power for the utility to then use and sell – solar systems do.

What the decision was actually like, though, is the incident in late 2022 which involved the state announcing its mandate that every new car sold in the state must be electric by 2025 and then – literally a few days later – asked electric car owners to not charge them because the power grid was too strained.

The millions of rooftop solar systems (including larger systems on commercial buildings and such) in the state provide about 10% of the total electricity used in California.

Considering the various electric/renewable energy mandates the state has imposed, the buckling of SunPower and the wobbliness of the entire industry could make reaching those already absurd goals impossible.

It took ten years to install  the first million, five years to install the second million, and now installations are at a ten-year low,” Del Chiaro said.

It should be noted that the execrable Pacific Gas and Electric (PG&E) – even more so than the other utilities – has a direct pipeline into Sacramento regulators – some even used to work for the company – and politicians – it doles out millions, including money directly to people like First Partner Jennifer Seibel Newsom for her “films.”    

PG&E (remember - the company pleaded guilty to actually killing people) to purposefully kick an evil but sadly not dead horse, has been expertly manipulating the levers of power in the capitol for more than a century (too bad they are better at that than manipulating actual power). And they - short of the Second Coming or the actual revolution – are primed to continue to do so for the next 100 years.

“Yes - A convicted felon dictates energy policy for California,” acidly noted Del Chiaro.

So, Go Electric! says the state…just don’t cost the utilities any money or any Sacramento leverage.

We’ll see how that works out.