California may cut rooftop solar incentives as market booms

California's rooftop solar market is the largest in the nation but is poised for changes by state regulators who could lower financial benefits for homeowners who install solar panels

SACRAMENTO, Calif. -- California’s 26-year-old program to get more people to put solar panels on their homes has been wildly successful, but state regulators may lower the incentives for people to go solar in a bid to reduce electricity bills for the rest of residents in the most populous U.S. state.

Current incentives allow residential solar customers to sell whatever energy they don’t use back to power companies at the retail rate for power, usually resulting in a big discount on their energy bills. But power companies say the savings are now so great that solar customers are no longer paying their fair share for the operation of the overall energy grid.

The future of the program, known as “net energy metering,” has prompted a fierce debate between the state's major utilities and the solar industry. Regulators at the California Public Utilities Commission, which oversees the state's major utilities and the rates they can set, are expected to issue proposed reforms on Monday. It comes as California strives to achieve its ambitious clean energy goals.

California’s net metering program launched in 1995 with the goal of boosting solar adoption in the famously sunny state. California now has more than 1.3 million residential solar installations, more than any other state, according to the solar industry. That number will only grow because since 2020 all newly constructed homes in California must have solar panels.