California's Solar Success Story

How the Million Solar Roofs Initiative Transformed the State's Energy Landscape
Released by: Environment California Research & Policy Center

Executive Summary

California is a leader in solar energy. In 2014, the state led the country in cumulative solar energy capacity, with over four times the amount of solar energy capacity as Arizona, the next highest state. The growth in solar energy in California is helping the state meet its goals for reducing emissions of global warming pollutants while reducing our dependence on fossil fuels and spurring a new and vibrant clean energy economy.

A future in which solar energy is increasingly abundant and cost-competitive was the goal envisioned by policymakers a decade ago when California adopted the landmark Million Solar Roofs Initiative (SB 1, 2006). The decade-long, $3.3 billion initiative was designed to pave the way for a clean energy future – bringing solar energy within reach of more California residents and businesses.

California’s Million Solar Roofs Initiative is a success – bringing a future of abundant renewable energy within closer reach. The California Solar Initiative (CSI), the portion of the initiative administered by the investor-owned utilities, is currently on track to reach the goals of the program two years ahead of schedule.

By bringing about economies of scale in the solar energy industry, the Million Solar Roofs Initiative helped create a “vir­tuous cycle” that will spur further innovation and growth in solar energy. But the work of building a solar energy future is not over. California must build on the success of the Million Solar Roofs Initiative by adopting and expanding strong policies that will continue the state’s momentum and help it to achieve Governor Jerry Brown’s goals to increase the percentage of electricity derived from renewables to 50 percent by 2030.

The Million Solar Roofs Initiative was designed to lower the cost of solar energy and make it a mainstream source of energy.

  • The program’s goal is to stimulate growth and demand in the solar energy market by providing upfront financial incentives for solar energy installations. The financial incentives provided under the program were designed to decline over time as experience, innovation and competition in the field continued to lower prices.
  • The initiative consists of three main solar PV system installation programs:
    • The California Solar Initiative (CSI) General Market Program, an incentive program for areas served by investor-owned utilities (Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric).
      • CSI is also home to two solar energy programs that focus on low-income housing: the Multifamily Affordable Solar Housing (MASH) program and the Single-family Affordable Solar Homes (SASH) program.
  •  A parallel program for publicly owned utilities.
  • The New Solar Homes Partnership, which supports solar energy on new homes built within investor-owned utility territories.
  • In addition, the initiative set up the CSI Solar Thermal program and required a five-fold increase in the state’s highly successful Net Energy Metering program, allowing more solar energy generators to receive fair compensation for the excess solar energy they supply to the grid.
  • A 2004 Environment California Research & Policy Center report estimated that a program similar to the California Solar Initiative could reduce the average installed cost of a solar PV system to $5.51/W (AC) by 2014. By mid-2014, the cost of a residential solar PV system had fallen to $5.32/W (AC), a 45 percent reduction from costs in 2007, when the CSI began.

California’s solar photovoltaic capacity has increased more than 16-fold thanks to the Million Solar Roofs Initiative.

  • In 2006, the year before the initiative began, California had 156 MW of customer-sited solar PV energy capacity. By November 2014, 1,891 MWof customer-sited solar PV energy had been installed under the Million Solar Roofs Initiative alone. This is 12 times as much solar PV capacity as the entire state had in 2006.
    • Customers under the California Solar Initiative program (CSI), in areas served by investor-owned utilities, had installed 1,617 MW, 83 percent of their goal.
      • The General Market Program had installed 1,585 MW in total.
      • SASH and MASH had installed 32.4 MW (combined). In addition, MASH has served 6,371 tenants who benefit from virtual net metering contracts, and SASH has trained nearly 13,000 volunteers in solar PV system installation techniques.
  • As a whole, publicly owned utilities are lagging behind in meeting their goals. While several publicly owned utilities have already exceeded their goals for solar energy development under the Million Solar Roofs Initiative, many others have struggled. The Los Angeles Department of Water and Power, which has the state’s largest target for public utility solar installations, is only at 40 percent of its goal as of October 2014. As of July 2014, the publicly owned utilities had installed 228 MW in total, 33 percent of their goal.
  • The New Solar Homes Partnership, 13 percent of the way to its 2016 goal for solar installations, had installed 46 MW. The shortfall is largely due to the collapse of California’s market for new homes during the financial crisis. In 2014 alone, the program had allocated over twice as much money for projects as in 2009.

Figure ES 1: Installed Solar Capacity Relative to December 2016 Goals*

*Installed capacity as of November 2014.

The initiative has helped lower the cost of solar energy.

  • In 2007, when the program began, the average cost of a residential solar PV system in California was $9.68/Watt. By June 2014, the cost had fallen to $5.32/Watt, a 45 percent drop. The average cost of non-residential systems fell 51 percent from $8.86/Watt to $4.32/Watt. The program generated demand that helped bring down the price of solar modules globally and improve the efficiency of solar energy installations in California.
  • As the price of solar energy continues to fall in California, the state could reach grid parity – the point at which the cost of generating solar energy will be less than, or equal to, the cost of purchasing electricity from the grid – in the near future without incentives.

Figure ES 2: Average Cost per Watt of Installed Residential Solar PV Capacity in California (2007-2014)

Figure ES 3: Average Cost per Watt of Installed Non-Residential Solar PV Capacity in California (2007-2014)

The Million Solar Roofs Initiative has created jobs and built a strong solar energy industry.

  • In 2014, an estimated 54,690 solar workers, those workers who reported spending a majority of their time on solar activities, were employed in California, a 16 percent increase since 2013.
  • The solar energy system installation sector provides the highest number of jobs within the solar industry. This sector accounted for 54 percent of the solar energy jobs in California.
  • There were more than 1,889 firms throughout the solar energy value chain in California in 2014.

The Million Solar Roofs Initiative has created a strong foundation for a solar energy future.

The success of the Million Solar Roofs Initiative has been remarkable, but California has the potential to obtain even more of its energy from the sun in the years to come. California should build on the success of the Million Solar Roofs Initiative by setting ambitious goals for solar energy and adopting policies that can make them a reality. The state should:

  • Ensure that all of the publicly owned utilities meet the capacity goals originally set forth under California’s Million Solar Roofs Initiative (SB 1).
  • Ensure that California’s solar energy customers continue to receive the full, fair value for the excess clean electricity that they provide to the electricity grid by extending net metering over the long term.
  • Maintain solar-friendly rates for residential and commercial consumers.
  • Demonstrate support for an extension of the federal Investment Tax Credit (ITC) for solar energy systems on residential and commercial properties to ensure that California’s solar market experiences continued growth.
  • Ensure that the state’s new requirement for net zero energy buildings is enforced and implemented. In 2014, California implemented new revisions to the state’s Title 24 that will encourage both energy efficiency and renewable energy generation. Under the new rules, all new residential buildings must produce as much energy as they consume annually by 2020, and new commercial buildings must do the same by 2030.
  • Diversify the state’s solar energy consumer base by advancing policies designed for non-profit consumers who cannot take advantage of federal tax credits for solar energy systems, renters or those whose roofs are not well suited for solar power, and low-income consumers.
  • Ensure that AB 2188 is implemented in all of California’s cities, thereby establishing a streamlined permitting process that requires local officials to make decisions on applications more quickly and limits the restrictions that covenants, deeds or contracts can put on solar energy systems.