ARTICLE
By Angela Lipanovich, Cleantech Attorney at Estriatus Law As a clean energy attorney with nearly two decades of experience advising small businesses, nonprofits, and property owners across the state, I’ve had a front-row seat to the evolution of energy policy in California. In recent years—particularly over the last five to ten—I’ve observed a concerning shift at the state legislative level: the gradual erosion of the rights of individuals and businesses to own and benefit from solar energy. Despite growing interest in clean energy solutions, there is a notable lack of consistent advocacy representing the interests of homeowners and small businesses in the policymaking process. This vacuum has allowed utility-driven initiatives to shape regulations that make it increasingly difficult—and potentially cost-prohibitive—for Californians to own and operate their own solar energy systems. A current and significant example of this troubling trend is Assembly Bill 942 (AB 942). If enacted, AB 942 would retroactively amend existing solar contracts between system owners and California’s investor-owned utilities (IOUs) —PG&E, SCE, SDG&E. This change would significantly reduce the economic value of existing properties with solar systems. The state’s Net Energy Metering (NEM) program outlines the terms under which solar customers connect to the utility grid, which prior to April 15, 2023 were either NEM 1.0 or NEM 2.0 interconnection agreements. Under current NEM 1.0 and 2.0 rules, property owners can rely on a long-term return from their solar investments, whether they remain the system owner or choose to sell their property. AB 942 would amend this framework by prohibiting the transfer of NEM 1.0 and 2.0 agreements when the property is sold – effectively erasing a key financial incentive for investing in solar. The consequences would be substantial: reduced resale values for solar-equipped properties, weakened investment returns and financial profiles for existing solar investments, abandoned renewable energy contracts mid-term, and the penalizing of investors for participating in the State’s previously designed programs. Further, the positional change will create an uncertainty and lack of confidence in the State to uphold existing clean energy programs, thereby likely increasing decline in participation in the State’s solar programs. AB 942, currently under consideration in the California State Senate, has already passed the Assembly and is now advancing through Senate committees. Earlier versions of AB 942 sought to retroactively reduce the duration of NEM contracts—from 20 years to 10—for all solar customers who installed their systems before 2023. That provision was removed in response to public opposition. However, the current version still includes the retroactive elimination on the transferability of NEM 1.0 and NEM 2.0 agreements when a property is sold. If passed, this provision would apply retroactively to hundreds of thousands of existing solar customers – estimated at about 800,000 state-wide. Importantly, AB 942 contains no provisions to ensure that any savings from these changes would result in lower utility bills for rate-payers and/or low-income customers. Without dedicated rate relief mechanisms, it is unclear whether IOUs would pass on any benefits to consumers, raising concerns that AB 942 may primarily protect utility revenues rather than promoting ratepayer equity. This is occurring at a time when IOUs are making historical profit levels. The impacts on affordable housing providers may be especially significant. One provider, which operates housing for over 10,000 people across the U.S.—including 4,000 in California—has stated: “My company operates an affordable housing business that is not subsidized or funded by the government. We provide housing for over 10,000 people nationally, with roughly four thousand of those in our home state of California. Needless to say, our operating margins are very tight and the multi-million dollar investments we have made in eight solar systems at our communities in the state were crucial to ensure the long-term viability of our business and this affordable housing. To pull the rug out from underneath us after the investments have been made is both extremely unfair and a major risk to our ongoing operation. Even if we never sell these properties, the mere fact that selling would void some of the significant economic benefits of the systems makes our properties less valuable today, which worsens our financing opportunities and increases our financing costs. If you are going to change the rules around solar investments, do it on a go-forward basis as to new investments. Don't move the goalposts on millions of dollars in investments we have already made in the state.” Thom Niederkofler, Partner, Pacific Current Partners Given the central role that solar now plays in reducing operating costs and improving financial stability for housing and small business operators, policies that retroactively alter terms of investment raise serious concerns for the long-term sustainability of clean energy development in California. According to an analysis by data scientist Jenny Folkesson, PhD, California’s commercial solar market is already in sharp decline. Since 2022, PG&E has reported an 85% drop in non-residential solar applications, a trend that is mirrored in the State’s own data. Table 1. Data from PG&E and California’s Distributed Generation Statistics (CDGS) This declining trend is directly attributed to a combination of recent policy changes that have reduced the financial viability of solar adoption for businesses. California’s solar industry currently supports over 80,000 jobs, and analysis from the National Renewable Energy Laboratory indicates that each gigawatt of installed solar contributes more than 5,000 jobs—many in local and regional economies. By introducing additional regulatory uncertainty, AB 942 could further reduce solar adoption and put existing jobs at risk. Supporters of AB 942 argue that current NEM structures shift costs onto non-solar ratepayers. However, the California Public Utilities Commission (CPUC)—which regulates rate structures—currently assigns the costs of NEM credits to ratepayers rather than drawing from the profits of IOUs. This regulatory approach has created what appears to be a “cost shift,” though it is rooted in policy design rather than an inherent flaw in solar economics. Meanwhile, rooftop solar provides measurable benefits to the state’s electric grid. According to the CPUC, distributed solar generation provides substantial annual cost savings by reducing the need for transmission lines and grid upgrades, and experts have valued the 20-year net savings from existing solar installations at $2.2 billion. There is also growing evidence that curbing solar incentives would negatively impact low- and moderate-income communities. A recent report from Lawrence Berkeley National Laboratory shows that solar adoption is increasingly common among households in lower income brackets. These communities are first in line to lose access to cost-saving, clean energy solutions when financial incentives are rolled back. As the Senate considers AB 942, lawmakers must carefully weigh its stated goals against its far-reaching economic, environmental, and equity impacts. Stakeholders across the state—including homeowners, business owners, solar workers, and housing providers—should review the implications of this bill closely and share their perspectives with elected representatives. If you are a homeowner, business owner, or nonprofit with a stake in solar energy, now is the time to speak up. In a landscape where solar consumers often lack unified representation, engagement is essential. Inaction risks not only diminishing consumer protections and solar participation but also undermining the state’s progress toward its 2045 carbon neutrality goals.
By Angela Lipanovich, Cleantech Attorney at Estriatus Law
As a clean energy attorney with nearly two decades of experience advising small businesses, nonprofits, and property owners across the state, I’ve had a front-row seat to the evolution of energy policy in California. In recent years—particularly over the last five to ten—I’ve observed a concerning shift at the state legislative level: the gradual erosion of the rights of individuals and businesses to own and benefit from solar energy. Despite growing interest in clean energy solutions, there is a notable lack of consistent advocacy representing the interests of homeowners and small businesses in the policymaking process. This vacuum has allowed utility-driven initiatives to shape regulations that make it increasingly difficult—and potentially cost-prohibitive—for Californians to own and operate their own solar energy systems.
A current and significant example of this troubling trend is Assembly Bill 942 (AB 942). If enacted, AB 942 would retroactively amend existing solar contracts between system owners and California’s investor-owned utilities (IOUs) —PG&E, SCE, SDG&E. This change would significantly reduce the economic value of existing properties with solar systems. The state’s Net Energy Metering (NEM) program outlines the terms under which solar customers connect to the utility grid, which prior to April 15, 2023 were either NEM 1.0 or NEM 2.0 interconnection agreements. Under current NEM 1.0 and 2.0 rules, property owners can rely on a long-term return from their solar investments, whether they remain the system owner or choose to sell their property. AB 942 would amend this framework by prohibiting the transfer of NEM 1.0 and 2.0 agreements when the property is sold – effectively erasing a key financial incentive for investing in solar. The consequences would be substantial: reduced resale values for solar-equipped properties, weakened investment returns and financial profiles for existing solar investments, abandoned renewable energy contracts mid-term, and the penalizing of investors for participating in the State’s previously designed programs. Further, the positional change will create an uncertainty and lack of confidence in the State to uphold existing clean energy programs, thereby likely increasing decline in participation in the State’s solar programs.
AB 942, currently under consideration in the California State Senate, has already passed the Assembly and is now advancing through Senate committees. Earlier versions of AB 942 sought to retroactively reduce the duration of NEM contracts—from 20 years to 10—for all solar customers who installed their systems before 2023. That provision was removed in response to public opposition. However, the current version still includes the retroactive elimination on the transferability of NEM 1.0 and NEM 2.0 agreements when a property is sold. If passed, this provision would apply retroactively to hundreds of thousands of existing solar customers – estimated at about 800,000 state-wide.
Importantly, AB 942 contains no provisions to ensure that any savings from these changes would result in lower utility bills for rate-payers and/or low-income customers. Without dedicated rate relief mechanisms, it is unclear whether IOUs would pass on any benefits to consumers, raising concerns that AB 942 may primarily protect utility revenues rather than promoting ratepayer equity. This is occurring at a time when IOUs are making historical profit levels.
The impacts on affordable housing providers may be especially significant. One provider, which operates housing for over 10,000 people across the U.S.—including 4,000 in California—has stated:
“My company operates an affordable housing business that is not subsidized or funded by the government. We provide housing for over 10,000 people nationally, with roughly four thousand of those in our home state of California. Needless to say, our operating margins are very tight and the multi-million dollar investments we have made in eight solar systems at our communities in the state were crucial to ensure the long-term viability of our business and this affordable housing. To pull the rug out from underneath us after the investments have been made is both extremely unfair and a major risk to our ongoing operation. Even if we never sell these properties, the mere fact that selling would void some of the significant economic benefits of the systems makes our properties less valuable today, which worsens our financing opportunities and increases our financing costs. If you are going to change the rules around solar investments, do it on a go-forward basis as to new investments. Don't move the goalposts on millions of dollars in investments we have already made in the state.” Thom Niederkofler, Partner, Pacific Current Partners
Given the central role that solar now plays in reducing operating costs and improving financial stability for housing and small business operators, policies that retroactively alter terms of investment raise serious concerns for the long-term sustainability of clean energy development in California.
According to an analysis by data scientist Jenny Folkesson, PhD, California’s commercial solar market is already in sharp decline. Since 2022, PG&E has reported an 85% drop in non-residential solar applications, a trend that is mirrored in the State’s own data.
Table 1. Data from PG&E and California’s Distributed Generation Statistics (CDGS)
This declining trend is directly attributed to a combination of recent policy changes that have reduced the financial viability of solar adoption for businesses. California’s solar industry currently supports over 80,000 jobs, and analysis from the National Renewable Energy Laboratory indicates that each gigawatt of installed solar contributes more than 5,000 jobs—many in local and regional economies. By introducing additional regulatory uncertainty, AB 942 could further reduce solar adoption and put existing jobs at risk.
Supporters of AB 942 argue that current NEM structures shift costs onto non-solar ratepayers. However, the California Public Utilities Commission (CPUC)—which regulates rate structures—currently assigns the costs of NEM credits to ratepayers rather than drawing from the profits of IOUs. This regulatory approach has created what appears to be a “cost shift,” though it is rooted in policy design rather than an inherent flaw in solar economics. Meanwhile, rooftop solar provides measurable benefits to the state’s electric grid. According to the CPUC, distributed solar generation provides substantial annual cost savings by reducing the need for transmission lines and grid upgrades, and experts have valued the 20-year net savings from existing solar installations at $2.2 billion.
There is also growing evidence that curbing solar incentives would negatively impact low- and moderate-income communities. A recent report from Lawrence Berkeley National Laboratory shows that solar adoption is increasingly common among households in lower income brackets. These communities are first in line to lose access to cost-saving, clean energy solutions when financial incentives are rolled back.
As the Senate considers AB 942, lawmakers must carefully weigh its stated goals against its far-reaching economic, environmental, and equity impacts. Stakeholders across the state—including homeowners, business owners, solar workers, and housing providers—should review the implications of this bill closely and share their perspectives with elected representatives. If you are a homeowner, business owner, or nonprofit with a stake in solar energy, now is the time to speak up. In a landscape where solar consumers often lack unified representation, engagement is essential. Inaction risks not only diminishing consumer protections and solar participation but also undermining the state’s progress toward its 2045 carbon neutrality goals.