A solar equipment company based in Fremont is set to lay off 350 employees this Friday, citing market conditions as the driving force behind this decision. Enphase Energy, specializing in producing inverters that convert solar panel-generated energy into household power, attributes the layoffs to a combination of factors including rising interest rates and a significant alteration made by the California Public Utilities Commission (CPUC) last April.
The CPUC’s decision involved a substantial reduction in payments made to individuals who contribute surplus energy to the grid. This modification led to a sharp decline in demand for solar energy systems. Solar advocates, including Cailey Underhill from the Solar Rights Alliance, have pointed fingers at the state for this outcome, emphasizing that the significant volume of public input received by the CPUC on this issue was disregarded.
The amendment to the “net metering” rate, effective for systems installed post-April 15, 2023, resulted in a drastic 75% reduction in the credit offered for excess energy. The announcement triggered a rush in installations before the deadline, as described by Keith Kruetzfeldt, owner of Suntegrity Solar in Santa Rosa, characterizing the period leading up to April 15 as immensely busy followed by a steep drop-off in demand thereafter.
The aftermath of this policy change has taken its toll on numerous solar companies, forcing some out of business, particularly those that experienced rapid expansion during the heightened demand phase. Kruetzfeldt highlighted the impossibility of preparing for such a sudden and drastic decline in demand, asserting its impact on business sustainability.
However, Severin Borenstein from UC Berkeley’s Haas School of Business defended the CPUC’s decision, arguing that the previous rate was overly generous, burdening non-solar users with higher costs to support the power grid. He maintained that while the new policy may make solar adoption less financially attractive, it won’t entirely eliminate the industry.
Despite differing viewpoints, solar advocates are adamant that changes to net metering policies counteract the state’s clean energy goals. They argue that the alterations create a challenging economic landscape for adopting clean energy resources, contrary to the need for expanding rooftop solar installations.
Interestingly, the solar industry might find support from utilities like PG&E, as Kruetzfeldt observed that every time these major power companies request rate hikes, the appeal of solar systems increases.
However, in the interim, the solar industry faces a challenging period of reduced profitability, dampening the once-promising outlook for the sector.