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California bill could restructure traditional incentive programs

Policy
Villa Lakeshore Apartments in Lakeside, which BQuest provided a SOMAH bride loan for, allowing the property to install solar, which saves tenants $1,600 a year on utility bills

It is no secret that traditionally, clean energy infrastructure has primarily been accessible to wealthy homeowners in California. More than a million homes and businesses have rooftop solar, but the state’s environmental justice communities, which are in the most polluted areas, have been left out. In order to reach the state’s climate and clean energy goals, it is necessary to provide clean energy access to everyone and a big part of how we get there is programs. 

The Solar on Multifamily Affordable Housing (SOMAH) Program was created by California Assembly Bill (AB) 693 introduced by then Assemblymember Susan Eggman in 2016, which included the largest investment of its kind in the nation - $1 billion over the next decade from five of the state's gas and electric  investor-owned utility companies greenhouse gas cap-and-trade auction proceeds to subsidize solar panels on multifamily affordable housing across the state. For tenants, this means reduced utility bills, better housing security and job training opportunities. For housing complex owners, the solar reduces common area electricity costs, reducing overhead expenses. The program had a very successful launch, becoming fully subscribed within the first 24 hours of opening the program with more than 240 applications representing 74MW of solar capacity. However, after the successful launch, the program has experienced a significant decrease in applications in subsequent years, only receiving a total of 20 applications in 2022. 

A required third-party evaluation of the program identified a number of barriers to program participation. A major barrier cited from property owners was gap financing. SOMAH Program projects can be lengthy, and the current incentive structure requires the property owner to float the rebate amount, which can be thousands of dollars to hundreds of thousands of dollars, sometimes for a year. The program recognized this issue and rolled at progress payments, which paid a portion of the incentive for certain project milestones, but this simply is not enough for some property owners. Recognizing the need for gap financing in order for these projects to participate in the program, Hammond Climate Solutions Foundation and BQuest Foundation began working together to provide no interest bridge loans for SOMAH projects, providing much needed funds for projects that would have otherwise not moved forward. After funding a handful of projects, BQuest realized they could scale this opportunity a lot more quickly and reach many more property owners by creating a loan guarantee instead of financing these projects on a one by one basis. A loan guarantee would allow the property owner to access the rebate on the front end, backed by a loan guarantee from BQuest, without putting ratepayer money at risk and allowing BQuest to scale their impact. 

In February 2023, Senator Eggman introduced Senate Bill (SB) 355, which expanded SOMAH Program eligibility to include tribal housing, housing owned by public agencies and increased the income threshold among other things. At this point, Hammond Climate Solutions Foundation and BQuest had already been involved in numerous meetings with the SOMAH Program administrators, the California Public Utilities Commission (CPUC) energy division staff, the Governor’s Office and were actively involved in the SOMAH proceeding at the CPUC and while support for this idea was given by all parties, implementing something like this had proven to be slightly more difficult. Since SB 355 addressed the lack of applications in the SOMAH program and expanded eligibility, we met with Senator Eggman’s staff and proposed an amendment to the bill to include language for a loan guarantee and not only was the language added with no opposition, it was signed by Governor Newsom on October 7! 

This is a huge win for California and an opportunity to prove that incentive programs structured in a way that provides the rebate on the front end can work and will eliminate barriers to participation. You can read the full bill text here.     

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Nature-Based Solutions in San Diego

Nature-based solutions are actions to help protect, sustainably manage and restore natural or modified ecosystems that address societal challenges while simultaneously providing benefits for people and the environment. As the most biodiverse county in the continental United States, San Diego County is well positioned to utilize nature-based solutions. These actions can help reduce greenhouse gas emissions and achieve societal co-benefits.

Nature-based solutions aim to enhance the natural function of ecosystems to provide multiple societal co-benefits such as improved public health through cleaner air and water as well as the availability of open space, improvements to habitat for wildlife and plants, flood risk reduction and other ecosystem services that enhance the resiliency of our environment. Natural and working lands are vital in the carbon cycle in San Diego and throughout California. Healthy ecosystems that include vegetation and soil microbes capture and store carbon from the atmosphere. In contrast, changes that alter or damage ecosystems, including land use modifications, deforestation and wildfires, can release sequestered carbon back into the atmosphere, accelerating the climate crisis. To balance between carbon stored and carbon released determines whether natural lands and ecosystems function as net sources or net carbon sinks. Protection of natural environments from land use and disturbances helps promote the functioning of forests, wetlands and oceans as carbon sinks that absorb more carbon than they emit.

San Diego has initiated multiple nature-based solutions projects already. However, the need to develop and scale up these projects is ever increasing as San Diego and California face impacts of the climate crisis. The United States Economic Development Administration’s Economic Integrator helped catalyze a nature-based solution project focused on upstream improvements to reduce runoff and debris deposited into San Diego’s stormwater infrastructure. This project helps mitigate the impact of flooding in the urban center while enhancing outdoor recreation and economic development for the County. The project focuses on Maple Canyon, nestled between Balboa Park and San Diego International Airport, a green space that buffers business with nature inside the urban core of San Diego. As flooding during storm events occurs, runoff and debris impact the downstream commercial enterprises, transportation networks and natural habitats. Restoration efforts have minimized flooding and stormwater runoff, helping protect vital urban infrastructure and important urban and natural landscapes.

As a coastal city, enhancing the resiliency of our coast is vital to managing climate change impacts such as sea level rise, coastal erosion and storm surges. Coastal wetlands throughout San Diego County are essential ecosystems that not only help with flood protection but are also some of the most productive ecosystems that play an integral role in the ecology of our watershed. Coastal wetlands are also considered “blue carbon ecosystems,” which include habitats like salt marshes and seagrass meadows that help capture and store more atmospheric carbon per acre than terrestrial forests. Nature-based solutions that preserve and restore these wetlands help build community resilience to the impacts of climate change by sequestering carbon and helping enhance the resiliency to sea level rise and coastal flooding. The Blue Carbon Collaborative, founded by the nonprofit organization Wildcoast, is a network of organizations working on the conservation, research and policy developments for blue carbon ecosystems and nature-based solutions. 

Only 10 percent of California’s original wetlands remain, yet they are some of the best ecosystems on the planet for taking carbon out of the atmosphere and storing it in the ground for a long time. Restoration of these wetlands provides an opportunity to enhance these ecosystems' production and utilize their potential as a natural climate solution. Aligning nature based solutions with the 30x30 plan to conserve 30 percent of our land and coastal waters by 2030 to protect biodiversity will expand access to nature while lessening the impacts of the climate crisis.

Cover photo credit: IUCN

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Credit: Bryan Olin Dozier/NurPhoto/Reuters (found on CNN)

The Biden Administration has decided the fate of Alaska’s Northern Slopes, and it’s not good

The Biden administration has issued their decision on ConocoPhillips’ proposed Willow Project, and it's not good

The Biden administration has issued their decision on ConocoPhillips’ proposed Willow Project. In case you haven’t heard about it yet, this is a huge long-term oil drilling investment by the petroleum refinery company in the northernmost borough of Alaska that would produce over an estimated 600 million barrels of oil, and close to 300 million metric tons of carbon dioxide into our atmosphere over the next 30 years. This is equivalent to emissions from roughly 70 coal fired power plants, or from 56 million vehicles over one year –  a “carbon bomb” some have labeled – and the President has signed off on its approval.

This is a major setback in President Biden’s commitment to end oil drilling on federal land, a pledge campaigned during his 2020 election season. The Bureau of Land Management (BLM) released their final environmental impact statement last month, recommending a reduction in the number of drilling pads from five to three, and the planting of trees to offset the carbon emissions. With the increase in pushback from the public and environmental groups this past year, the administration considered lowering the scope of the project to two pads, however, ultimately stuck with three to make it economically viable. Even with the newly announced protections of the U.S. Arctic Ocean and surrounding land surface, this will not prevent the degradation caused by oil drilling.

So, what are they saying in Alaska? The conversation is rather divided in the state, with the voice of legislators seeming to dominate. Major arguments in support of this development are concerned with the potential for massive revenues, job opportunities, and domestic energy production that would benefit the state. They are looking towards the estimated $1.25 billion in taxes to fund infrastructure improvements, and another $2.5 billion for a grant program for community initiatives to frame the Willow Project as a net benefit. One coalition of Alaska Native groups has extended their support, regarding this as an opportunity to gain basic services such as education, healthcare, and law enforcement.

On the other side, previously impacted residents of past ConocoPhillips ventures urged the President to reject any form of this project. The city of Nuiqsut, the closest residential area in proximity to the proposed site of the new drilling pads, is heavily concerned about the health and environmental risks posed. Just last year, the company’s oil field at the Alpine Central Facility had a methane gas leak, eight miles away from Nuiqsut. This prompted some of the 500 residents to flee the area, and now they are worried the Willow Project will bring even more dangers.

In any case, developing the Arctic Alaska for oil drilling purposes will threaten our global atmosphere, the local wildlife of the region, and push the global ice caps beyond the point of return. Many petitions have been passed through social media to urge the administration to put an end to the project; the #StopWillow campaign on Tiktok has reached over 50 million views, landing itself on the trending page where anybody on the platform can engage with it. Environmental organizations are preparing to challenge this decision legally, and we encourage you to stay up to date on this topic as we continue the fight against climate change.

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CA’s deadline to go solar to maximize savings is upcoming

The NEM 3 decision includes a “sunset period” that ends 120 days after the approval of the final decision, meaning anyone who goes solar before the sunset period date is still eligible for NEM 2.

In case you missed it, in December 2022, the California Public Utilities Commission (CPUC) issued a decision that ended a nearly two-year long battle between the investor-owned utilities and environmental groups over the future of rooftop solar in California. Although there was a coalition over 600 strong comprised of environmental and climate change organizations, nonprofits, schools, cities, churches, businesses and elected officials who spent two years urging the CPUC to keep solar growing sustainably, as instructed by law, the CPUC ultimately decided to side with the investor-owned utilities and made significant cuts to agreement solar customers go on, known as net energy metering. You can read more about the coalition here

Under the new net energy metering (NEM) agreement (known as NEM 3), solar customers will get about 75 percent less from the utility for the clean, local and reliable excess energy they share with their neighbors (which the utilities still charge their neighbors full transmission and distribution fees for). Just to give you a sense of how the new tariff compares to what solar customers are receiving currently, compensation for energy will go from an average of $.25/kWh all the way down to about $0.05/kWh. NEM 3 customers will also be forced to go on rates that have higher rates in the evening. All in all, these changes will nearly double the time it takes to pay off a residential system.  

There is some good news.  

If you already have solar, these changes will not affect you! All NEM 1 and NEM 2 customers will continue to receive benefits until their agreement expires, which is 20 years after the system was turned on. The only scenario that would make a customer lose their current NEM status is if a customer adds additional panels that exceed the allocated amount. 

The NEM 3 decision includes a “sunset period” that ends 120 days after the approval of the final decision, meaning anyone who goes solar before the sunset period date is still eligible for NEM 2. In order to go solar and receive maximum benefits, a solar contractor must submit a completed interconnection agreement without significant errors and a signed contract by April 14, although we recommend getting this submitted as soon as possible in case there are errors that need to be resolved. The solar power system can be installed after the cutoff date, so long as the application is submitted by April 14 and it is approved by the utility, however, if any significant changes are made to the equipment being used or system size, that would trigger a new application and cause the customer to lose their NEM 2 status.    

As the proceeding currently stands, customers should be prepared to go solar by the cutoff date, April 14, in order to receive the maximum benefits, however, there is a small possibility that this decision could be reversed entirely. Last month, the Center for Biological Diversity, Environmental Working Group and Protect Our Communities Foundation filed a formal appeal to reverse the CPUC’s final decision. The appeal highlighted ways in which the CPUC violated the law. 

The first and perhaps most obvious issue is that the decision violates a California law requiring the sustainable growth of rooftop solar. The California law is very clear in stating that the new NEM tariff must “ensure that customer-sited renewable distributed generation continues to grow sustainably,” During the course of the proceeding, some commissioner’s even stated that this decision may slow rooftop solar adoption but the CPUC has to consider other issues as well. The appeal rightfully argues that this decision is not the CPUC’s decision to make, as the law is very clear. 

The second issue is that the decision violates another California law that requires the CPUC to put forward an alternative option that would increase solar in communities of concern. The current California law states that any changes to NEM must include an option that will grow solar in “disadvantaged communities.” Not only does the decision actually make rooftop solar more expensive for everyone and disproportionately impacts communities of concern, but the CPUC promises funds to disadvantaged communities that are not available unless the legislature allocates them and are only for battery storage, not rooftop solar. 

  

The overarching issue of the entire proceeding is that the CPUC completely failed to account for all of the benefits and costs of rooftop solar. Any changes to NEM should have been based on the costs and benefits to all ratepayers and the CPUC not only disregarded the benefits of rooftop solar, but also misrepresented the impacts of long distance transmission lines. The appeal claims that in disregarding evidence presented to them, they violated their own process and precedent.  

What's next? 

Although the appeal is strong in its merits, this appeal is simply administrative, meaning that the CPUC has no real timeline to respond to the appeal or make any decisions. If the CPUC fails to respond within 90 days, the organizations that filed the appeal can escalate the appeal to an appeals court, which representatives have stated is the plan. 

The appeal is strong, and has already gained support from groups like 350.org and Solar Rights Alliance, however appeals similar to this have been filed in previous CPUC proceedings and were ultimately dismissed by a court of law and the CPUC. While we should remain optimistic about the appeal, customers should still plan to follow the current deadlines on the table to ensure they don’t miss the opportunity to go solar.   

Bottom line is that if you can go solar now, we recommend it as you’ll be able to maximize your savings and start producing clean energy soon!

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