The Great Rooftop Solar Debate

Summary

Podcast Summary: Boiling Point – The Great Rooftop Solar Debate

Episode Information:

• Title: The Great Rooftop Solar Debate
• Host: Sammy Roth, LA Times Studios
• Release Date: March 27, 2025
• Description: This episode delves into the contentious debate surrounding rooftop solar installations in California, featuring perspectives from industry leaders and energy economists.

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Introduction

In this episode of Boiling Point, host Sammy Roth tackles the heated debate over rooftop solar installations in California. With over two million solar installations statewide, rooftop solar panels are a significant source of climate-friendly electricity. However, the incentives supporting these installations, particularly through the net metering program, have sparked intense disagreements among stakeholders.

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Background on Rooftop Solar in California

California boasts approximately two million solar installations, ranging from residential rooftops to large parking lots and warehouses. Rooftop solar is lauded for being clean, local, and cost-saving for users. However, the net metering program, which compensates solar panel owners at retail rates for the electricity they generate, has become increasingly controversial over the past 11 years.

Sammy Roth sets the stage by highlighting two primary camps in the rooftop solar debate:

• Pro-Rooftop Solar: Solar companies and environmental groups advocating for rooftop solar as the optimal climate solution.
• Critics of Rooftop Solar Incentives: Economists, state regulators, and some environmentalists arguing that rooftop solar is costlier than utility-scale solar farms and leads to higher electric bills for non-solar customers.

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Net Metering and Cost Shift Debate

Brad Hevner's Perspective ([00:34]): Brad Hevner, Executive Director of the California Solar and Storage Association, argues that the reduction in net metering incentives by Governor Gavin Newsom's appointees has severely impacted the rooftop solar industry. He cites significant job losses—17,000 solar jobs—and the bankruptcy of major solar companies like SunPower Global Solar Pioneer. Hevner contends that the abrupt policy change has halved the expected solar adoption rate, hindering California's climate goals.

“We’re in a climate crisis. We need more solar. And the state should really be making sure that the background policies are such that there’s a good opportunity for a wide market for solar.”
— Brad Hevner [00:38]

Severin Borenstein's Counterpoint ([06:50]): Severin Borenstein, an energy economist at UC Berkeley, disputes the notion that rooftop solar has been "killed" by policy changes. He acknowledges the initial setback but points out that new installations have rebounded to 2019 levels. Borenstein suggests that the market has stabilized and that the industry's growth is now more sustainable.

“If you just look at new systems, they’re back to 2019 levels.”
— Severin Borenstein [07:00]

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Perspectives from Brad Hevner

Hevner emphasizes the negative impact of the net metering policy change on the solar industry, highlighting:

• Economic Shock: The sudden shift disrupted the relationship between solar customers and utility companies.
• Job Losses: The industry has seen a significant reduction in solar-related employment.
• Market Contraction: The expected growth in solar adoption has not materialized, with installation rates remaining stagnant.

Hevner criticizes Borenstein for allegedly dismissing the ongoing struggles of the solar industry and accuses him of having a pro-utility bias.

“You have a fiduciary responsibility to shareholders to spend more money on the grid. This is a perverse incentive, and it’s logical that they would fight against customer solar.”
— Brad Hevner [19:43]

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Perspectives from Severin Borenstein

Borenstein challenges Hevner’s claims by arguing that:

• Temporary Surge: The apparent decline in solar installations is partly due to a temporary surge before the policy change.
• Market Realignment: The industry is adjusting to more sustainable growth levels, moving beyond inflated figures.
• Cost Efficiency: Grid-scale solar is less expensive, and the current level of rooftop solar may be optimal given its higher costs.

He also disputes the notion that utility companies are actively trying to undermine rooftop solar, pointing out that publicly owned utilities have higher solar adoption rates compared to investor-owned utilities.

“If you just look at new systems, they’re back to 2019 levels. Now we can debate what the right level is.”
— Severin Borenstein [07:00]

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The Heated Debate

The conversation becomes increasingly tense as Hevner and Borenstein present conflicting data and interpretations:

• Job Market Impact: Hevner asserts severe job losses, while Borenstein contends that employment trends were already downward before policy changes.
• Cost Shift: Hevner denies the existence of a cost shift, claiming solar reduces overall rates, whereas Borenstein maintains that there is a measurable cost shift impacting non-solar customers.
• Utility Intentions: Hevner accuses Borenstein of siding with utilities, suggesting a bias, while Borenstein clarifies his objective stance based on economic analysis.

“This is utility versus solar. That’s true. It’s fair.”
— Brad Hevner [21:08]

“If we keep harping on how the utilities are trying to beat up on rooftop solar… it’s part of the machine.”
— Severin Borenstein [21:59]

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Common Ground and Solutions

Despite their disagreements, both participants acknowledge the complexity of regulating utilities and the need for independent, unbiased analysis. They touch upon the following points:

• Regulatory Challenges: Hevner calls for more rigorous auditing of utility expenditures and greater independence for regulators.
• Shared Goals: Both agree on the necessity of advancing clean energy solutions to combat climate change, though they diverge on the methods and policies to achieve this.

“We need to keep trying. We don’t have a choice.”
— Brad Hevner [45:26]

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Conclusion

The episode concludes without a resolution, highlighting the deep ideological and factual divides within the rooftop solar debate in California. Sammy Roth underscores the importance of continued dialogue and collaboration to advance clean energy goals despite the contentious disagreements.

“My biggest takeaway is that people who care about the climate crisis should stop fighting and start working together.”
— Brad Hevner [45:30]

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Notable Quotes

• Brad Hevner:
  “The relationships between solar customers and the utilities changed abruptly, causing a shock to the market and the industry.” ([04:56])

• Severin Borenstein:
  “Grid-scale solar being big solar farm, those big solar farms are more cost-effective than rooftop installations.” ([10:42])

• Brad Hevner:
  “Utilities are acting rationally… their profits are tied to the amount that they spend on the electric grid.” ([19:43])

• Severin Borenstein:
  “We pay for the extra costs of rooftop solar through our electric bills, disproportionately hurting poor people.” ([32:46])

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Key Takeaways

• Rooftop Solar's Role: While rooftop solar is essential for clean energy, its optimal contribution and funding mechanisms remain hotly debated.
• Economic Impacts: Policy changes significantly affect the solar industry's job market and growth trajectory.
• Utility Regulation: Effective regulation and independent analysis are crucial to balance the interests of solar adopters, non-solar customers, and utility companies.
• Need for Collaboration: Bridging ideological and factual divides is imperative for advancing California's climate and energy objectives.

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For More Information: To delve deeper into the perspectives discussed in this episode, refer to Brad Hevner's latest column titled "California's Rooftop Solar Infighting is a Colossal Waste of Time," available here.

Transcript

[Sammy Roth]

This is an LA Times Studios podcast.

[Brad Hevner]

My name is Sammy Roth. This is Boiling Point. A few weeks ago, I wrote a column with the title, California's Rooftop Solar Infighting is a Colossal Waste of Time. So maybe I was wasting my time.

[Severin Borenstein]

Inviting two people to come on this.

[Brad Hevner]

Podcast to fight about rooftop solar.

[Severin Borenstein]

But it's an important debate, so I did it anyway.

[Brad Hevner]

This week you're gonna hear the results. But first, a little bit of background. For the uninitiated, California has 2 million solar installations. And that is pretty amazing. You've probably seen rooftop solar panels driving around your neighborhood if you don't have them yourself. There are solar panels on single family homes, parking lots, warehouses. They're one of the state's biggest sources of climate friendly electricity. But incentives for rooftop solar have become surprisingly controversial over the 11 years I've been writing about energy and climate change. There aren't many topics that have made people angrier than rooftop solar incentives, particularly a program known as net metering. And I'm not talking about climate deniers arguing with climate activists. I'm talking about people who care about climate change arguing with each other. On the one hand, there are solar companies and environmental groups that see rooftop solar as far and away the best climate solution. It's clean, it's local, it lowers your energy bill.

[Severin Borenstein]

It's, you don't need to buy as.

[Brad Hevner]

Much power from a big utility company. You don't need to build solar farms that destroy the desert. I mean, what's not to love, right? On the other hand, there are economists and state regulators and even a few environmental groups who say, yeah, rooftop solar is good, but it's a lot more expensive than big solar farms. And rooftop solar is great for people who can afford it, but a lot of people can't afford it. And also, those net metering incentives that California has been giving people to install solar, they've had the unintended side effect, these critics say, of making electric bills higher for everyone else. On this week's podcast, we're going to hear from two of the most prominent people in the rooftop solar debate. One of our guests is Brad Hevner. He's the executive director of the California Solar and Storage Association, a trade group for the rooftop solar industry. He thinks Governor Gavin Newsom's appointees made a terrible decision two years ago when they dramatically reduced rooftop solar incentives through the net energy metering program. Our other guest is Severin Borenstein. He's an energy economist at UC Berkeley, and he thinks Newsom's appointees actually should have done even more to cut those net metering incentives. I'm grateful to Brad and Severin agreeing to do this podcast. I knew it wouldn't be an easy conversation. Still, I thought if I put the two of them together and asked them to try to hash out their differences, they might find some common ground, even if things got tense at times. Well, things did get tense and surprisingly personal. And I'm sorry to say there was not a lot of common ground between Brad and Severin. But if you want to know why we've spent so much time debating rooftop solar in California and why so many people are so angry, this conversation will tell you everything you need to know.

[Sammy Roth]

It's sort of very similar as to being a foster parent. You go in it not for the length of time, but to know that even two months or 10 years can still create a big impact in a child's life. So CASA is a nonprofit organization that stands for Court Appointed Special Advocate and they specialize in making sure that the child's needs are met, whether it's medical, health, educational, and ensuring that the child is receiving the most ability they can.

[Brad Hevner]

Brad Severin, thank you very much for.

[Severin Borenstein]

Being with us on the Boiling Point podcast.

[Brad Hevner]

Thanks for having us.

[Severin Borenstein]

Good to be with you.

Brad, let me start with you here. It's been almost two years now since this decision from the Public Utilities Commission took effect, reducing net metering incentives for rooftop solar in California. What has happened with installation since then within your industry? What have things looked like? What have the last two years been like?

[Brad Hevner]

Well, it's been painful. It's been really horrible. From a business perspective and a solar adoption perspective. The terms changed for the relationship between solar customers and the utilities. It happened very abruptly and sharply without a real transition from one to the other. What we had been hoping from the Utilities Commission is sort of a glide path to change from the old rules to the new rules. They did one that was kind of in name only. The numbers were really nothing. And so it was a really abrupt switch in the economics and it was a shock to the market and the industry. And we've seen a lot of bankruptcies of solar companies and job loss. We've lost 17,000 solar jobs, well trained people that made their living installing, designing solar. And then long standing companies including SunPower Global Solar Pioneer that's based here in California, went out of business and a lot of small contractors left the business as well. And, and the total adoption rate is about half of what you would expect it to be based on before the transition. Immediately before the transition, there was a surge in solar contracts getting signed because the rules were about to change. But if you take that out and just look at the rate before that surge started, we're at about half of that level. So we believe that the market should be twice what it is right now and then growing from there. We're in a climate crisis. We need more solar. And the state should really be making sure that the background policies are such that there's a good opportunity for a wide market for solar.

[Severin Borenstein]

Severin, I want to hear your take on this too, because you wrote a blog post recently for the Energy Institute at Haas blog that you write frequently.

[Brad Hevner]

The headline was Guess what Didn't Kill Rooftop Solar.

[Severin Borenstein]

So I'm guessing you might have a different perspective here on what's been going on in the rooftop solar market than.

Brad yeah, there's no question that the change in policy was a setback for rooftop solar. But if you look at the new adoptions in the first half of 2024, which is the most recent data available, they were already back up to the level of 2019. 2019 was a really good year for the rooftop solar industry. By their own recognition, the industry was was touting how well they were doing. The change, no question about it, caused a huge run up, a 4x run up in new installations and then completely predictably a crash afterwards. And it did take a while to get back from that crash. But if you look at the total installations starting from the date that the change was announced going forward 18 months, it is higher than going backwards 18 months. So it's not the case that this killed the industry. It is the case that it pulled forward a whole bunch of installations. And of course that created a whole bunch of new jobs temporarily. And then those jobs went away after April 2023 because we saw far fewer people selling the product or processing the applications. And then eventually, although it took a while, fewer people installing the solar because they had a huge backlog and it took pretty much the rest of 2024 to run through that backlog. Where we are now is not where we were a month or two before the change in policy. It's where we were in 2019. I think that that is a step towards right, sizing the industry because not just the change in policy, but the huge run up in rates in California and the public safety power shutoffs had caused this burst of demand.

That wasn't public safety power shutoffs for when the utilities were intentionally shutting off power because of wildfires.

That's Right.

So you're saying that was driving more.

No question. And in fact, the industry also was saying that that was a big factor.

[Brad Hevner]

So, Brad, I can see you're going.

[Severin Borenstein]

To want to respond to some of this because you've been making some faces at me here and I'm going to give you a chance to do that. But let me ask Sever to follow up first. So basically it sounds like you were saying that because people knew that this policy change was probably coming, that net metering was going to be reduced, which did ultimately happen, that there was a surge in demand and that that inflated the numbers. You said temporary jobs is what you called them, were created. And the industry, use your words here. Right. Sized itself.

[Brad Hevner]

I guess one thing that I'd be.

[Severin Borenstein]

Curious to ask you in the work that you've done, what do you see as being sort of the appropriate role or the best role for rooftop solar to play in meeting California's CLE energy and climate goals? Because I think there's a lot of different views or perspective on where rooftop solar fits into the sort of broader clean energy picture in California. So I'm curious to get your take on that.

Well, I'm an economist and my role, I think is not to pick technology winners, but to recognize that there are a lot of technologies and try to create a landscape where all of them can provide the most value possible. I think there are two separate questions when we get to rooftop solar. One is how much rooftop solar there should be and the other is who should pay for the extra cost of rooftop solar, which is more expensive than grid scale solar. And I think on the first grid.

Scale solar being big solar farm, those big solar farms.

And I think on the first question, how much. The rooftop solar industry actually commissioned their own study of this a few years ago by Vibrant Clean Energy. That study said that in an optimized system, rooftop solar nationwide would provide about 5% of all of the energy and in California would provide about 7% of the energy. We are over double that now in California. Again, if the cost came down, if we got to Australia level costs of rooftop solar, where it is about a third the cost of installation. Rooftop solar should have a much larger role, but it is quite expensive in California and unfortunately we haven't brought those costs down. And at these cost levels, I think the role should be more limited. By the way, I don't agree with that rooftop solar study. I think it overstates the role of rooftop solar by making some very generous assumptions about how it saves costs on distribution and Bundles it with rooftop solar, with batteries. But even if you take their numbers, we're way past the optimal level.

Lots going on here. Brad, where do you want to start? Because I can tell you have stuff to say.

[Brad Hevner]

Well, Severn, I don't know where you're getting this temporary hiring fact. I think you're making that up. I talk to these solar companies all the time. I represent them, and they were not hiring temporary or permanent jobs after the transition between net metering and net billing. They were laying people off. We lost 17,000 jobs. And, you know, that's a lot of good trained people earning, earning a living wage and feeding their families. And they went away pretty quickly. There was an increase in contracts signed before the transition. Those were installed over time, which, which reduced the layoffs is what happened. And then, and then it spread out. Delay delayed the layoffs, but those layoffs did happen. And the industry, solar businesses, knew that the first few months after this transition were going to be tight, that there'd be nothing going on, no activity, because we did a bunch of sales before the transition. There's going to be a few months after the transition where new sales don't come in. It's now been almost two years and we have not seen the uptick. It's been really scary talking to solar contractors where for a while they said, yeah, it's tough, but we're hopeful. And then for a while after that, they said, yeah, this is really going on longer than I thought and I'm starting to get scared. And then after that, shutting down their businesses and saying, it's been a year and a half, it's been almost two years and we still haven't seen the uptick. So Your comparison to 2019, Severin, is false. You looked at a partial year of 2019 compared to a partial year in 2024, and it's not a comparison. And the average monthly installation throughout the year, so it's back further than that. But even with that, I don't know why you're celebrating that we go backwards in the market when we need more solar in California, and you say that you're not in the business of picking winners and losers, but, Severin, you've been trying to pick a winner and encourage a winner for 15 years. You've been dissing rooftop solar. 15 years ago, you said it was a bad deal. You thought customers were going to lose money. You said that residential solar wouldn't take off after the end of the solar subsidy in 2012. You were wrong on both of those. You said that solar would increase dependence on fossil fuels because the sun doesn't shine all the time. You're wrong. And you have been consistently promoting a pro utility message, building yourself a platform from the ivory tower and arguing against rooftop solar. You're absolutely trying to pick winners and losers. It's not appreciated. I don't think that you're an unbiased observer.

[Severin Borenstein]

I don't know how much moderating I have here to do. I'm just going to give the floor back to Severin.

Okay. When I made comments about the cost of rooftop solar, it was drastically more expensive than it is today. And frankly, I did not foresee the drastic run up in utility prices. So I thought people installing back then would lose money, but I also thought it was their business. The issue I was more worried about, and I have no bias, I would love to say rooftop solar is a great deal. And by the way, I wrote a paper back in 2006 that said grid scale solar is too expensive. And I have completely changed my mind on that because grid scale solar got a whole lot cheaper. And so when the facts change, I change my mind. As far as going back to your comment on hiring, the CEO of sunrun.

Herself said that sunrun being the biggest rooftop solar installer in the country, for those who may not be aware, said.

Herself that they were a little worried at first, but now they are. Things are going well. If you look at the industry's own numbers on employment, you see a downward glide for many, many years, long before any of this discussion, because they've gotten a lot more efficient at installing. But you also see that flattening out in the last few years before the change in policy. And then, yes, it dropped. What happened is if you draw a line through that downward slope is it now has caught up with where it would have been. But that's not because of the rooftop. But if you just look at new systems, they're back to 2019 levels. Now we can debate what the right level is. And I can bring up the study that the rooftop solar industry paid for that says it should be much smaller than it is. But the reality is this is not an industry that's dying. Some companies are going out of business and some companies, apparently, at least they're telling their shareholders that they're doing just fine. So I don't think, I'm not making anything up. I'm not biased towards utilities. I invite anyone to go on my website and read all of the blogs I've written, including the ones critical of a too High rate of return allowed to the utilities, including the ones that have been critical of their lack of adoption of real time pricing. So I am not trying to promote utilities. And while you make that point, the industry often says, well, it's big utilities, the for profit utilities who are trying to slow us down. First of all, NRDC shares this view. Natural Resources Defense Council and environmental group, the Utility Reform Network, a consumer protection group, the cpuc, the California Public Utility Commission's own public advocate office. But even beyond that, if you compare rooftop solar penetration in the three investor owned utilities in California, that's Edison, PGE.

And San Diego Gas and Electricity to.

The adoption in the municipal utilities, Los Angeles Department of Water and Power, Sacramento Municipal Utility District, Alameda, Palo Alto, they are twice as high as they are in those munis.

I want to let Brad weigh in here, especially on this question of investor owned utilities because I think you were starting to say, Severin, that you're skeptical that the big monopoly utilities are trying to do away with rooftop solar here. But I want to hear what Brad has to say about this because a lot to respond to.

[Brad Hevner]

Well, the conversation we should be having is about the utility rate of return and the runaway spending.

[Severin Borenstein]

And that's the rate of return, by the way. That's upturn, meaning profits, basically.

[Brad Hevner]

Yeah, we should be talking about utility profit levels. The runaway spending that is the real reason for driving up rates. The failure of the regulators to check the spending of the utilities. Severin, you should be thankful about this study that we funded. You portray it as us being biased and you not having a bias. But hey, I work for the solar industry. I work for solar businesses in California. I'm proud of that. There's a reason for that. I love them. They are doing good work and they are a strong voice. They should be respected. You work for utility interests. You get a salary from the Cal ISO grid operator.

[Severin Borenstein]

No, come on, stop, stop, stop. I'm sorry, Sammy.

[Brad Hevner]

No, this is bias.

[Severin Borenstein]

You can't. If we're going to go here and start saying that I work for utility interests.

[Brad Hevner]

You are supported by utility interests.

[Severin Borenstein]

We get 3% of all of our funding from utilities. We get more than that from municipal owned utilities and CCAs, we get far more than that from the, from the foundation. So this idea, 3%.

I just want to clarify what's being said here a little bit. What Brad is referring to is that Severin chairs the board of the California Independent System Operator which oversees the balancing authority for the state of California, which oversees the grid operated by the investor owned utilities.

Oh, I'm sorry, I thought you were using.

Weren't you referring to the ISO bread?

[Brad Hevner]

Yes, yes, your work for Cal ISO.

[Severin Borenstein]

Long before Severin was appointed to that position, he's been a professor at the Energy Institute at Berkeley, which I've looked into and received a very small percentage, I think about 3% is what you said, Severin, of its funding from investor owned utilities. And Brad, I do wanna say, I have looked into that and as Severin said, the Energy Institute receives the vast majority of its funding from non utility sources. And we've talked about that before, so I do wanna make that clear to folks.

[Brad Hevner]

I see that. And yeah, the $220,000 they've institute is probably small in comparison to other sources, but it's still real money. But I'm more referring to two things.

[Severin Borenstein]

Look, I'm not that interested in getting into this debate here.

[Brad Hevner]

If he's attacking my credibility is biased, I take issue with that. And I think that his work building a career as a utility.

[Severin Borenstein]

I didn't attack your credibility as biased, Brad.

[Brad Hevner]

I didn't take credibility the utility grid operator. It's just not fair. This is utility versus solar. That's true. It's fair. We can talk about utilities versus solar.

[Severin Borenstein]

Okay, so basically anyone who doesn't think rooftop solar should be massively subsidized is part of the vast conspiracy trying to kill the industry, including utilities, including publicly owned utilities, including state agencies. Come on, Brad. Everyone who is looking at this, who is well informed, who is serious about this, is coming out with these conclusions. NRDC is not an organization that is in bed with the utilities. The Utility Reform network is constantly at loggerheads with the utilities. The public advocates office is constantly trying to get money back from the utilities. So I really, you know, just claiming everybody who doesn't agree with you is biased. I didn't attack your credibility, Brad.

[Brad Hevner]

You said that I have a bias and my bias is clear. And so we have offered a fresh perspective on this analysis of the cost and benefits of solar. We funded an economist to do a study that took a different approach towards measuring the costs and benefits of rooftop solar in California.

[Severin Borenstein]

You're referring to the work that Chris Clack did at vibrant.

[Brad Hevner]

Richard McCann published a study.

[Severin Borenstein]

Oh, you're talking about Richard McCann's work.

[Brad Hevner]

Okay, yeah, we recently hired the this economist because we're tired of being scapegoated. Look, the utilities are acting rationally. They absolutely see us unfortunately as their competition. And they have long been putting up barriers Obstacles to rooftop solar adoption. They've been fighting against us at the utilities commission, in the legislature, and they're acting perfectly rationally because their profits are tied to the amount that they spend on the electric grid. The more money they spend, the more money their shareholders get. They have a fiduciary responsibility to shareholders to spend more money on the grid. This is a perverse incentive, and it's logical that they would fight against customer solar. It creates sort of a utility machine, the public advocate's office turn even, and I might even say some in the ivory tower who are just part of this whole machine sing from the same song sheet. And it's driven by the utilities, and it creates a platform to be heard. I think that it's really striking, Severin, that you haven't looked at Dr. McCann's work and said, yo, that's interesting. He has taken a couple of different approaches here that are actually interesting. There are some flaws in the traditional utility methodology for measuring the costs and benefits of solar. And let's get together and think about improving our collective analysis of this important question. And you've been completely dismissive. You haven't recognized that this study includes things that the traditional utility methodology ignores. And I wish that you would embrace this fresh perspective.

[Sammy Roth]

It's sort of very similar as to being a foster parent. You go in it not for the length of time, but to know that even two months or 10 years can still create a big impact in a child's life. So CASA is a nonprofit organization that stands for Court Appointed Special Advocate. And they specialize in making sure that the child's needs are met, whether it's medical, health, educational, and ensuring that the child is receiving the most ability they can.

[Severin Borenstein]

I'm going to step in for a moment here and ask each of you a question because you know, this is getting a little bit heated and you're both, you know, shaking your head pretty hard. And I want to ask each of you a question and ask for a yes or no, and then I promise I'll give you a chance to expand. I promise. But let's start with a yes or no. I think there's sort of a fundamental point being made by each of you and sort of each side of this argument here that there's maybe disagreement on. So I think from folks who are less favorable to rooftop solar, there's long been this idea of the cost shift. And I'm just sort of catching folks up to speed here who might be new to this conversation, of whom I assume there are a Few people listening to this because not everyone's been so steeped in this for so long. There's this idea that this net metering program that for so long has made it more advantageous to install rooftop solar by compensating people who have rooftop solar at retail electric rates for the electricity that they produce. That that has hoisted costs from people who install solar onto other electric rate payers and thus driven up electric rates because people who have solar don't have to pay as much. This is called the cost shift. And Severin, you've written about this and others have as well. Brad, I want to ask you because there's a lot of folks who believe that this is one of the reasons that electric rates have gotten much higher for customers of Edison, PG&E and SDG and E. Does the cost shift exist? Is it a real thing? Yes or no?

[Brad Hevner]

No. Solar reduces rates for all repairs.

[Severin Borenstein]

Okay, you added a few more words there, but I'll take that as close to a yes or no. Severin, let me do the yes or no for you. On the other side of this debate, there's a pretty fundamental belief and argument that the utility companies, Edison, pge, SDG and E are. And Brad articulated this a minute ago, and it's a little less complicated to explain that rooftop solar cuts against their.

[Brad Hevner]

Business model, that the more rooftop solar.

[Severin Borenstein]

Grows, that they are going to make less money because they have less infrastructure to build and that that eats into their profits. And that therefore they have a strong motivation to fight rooftop solar and to inhibit its growth. And that they have done that and have been very successful at that. And that that has been a motivating factor for the utilities for a long time. Do you think that is true?

I think that effect is so small that it is just not something they spend a lot of time worrying about. And if it worked, utilities.

We did a yes or no here. Wait, yes or no. Okay, so basically you both said no. So clearly we have a very, very fundamental point of disagreement here. And I think that this is one of the reasons why it's been so, so difficult to bridge any of these gaps. Do either of you have any ideas? And whichever one of you wants to answer first, how do we start to bridge these gaps? Because I've been covering energy for 10 years in California, almost 11 now, and you guys have been doing this a lot longer than I have. I think if we can't agree on such sort of fundamental ideas and beliefs about what's really happening at the heart of this conversation, how do we move forward to get to a place where we can continue to promote clean energy, rooftop solar and other kinds, and move forward together on such a fundamentally important issue of clean energy and climate policy? Because it's not like one of you is a climate denier and one of you is a climate scientist. You both want to solve this problem, but it's just there's such a fundamental disagreement about what's actually happening.

[Brad Hevner]

How do we move forward from here? What do we do next?

[Severin Borenstein]

Because this isn't working.

[Brad Hevner]

I'd like to talk about something that I think Severin and I agree on.

[Severin Borenstein]

Okay, that sounds great.

[Brad Hevner]

That utilities are very hard to regulate. That the whole process is kind of a little rotten where the utilities sort of do their own analysis and what's needed for grid safety and say we need to spend $8 billion on grid upgrades this year. And you have to trust us because we know what is needed for safety and reliability. And the regulatory commission doesn't really have the chops to challenge that. And they're afraid of saying no and risking safety. And approved nearly all of the utility spending plans year after year after year. And this is the real reason we have high rates in California. I wish that the regulators were more well compensated. There were more of them. They had a bigger budget to really dig in and say no. You are clearly feeding shareholder profits and your spending needs to be frozen and you should stop driving up rates. And that's really the fundamental thing. Let's do more detailed accounting and auditing of utility expenses. Let's bring in non utility people to help with their spending planning and do this really on the behalf of ratepayers, not just trying to serve the utilities. Because how to get more money from different, all the different customer groups, solar users and others, in order to feed runaway utility profits and spending is not the exercise. That's not what we should be talking about is like how to squeeze customers and feed these runaway spending spending plans. We should be talking about how to reverse the runaway spending.

[Severin Borenstein]

Okay, I will actually answer your question. Which is the way to get more common understanding, I would argue is the same way we should be doing it in Washington D.C. right now. Independent analysis by unbiased parties. Now we're not doing that. The Public Advocates Office of the cpuc, the Utility Reform Network was hardly considered unbiased, but they were not considered to be in the pocket of the utilities. The Natural Resources Defense Council was generally antagonistic to the utilities. So all of these organizations are doing analysis and are trying to find truth as Long as it is somebody who is not being paid by either side. I take their studies very seriously. I even take Rich McCann's study seriously. And although Brad says I haven't read it, I have responded to it in some detail. Look, utilities are hard to regulate. There's no question I would. Given that we're going to have investor owned utilities, we should be spending a lot more on the regulatory process. But let's not forget we have publicly owned utilities in California. They have far lower penetration of rooftop solar. They have far less solar friendly policies. So this is not unique to investor owned utilities. And maybe they're part of the conspiracy too, but I don't think so. I think that all of these organizations, the Sacramento Municipal Utility, ladwp, Palo Alto, all these others, and the Public Advocate's office whose business is to protect ratepayers and NRDC and turn who are very much on ratepayer sides and have been all of them are saying there is a huge cost shift here. I am also saying that I don't have a track record of being on the utility side. I just call it like I see it. I am on the board of governors of the California Independent System Operator and.

Forgive me, I said you were the.

Comment that long before I got on that I was already saying things that he didn't like. So that's not the explanation.

Yes, it sounded like you agreed that there needs to be both. You agree there needs to be more funding for the puc.

Absolutely.

So that's a small point of agreement. But anyway, Brad, I think you were.

[Brad Hevner]

Going to respond and I mean you're not alone in commenting on these issues amongst academics in California. Your own colleague at UC Berkeley, Dan Kammen, says that the Kashif methodology is not credible and that Richard McCann's analysis is more correct. Mark Jacobson at Stanford, one of the leading experts on how to get to 100% clean energy in California, he's really leading the charge on that research, says we can't do it without a lot of rooftop solar and that the cost shift methodology is incorrect. Ronnie Lipchitz UC Santa Cruz Dustin Mulvaney San Jose State these are other researchers on energy issues in California that strongly disagree with Dr. Borenstein. Then in terms of public advocate's office, it's just really sad to me that they go away.

[Severin Borenstein]

And the Public Advocates office for those who don't know, by the way, that is the ratepayer watchdog office within the cpuc. So it's independent of the rest of PUC staff. Its director is Appointed by the governor?

[Brad Hevner]

Yeah, appointed by the governor. And they're embedded in the puc. And it's sad that they've kind of become part of the machine and that they agree with the utility scapegoating of rooftop solar when the clear evidence shows it's almost indisputable. The reasons why rates are high in California is because utility spending has increased, nearly tripled in the past 12 years on grid expansion. They have tripled the amount of money they spend on the grid, and their profits have gone up in a similar curve. $2.5 billion last year for PG&E, $2.2 billion profit from Southern California Edison. And the public advocate's office is understandably frustrated that they can't rein that in. But they need to just redouble their efforts and focus on the true problem rather than giving in to the utility scapegoating of rooftop solar. Which again, I don't really want the utilities to think of us as competition. I don't think they should, but they do. Because we do take weight off the grid. We do cause less need to expand the grid, which is what feeds their profits. And this mentality that protecting the utility and serving the grid is the first order of business is just wrong. Customers should be first. We need to serve customers and overbuilding the grid is not the way to do it. Yes, utilities need to be there. We need to make sure that they're available to roll their trucks and fix the wires, but they're not going anywhere. They will have a guaranteed rate of return on that work. And we should be focused on not having customers serve the grid, but having all of us serve customers. Especially at a time when we are going to greatly increase our energy consumption in California through electric vehicles and electrification of buildings. For 20 years, we have remarkably kept our state energy consumption, the peak consumption, flat without increasing the peak needs. And you build the grid to serve the peak. I mean, you need to build enough grid capacity to deliver the most you ever need. Okay. And so when we reduce that peak, we reduce the need to expand the grid.

[Severin Borenstein]

So you're talking about all of the various benefits of rooftop solar, which frankly I would add, and this is one that I want to get to in a minute. And Severin, I'll bring you in after this, is that. I can't believe we've gotten half an hour. I write a lot about environmental consequences of large scale solar. And if anyone reads my writing, they know that I'm well aware. And I write about all the science showing we need a huge amount of large scale solar. But one argument I think for rooftop solar is that it doesn't have ecological consequences in the desert in the same way that large scale solar does. But Severin, you've been waving your hand at me here and I want to bring you in. And then I want to weigh in too and pose a couple things because I don't want to make people listen to us forever and ever. But Severin, what are you thinking about?

Okay, first of all, Brad talks about how the utilities are still going to be here. And that's absolutely right because the rooftop solar has only a tiny effect on the utilities. The utilities we're talking about, PG&E, Southern California Edison, San Diego Gas Electric, are not in the energy business. They are in the grid business. And we're still going to need the grid, as Brad just said. And rooftop solar saves us almost nothing on that grid. We're still going to have those wires. We're still going to have to insulate those wires. We're still going to have to underground some of them, though not nearly as much as the utility PGE wants to. All of those are just, are still going to have to happen. And that means all of those costs still need to be paid. And we pay those costs through our per kilowatt hour charge, what you avoid when you put in rooftop solar. And that's where the cost shift comes from. We pay as residential customers about 40 cents a kilowatt hour. The utility saves less than 15 cents a kilowatt hour. That difference has to be paid by somebody else. Secondly, you can't just keep harping on how the utilities are trying to beat up on rooftop solar and ignore the fact that we have publicly owned utilities or maybe they're part of the machine too.

Sever, you've made this point a couple of times already. I think it's been stated. I think something that's going to be illuminating about this for people listening to this conversation, regardless of whether they understand all of the details, which a lot of people won't, sorry, is that this illustrates why it's so difficult to make progress on and come to agreement and to move forward peaceably on rooftop solar policy because there are so many fundamental points of factual and philosophical disagreement.

[Brad Hevner]

And as you can probably tell from.

[Severin Borenstein]

The articles I've written on this topic recently, it is frustrating for me personally and clearly even more frustrating for you guys because you're in the trenches on this one and I'm just a journalist who happens to care about this stuff. I think an observation that I want to make writing about these issues. I've just.

[Brad Hevner]

I get such strong reactions depending on.

[Severin Borenstein]

What angle I'm coming from when I write about it. I write one thing, I get accused of being a stooge for the utilities, and I write another thing and I get accused of not knowing what the hell I'm talking about. And don't I understand simple economics. Can I answer? No, hold on one second. My view, as expressed in all of my stories is we need a lot of all of this. You know, like, let's do it all in combination and resolve these, you know, these, these plot twists and conflicts and, and move past this. But it's hard for me not to think that there's a deep ideological component factored into this as well, where we're getting stuck in these ruts on climate because people on different sides of this. And I know you're probably thinking, Brad, yes, that's Severin's problem. And I know you're probably thinking, Severin, yes, that's Brad's problem. Even if you're not thinking that about yourself necessarily, that there's an ideological component to this debate. What do you guys make of that?

[Brad Hevner]

Whoever wants to go first?

[Severin Borenstein]

Well, I'm going to go first this time. First of all, I have no money on the line on one technology versus another, and I have changed my mind on many technologies and I have hoped for every technology. It's really easy to get me excited about technologies because I don't know anything about them. But I think there are two separate questions here. As I said at the beginning, how much role should rooftop solar play and who should pay for it? If there were a separate debate that said, boy, what Sammy thinks we need a lot of rooftop solar because we need a lot of everything. But what the numbers clearly show, which is there's a big cost shift from rooftop solar, pay for it through the state budget, Severin.

That's what I said in my most recent column.

Great. You and I are in agreement on that. But the state budget isn't doing it. So what we're doing instead is we're paying for it through taxes on electricity. And those taxes disproportionately hurt poor people. And so the reality is that's what we are doing. I would love to have a impartial, data centered discussion of the cost shift, but I think that should be separate from the discussion of how much solar do we need, because the cost shift numbers, I think, are really hard to argue with. And independent people who study that agree but who should pay for it if we're going to go ahead and have solar? I think that there's a clear answer. I don't agree with you by the way. I think I agree more with the vibrant clean energy study which says it should play a pretty small role.

Brad, your turn.

[Brad Hevner]

Well, the numbers are just wrong. They're false and it's really sad to see so many people acting with a pro utility message which is feeding their storing profits. And we need to get to a decarbonized grid and rooftop solar needs to be a big part of that. Part of the reason I like doing this work. I've been doing this type of clean energy work for 25 years and I believe both in climate responses but also democratization of energy and that monopolies are inherently a dangerous thing that aren't necessarily in customers best interest. We should be elated that customers have been willing to invest their own money. They're spending the money or they're signing long term agreements to lease their solar systems to the benefit of everyone. The fact that it also reduces the need to build the grid, it's not reducing usage. We're growing our usage. We're using more energy and we would have been using more energy for a long time were it not for the amount of rooftop solar we've built. That's good for people, that's good for all ratepayers and we should be thankful of the customer investment that democratically is saying hey, I'm going to be part of this clean energy revolution and I'm going to do my part. Especially as everyone is adopting electric vehicles around the state. We need more power everywhere. A lot of it will come from utility scale and we will increase our transmission network and the grid capacity. We need to, we need a lot more of everything but we need a lot of it locally where the power is being generated. Because if we're asking the utilities to build our way out of this electric increase in usage, that's going to be the worst decision that we could possibly make. We're going to increase our usage a lot. If we get it all from far away power plants and long distance transmission lines, utilities would be overjoyed. But consumers would hurt.

Brad, one point that Severin has brought.

[Severin Borenstein]

Up that I do want to ask you about before we close this out is there, I mean you've said that the analyses that have been done by Natural Resources Defense Council, Utility Reform Network, Public Advocates Office, you're not a fan of those outside of the analyses that the solar industry that you guys have commissioned. Are there any other analyses that you would point people towards that you trust?

[Brad Hevner]

Well, no. And even the Vibrant was not. It was kind of a quick job in the California version of their study. I wasn't really.

Well, I want to thank you both.

[Severin Borenstein]

For being with us here on the podcast. I know this hasn't been the easiest or maybe most fun conversation for either with you, but I think it's meaningful that you both agreed to do this and took the time. I hope listeners will find it illuminating. And I want to thank my producers of this podcast, Mary and Jonathan, for making the effort to edit this, which I'm sure will not be their their easiest work either. So, Brad, Severin, Mary, Jonathan, thank you all very much.

Thank you.

[Brad Hevner]

So after all that, you might be wondering who's right about rooftop solar. I've written dozens of stories about this.

[Severin Borenstein]

Over the last decade, and if you.

[Brad Hevner]

Want to know what I really think, go read my most recent column, the.

[Severin Borenstein]

One I referenced at the beginning.

[Brad Hevner]

You can find the link in the.

[Severin Borenstein]

Show notes for right now though, my.

[Brad Hevner]

Biggest takeaway is that people who care about the climate crisis should stop fighting and start working together. I know that's not always easy, and I know it didn't work so well this time on this podcast. But we have to keep trying. We don't have a choice. Thank you for listening to Boiling Point. I'm your host, Sammy Roth. My producers are Mary Knoff and Jonathan Shiflet. Sound design and original music by Jonathan Shiflett. Elijah Wolfson is our editor. Denise Callahan is our studio manager. Ben Church is our Production manager. Nick Norton is our engineer. Special thanks to LA Times Studio President, Anna Magzanian, President and Chief Operating Officer of the Los Angeles Times, Chris Argentieri and Executive Editor of the Los Angeles Times, Terry Tang. Boiling Point is executive produced by Darius Derekshan and created by me, Sami Roth.

[Sammy Roth]

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