CALIFORNIA HAS THE NATION'S LARGEST residential solar market by far, largely due to rate programs and incentives to help decarbonize the state's electricity grid by 2045. Other states have adopted at least some of these programs in hopes of driving similar adoption in their jurisdictions. Now, the Golden State may be at the forefront of yet another solar regulatory trend: officials recently reduced some rooftop solar benefits while maintaining those for home energy storage systems. As California has become a bellwether of grid reform, the move could be a boost for battery makers seeking to expand their market among homeowners. California is home to 38 of U.S. residential solar capacity, according to the Solar Energy Industries Association, with photovoltaic panels topping more than 1.5 million homes and providing about 10 of its power. Homeowners were incentivized to invest in these systems by compensating them for power sent back to the grid at the full retail rate, which includes distribution and transmission fees, rather than at just the avoided cost of the electricity. Called net-energy metering, the program has been adopted by more than 30 other states and helped push solar adoption nationwide. The program's overwhelming success has had downsides. California can now have more electricity than it can use during day, while struggling to meet demand during late afternoon and early evening peak-demand periods. This has forced costs up during those times and sent system operators scrambling for resources. With PV owners getting credited at the full retail rate, more of the cost of maintaining transmission and distribution networks fell on those without panels, often lower-income residents and renters.
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