California's New Solar Public Works Law (AB 2143): An Example of California’s Recent Leadership Failures on Solar and the Climate Posted on Jun 18, 2024

It appears that California’s prior solar policies were too successful. California's policymakers have been rushing to stop a solar industry that they helped create.

The solar industry that California helped to create through policies supporting private ownership of solar systems is being dismantled one law and one regulation at a time. Over the past couple of years, just a few of the regulatory and legislative decisions reversing California’s progress on solar energy development are, as follows:

• NBT (“NEM-3”). In April 2023, the CPUC drastically reduced the amount of bill credits solar system owners receive from the utilities for their solar energy production sent to the electric grid:
• California cuts rooftop solar net metering: An industry reacts 
• California Supreme Court takes up NEM 3.0 case against the CPUC 
• California regulators cut incentives for rooftop solar even further 
• The solar battle continues: Opponents of California’s new rules seek a rehearing 

• VNEM/NEMA. In November 2023, the CPUC revised the solar rates for multi-meter properties, like farms, schools and rental housing, rendering it nearly cost-prohibitive for them to install their own solar systems:
• California makes it harder for schools farms and rental housing to go solar 
• CPUC undermines the economic value of California schools, apartments going solar 
• California reduces payments for rooftop solar power — for second time in a year 
• California Microgrid, DER Communities Seeking Legislative Reversal of CPUC Net Metering Decision 

• AB 2143 New Solar Public Works Law. In January 2024, the California legislature mandated that all commercial solar and solar plus storage systems, regardless of system size, installed under net energy metering or net billing tariffs, all multifamily housing projects greater than two stories and larger than 15 kW, and any interconnection applications to increase a commercial solar system size or pair energy storage to a commercial solar system are “public works” projects:
• Prevailing wage and apprenticeship requirements bring new challenges to large solar projects 

• Community Solar. In May 2024, the CPUC decisively rejected a proposal to create a viable community solar program:
• California regulators reject plan that would’ve boosted community solar 
• CPUC proposal approves utility-backed solar plan over community solar 
• California PUC policy proposal “significant misstep” for community solar growth 

Perhaps, the best example of the muddy waters in California’s current solar policy and legal landscape lies in the adoption and implementation of California new solar public works law (AB 2143).  

Originally, the solar industry understood that AB 2143 solely required prevailing wages and apprenticeship rules on larger solar projects, like commercial solar systems, that connected to the grid through a NEM or NBT tariff. Last month, the California Department of Industrial Relations (DIR) in charge of enforcing the labor requirements on AB 2143 solar projects stated that all of the projects are “public works." This means that anyone who wants to install a solar system in California that is subject to AB 2143, such as a commercial solar system owner connecting to the grid through NEM or NBT, is an “awarding body” under state law.

California’s definition of “Awarding Body” is “any kind of public agency or official (state, county, city, school board, water district, etc.) or a private entity using public funds.” It is unclear how the California legislature concluded that a private business buying a solar system from a private contractor that connects their solar system to one of the State’s privately owned IOUs, such as PG&E, to receive a state mandated amount of bill credit for their solar energy production is a “private entity using public funds.”

As a result of California's new solar public works law, every local coffee shop in California that wants to buy a solar system connected to the grid under NBT or NEM is a public works project. A Swiss cheese of regulatory requirements involving the California Public Utilities Commission and DIR must be navigated by these small business owners. Meanwhile, legal challenges to the law’s constitutionality are highly anticipated.

The solution rapidly deploying in California to the problems created by AB 2143 is for all larger solar systems to be built with onsite storage and to not be interconnect to the grid under NBT or NEM. Ironically, this means that the lengthy fight over NBT terms over the last several years becomes somewhat obsolete. If a solar contractor fails to meet California's new solar public works requirements, then customers lose their NEM or NBT arrangements with their utilities and are put on the less advantageous electric rate (PURPA rate).

It is well understood that the distributed solar industry is relatively small compared to utility scale energy companies. The latest pivot being imposed on this small industry is just another steep hill on the “Solar Coaster” powered by its passionate base of individuals and businesses with sufficient roof and/or ground space for a solar system.