The California Supreme Court on Thursday ordered a lower court to reconsider a state policy that reduced how much utilities have to pay homeowners with rooftop solar panels for the energy that they send to the electric grid.
The court did not deem California’s policy illegal but said a State Court of Appeal had erred in affirming the policy without fully reviewing it and by being too deferential to state regulators.
The rooftop solar industry and its allies hailed the decision as a big win and said it could open the door to reversing a policy that has sharply reduced the installation of solar panels on California homes over the last two years.
“Justice is served, and the sun shines a little brighter on California today,” said Bernadette Del Chiaro, senior vice president for California at the Environmental Working Group, one of the parties that challenged the state policy.
In 2022, California’s Public Utilities Commission significantly reduced the compensation that homeowners receive for the excess electricity they send to the grid, undercutting a business that had its origins in the state. The new policy applied to solar systems installed starting in April 2023.
Other states have made similar changes in recent years, making it difficult for rooftop solar companies to operate. Partly as a result, several big rooftop solar companies, including Sunnova and SunPower, have filed for bankruptcy in recent years.
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