Power companies in the state, the nation's biggest for solar power, are required to buy electricity from home solar generators at the same price they resell it to other customers, meaning utilities earn nothing to cover their fixed costs. The rules are shortsighted because eventually rates must be raised to make up the difference, according to Southern California Edison, which has joined with competitors to estimate potential losses.
As more homes and warehouses get covered in solar panels, higher rates imposed on traditional consumers risk a growing conflict between renewable-energy advocates and power companies that foresee a backlash in California and 42 other states with similar policies. The tension has also emerged in countries including Spain and Germany, where solar investments are curbing investment in the power grid.
"You get into a situation where you have a transmission and distribution system with nobody paying for it," said Akbar Jazayeri, vice president of regulatory operations at Edison, a unit of Edison International and California's second-largest electric utility.
To deter losses as solar abounds, states typically set a cap on the amount of photovoltaic power utilities must buy under what is called net-metering policies. Those allow a meter to run backward during the hours a day when a home or business is selling the power to the utility. California's limit is 5 percent of a utility's aggregate peak load.
Read More: SFGate