People with middle-class incomes are the biggest adopters of rooftop solar in states with the largest markets, a study said yesterday.

In Arizona, California and New Jersey, installations are "overwhelmingly" in neighborhoods where median incomes range from $40,000 to $90,000, the Center for American Progress (CAP) analysis said.

"Middle-class homeowners are overwhelmingly taking advantage of rooftop solar," said Mari Hernandez, research associate at CAP. "It really is becoming more of a middle-class tool and a middle-class energy resource.

The study challenges recent statements from some electric utilities, Hernandez said, that solar largely is the province of the rich and that consumers without solar subsidize those with rooftop panels.

The growth of solar and who receives benefits from it have been hot topics politically in states that include California, Arizona and Colorado. Utilities in those states have argued that changes in rates and fixed fees are needed because of net energy metering, a system that gives people with renewable power bill credits for surplus electricity sent to the grid. Utilities say customers with solar don't pay their fair share of transmission and distribution charges.

A draft study last month from the California Public Utilities Commission, or CPUC -- one ordered by the Legislature -- agreed, saying that homeowners with rooftop solar pay less than they should for electricity. It also found that net metering will cost the state's three large utilities $1.1 billion per year by 2020, about 3.2 percent of their expected revenues (ClimateWire, Sept. 30).

Utilities in California said they couldn't quickly address details of the CAP study. But in comments this month on the CPUC analysis, they contended that solar with net energy metering creates inequities.

"The majority of the cross-subsidies in [Southern California Edison's] territory overwhelmingly benefit high usage residential customers at the expense of customers that cannot or do not install solar PV," the utility also known as SCE wrote. "Systems that allow customers to avoid full retail rates, like [net energy metering], create subsidies paid by non-participating rate payers."

Pacific Gas and Electric Co., or PG&E, in Northern California has the highest number of rooftop solar customers in the country, with more than 95,000 as of September. That's growing by about 1,800 installations every month.

"We definitely agree that rooftop solar's come of age," said PG&E spokesman David Eisenhauer, referencing the CAP report. "Installation costs have dropped. We're really encouraged to see more and more people installing rooftop solar across all income levels."

National implications
Rooftop solar currently constitutes less than one-quarter of 1 percent of the electricity produced in the United States, the report said. In California, however, it is 1 percent and projected to grow to as much as 4 percent over the next decade. Utilities see that as a threat to their profits, solar advocates have said.

The fight over net metering has national implications, Hernandez said, as 43 states have some form of the system. Many are grappling with how to go forward as solar popularity surges.

"Regulators and policymakers should consider that it's not just wealthy customers that are adopting solar," Hernandez said. "This is actually bigger than that. This is something that has become something that is really important to the middle class and is being heavily adopted by the middle class.

"Changes to net metering will not only affect wealthy customers. They will affect middle-class homeowners," she added.

Some changes already are underway.

Arizona Public Service Co. in March increased its customer charge, a move it said was needed to fund fixed costs fully as more customers add solar. California utilities have lobbied for changes that included higher fees and a cap on the number of people who could use net metering.

The Golden State earlier this month enacted A.B, 327, a new law that imposes a rewrite of electricity rates. It protects net metering for the next few years (Greenwire, Oct. 8). But in 2015, the CPUC is ordered to retool net metering, creating a new program that will be "based on electrical system costs and benefits to nonparticipating rate payers."

The Center for American Progress examined solar installation data in California, Arizona and New Jersey, states that have issued subsidies or tax credits for rooftop solar adoption. Databases from those states provided the income information. The Center for American Progress then looked at census findings to pull median incomes by neighborhood.

The CAP analysis found that in Arizona, 80 percent of rooftop solar installations occurred in neighborhoods with annual incomes ranging from $40,000 to $90,000. In California, 67 percent of adoptions fell within that income band, and in New Jersey, it was 64 percent.

In New Jersey, households with incomes greater than $90,000 made up 32 percent of installations, while that group was 29 percent in California and 13 percent in Arizona.

In the Arizona, the report said, the highest number of installations occurred in ZIP codes with median incomes ranging from $40,000 to $50,000. In California and New Jersey, homeowners with median incomes ranging from $70,000 to $80,000 have installed the most photovoltaic systems.

Conflicting reports
The income data conflicted somewhat with the CPUC report out of California. That said that since 1999, customers with net energy metering "have an average median household income" of $91,210, compared to the state median income of $54,283 and median income in the investor-owned utility service territories of $67,821. The author of that report did not immediately respond to an email asking for clarification on the definition of average median household income.

Hernandez said that she didn't know what data the CPUC report had looked at, so she wasn't able to explain why her results differed. The CAP report looked at information that is part of the California Solar Initiative, or CSI, the solar rebate program offered to customers of three investor-owned utilities: PG&E, SCE and San Diego Gas & Electric.

There's been a shift over time in the income ranges that are adding solar, the CAP report said.

"While it is true that the wealthy are generally the first adopters of new technologies, our research suggests that solar technology has moved beyond the early adopter phenomenon and onto more widespread installation by the middle class," it said.

The most growth in adoptions from 2011 to 2012 came in median incomes ranging from $40,000 to $50,000 in both Arizona and California and $30,000 to $40,000 in New Jersey, it said.

The CAP analysis also found that in Arizona and New Jersey, solar installations are spread evenly across households incomes by ZIP code. In California, the distribution "is the most skewed toward the upper income brackets," it said.

The income issue aside, solar provides benefits to all rate payers, Hernandez said, including avoiding the costs of new power plants and fuel purchases in the future. In addition, she said, the power is clean, with no carbon emissions.

However, PG&E in its comments on the CPUC draft report on net metering said that there are added expenses with the growth in locally based renewable power, also known as distributed generation. Those include "incremental distribution upgrade and integration costs," PG&E wrote.

"When considering the level of [distributed generation] penetration at the newly defined [net energy metering] cap, these costs can be significant," PG&E said. "Recent and ongoing industry studies indicate that clustered [distributed generation] can increase integration costs."

PG&E said it supported the CPUC study not looking at societal benefits of net metering because "[i]nclusion of societal benefits which have no relationship to rates would inappropriately underestimate the rate impact."

Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC., 202-628-6500