California’s Solar Equity Challenge

California’s residential solar market is at a critical inflection point after years of strong growth.  Last year the state, which has more rooftop solar than any other, lowered the net metering rate that it pays solar households for the excess electricity that they feed into the electric grid. The policy change contributed to a steep decline in residential rooftop solar installations. This could complicate the state’s task of achieving 100% carbon-free power in just over 20 years.

Yet the reasons behind California’s decision to reduce its solar subsidy are complex, and reflect growing tensions over the private versus public costs of rooftop solar. These costs are particularly controversial in a state that already has among the highest electricity rates in the country, as well as aggressive targets for home electrification.

On the podcast Severin Borenstein, Kleinman Center visiting scholar and faculty director of the Energy Institute at the Haas School of Business at the University of California, Berkeley, discusses California’s residential solar energy policies and the challenge of balancing equity, solar growth, and the pace of electrification. Borenstein also explores the lessons from California’s experience that might be applied to other states where rooftop solar power growth is poised to accelerate.

Full Transcript

Andy Stone: Welcome to the Energy Policy Now podcast from the Kleinman Center for Energy Policy at the University of Pennsylvania. I’m Andy Stone.

California’s residential solar market is at a critical inflection point after years of strong growth. Last year the state, which has more rooftop solar than any other, lowered the rate that it pays solar households for the excess electricity that they feed into the electric grid. The policy change contributed to a steep decline in new rooftop solar installations that is expected to continue this year and which complicates the state’s task of achieving one hundred percent carbon-free power in just over 20 years.

Yet the reasons behind California’s lowering of its residential solar subsidy are complex and reflect growing tensions over the private versus public costs of rooftop solar and over who enjoys solar’s advantages and on whom its economic costs might disproportionately fall. These costs are particularly controversial in a state that already has among the highest electricity rates in the country, as well as aggressive targets for home electrification.

On today’s podcast we’re going to explore California’s residential solar energy policy with Severin Borenstein, Faculty Director of the Energy Institute at the Haas School of Business at the University of California, Berkeley and Visiting Scholar here at the Kleinman Center.

Severin has written extensively about the challenges that face California’s solar sector and how the state’s experience might serve as a guide to solar policy development elsewhere in the country. Severin, welcome to the podcast.

Severin Borenstein: Thanks for having me on.

Stone: Last year California reduced the amount that utilities pay to solar homeowners for the electricity that they provide to the grid. This payment is known as the “net metering rate.” To start us out, could you give us an introduction to solar net metering and explain how it has been used to incentivize solar growth in California?

Borenstein: If we go back to the ’90s or so, when we first started seeing rooftop solar being put onto houses, the utilities and the regulators, the California Public Utilities Commission, had to come up with some sort of tariff to reward that. The technology wasn’t great, and they didn’t actually have a way to separately meter the rooftop solar. When a household put power into the grid, the meter literally turned backwards. So the natural thing to do was to say, “Well, we’ll charge you for the net.” And that’s where net metering came from.

At that time, rates were a lot lower, and we’re not paying for nearly as many things through our rates as we do now, which we’ll get into, like wildfire prevention and so forth. That was the beginning, and it essentially said for households that had rooftop solar, you feed power into the grid, you take power out of the grid. We figure out the net of that, and we charge you for it.

The problem that has grown up over time is that while the price of electricity in California for households has gone way up, the actual value of that power that’s going into the grid hasn’t, really. So these days, we are paying somewhere in the range of 40 cents per kilowatt hour, but the actual value, which is called the “avoided cost” when you inject power into the grid is closer to 10 cents per kilowatt hour. This creates a huge problem because that extra 30 cents is paying for all sorts of fixed costs of the system, everything from the poles and wires to now wildfire prevention, undergrounding the distribution systems, paying for past wildfire damage, and many, many other things.

The problem is that when one household puts in rooftop solar and gets paid 40 cents per kilowatt hour for their injections, the system is only saving 10 cents, and somebody else has to make up the other 30 cents. The way it is made up is they raise the rate for everyone else. Unfortunately, there are many problems with that. It seems pretty unfair to other customers, and those other customers are disproportionately low-income, because the people putting in solar are disproportionately high-income. So that created a real political instability and a real financial pressure.

Last year, the CPUC said, “We’re not going to do that. For new systems going forward, we are going to only pay the avoided cost for injections into the grid. If you use it at your house, you still get to avoid paying the full retail price, but if you inject it into the grid, the credit you get is only the avoided cost, the 10 cents per kilowatt hour.” That doesn’t apply to any of the households that already have solar, the million-and-a-half households, and so this cost shift, as we call it, from people who have solar onto everybody else continues because almost everyone is still getting the full credit, the full retail credit.

Stone: It’s interesting because the retail rate for electricity in California has risen quite dramatically in recent years. In a blog post called California’s Exploding Rooftop Solar Cost Shift that you just published this last Monday, you point out that for the two biggest utilities in California, PG&E and Southern California Edison, that rate increase has been about 40% in the last four years, and that’s inflation-adjusted, which you point out.

Borenstein: Yes, that’s over and above inflation.

Stone: So why so dramatic in these last four years? What’s going on?

Borenstein: It’s mostly wildfires very recently. In 2018, 2019, we had some catastrophic wildfires because of climate change. We’ve always had sparking on lines. We’ve always had lines dropping and starting fires. The difference is, with climate change, it’s now occurring on very dry vegetation with very high winds. When that has happened, we’ve had these catastrophic wildfires, and so they are scrambling to very quickly do something about that.

The utilities, which have very perverse incentives on this area, are saying, “We should underground all the distribution lines.” Yes, that is a solution. It’s very expensive, and when the utilities do it, they get to put all of those expenditures into their rate base and earn a rate of return that is well above their actual cost. And so the utilities are really incentivized to go for high-cost, capital-based solutions, over things like vegetation management — you just cut back trees a lot more — or cheaper technologies such as these fast-trip technologies that will shut off a line within a tenth of a second of the time there’s a short on it.

So there’s some pushback now, and we’re having a discussion about what the most cost-effective way to deal with this is. That stuff has gone into rates, is going into rates and is really driving up rates very quickly. I’ll just give you one example. PG&E, one of the big utilities, their normal revenue requirement to run the entire electricity system for a year is about 29 billion dollars. They requested a 7 billion-dollar increase to deal with wildfires, to deal with the technologies to prevent future wildfires.

Stone: It’s interesting. These costs are going onto the volumetric rate that people pay. You mentioned a few minutes ago some of the proportions, but I want to make sure I understand this clearly. You’ve got the cost to produce and deliver electricity. That’s the marginal cost, or you talk about the social marginal cost. And then you have everything else that’s lumped on top, and that has been the basis for this big increase over the last four years. Is that right?

Borenstein: That’s right. The actual cost of producing and delivering electricity has barely moved in the last decade. It has been adjusted for inflation, but it has been pretty much flat. But rates have gone way up, and it’s because of all those wildfire costs. Another cost that’s in there is that we are paying for past wildfires. According to a law in California called “inverse condemnation” — I won’t go through the history of that — but if there’s a fire started by utilities, but they were not negligent, they still “have to pay for it.” But if they aren’t negligent, they turn around to the CPUC and they say, “We should be allowed to put this into our rates. We didn’t do anything wrong.”

So we are paying all of the damages for some catastrophic fires you’ve probably heard about in the news, through higher volumetric rates. California is also a bit of an outlier in that we have no fixed monthly charge on our bills at all.

Stone: None at all. Is that unique?

Borenstein: No, it’s not unique, but it’s rare. And it’s not like other utilities have huge fixed charges. In fact, on average in the United States, the fixed monthly charges are about 10% of your bill. So it’s not like it’s massively different, but we are really at the extreme, where it’s 0% of our bill.

Stone: Is there a political reason for that?

Borenstein: Yes, there has been pushback by the low-income advocates because if poor families consume less electricity than wealthy families — and that’s not as true as it used to be — and you take revenue out of the volumetric charge and put into a fixed charge that every house has to pay, it hurts poor families more. And so they have generally opposed it. My co-authors Meredith Fowlie, Jim Sallee, and I did some research on this a couple of years ago. You actually have had Meredith on the show talking about this, and we proposed an income-graduated fixed charge. That is being worked on and will probably be implemented, though at a very low rate. So I suspect we still won’t be paying much through fixed charges.

Stone: I want to get to that fixed charge in just a moment, but I want to point out something that is coming into focus here. There are two bad outcomes here from the high electricity rate in California. One is that when we have this cost shift from solar, haves to have-nots, and the second is that cost shift seems to exaggerate the retail rate for everybody else, and that is counter to any effort to electrify everything. Is that right?

Borenstein: That’s right.

Stone: If you raised the electricity rate, particularly for the people who may be having difficulty paying that rate to start out with, how can you expect to get home heating electrified and people in EVs if that volumetric rate for more electricity use just keeps going up and up?

Borenstein: Yes, that is very true. We are discouraging electrification with our rates, while we have all these other policies encouraging electrification. So California is sort of working against itself in this area.

Stone: Like a Catch-22 almost.

Borenstein: That’s right. The other piece of this, which you mentioned, is that when we say that you can avoid this by putting in solar, we are giving a break to wealthier people who tend not to be renters — renters are very unlikely to have rooftop solar — and can afford the upfront capital costs. Now, if you say this around solar advocates, they will say, “Oh, that’s not nearly as true as it used to be,” and that’s true. If you go back 20 years, it was only rich people who had solar. But the most recent study out of Lawrence Berkeley Lab, which does an annual update on solar adoption estimates that households putting in solar have 70% higher income than households without solar.

So we still have this real “have” and “have-not” when it comes to solar, which corresponds to haves and haves-not when it actually comes to income. As a result of this, this relationship that people used to take for granted, that wealthier households consume more electricity than poor households, when you’re talking about consumption from the grid, that’s really not true anymore. Wealthier households in California, their net consumption from the grid isn’t very different at all. It has become pretty much uncorrelated with how wealthy you are. So the wealthy households aren’t consuming much more than the poor households from the grid. They’re consuming a lot more electricity, but on average they’re getting a lot of it off their roof.

Stone: So as you’ve already started to talk about, California is starting to address this kind of net metering fall-out and the inequities that you’ve been talking about. There are two corrective actions. One is this net energy metering 3.0, NEM, I guess, NEM 3.0 for short. And that lowers the net metering rate that was implemented about a year ago. How is that going?

Borenstein: Well, it hasn’t really gone into effect much yet. It started that every household that contracted for solar before April 15th, 2023 got the old deal, where they get almost full retail price for their exports. After April 15th, 2023, they get the new deal, where for exports, they get a much lower price. But first of all, it hasn’t actually been implemented, so the households that have put it in since April 15th are still getting NEM 2.0. The billing systems of the utilities, they haven’t updated them. Utility billing systems are notoriously antiquated. PG&E’s billing system, even among utility billing systems, is known to be notoriously —

Stone: [OVERTALK] So are new systems getting NEM 2.0, or are they waiting to get NEM 3.0?

Borenstein: No, they are operating under NEM 2.0. Now, when they actually get the billing system updated, and I hope that will be soon, they’ll get NEM 3.0. But for now —

As a result of this change, though, we did see a big drop-off, as you mentioned in the intro. But when you actually do the analysis, much of it is not because of this change in rates. First of all, 2023 in aggregate was actually a better year for rooftop solar in California than 2022. There was a big drop-off after April 15th, but there was so much contract between January and April 15th that the total was actually higher than in 2022.

So what happened is a bunch of people — and I know many of these people — who would have put it in later in the year, scrambled to put it in before April 15th, to get the sweeter deal. So this idea that the new NEM policy is killing the solar industry is actually not supported. I wrote recently about this and did some calculations. The reason it’s not really undermining rooftop solar is that yes, you get a lower payment when you inject power into the grid, but California rates have gone up so much that the value you get when you use it on-site by avoiding what is now 40-cents or 50-cents, or during peak times 60-cents per kilowatt hour is incredibly high.

So when you do all the calculations of how much I am saving, how much I’m getting compensated, the value of putting in solar today looks a lot like 2019. It’s sort of roughly comparable. If you go back and look at the industry literature in 2019, they felt they were doing really well in 2019.

Stone: So is this an issue of perception, that people perceive that the deal isn’t going to be as good now for rooftop solar? Wood Mackenzie has put out a forecast that residential installations will fall 40% this year, right?

Borenstein: And they might. I’ll tell you some other things that are driving that. First of all, interest rates are way up, and any time you’re making a big capital investment, high interest rates are your enemy. And so we’ve seen a big increase in interest rates, and that has driven down capital investment in all rooftop solar everywhere. Secondly, rooftop solar is a long-term investment. So if you’re going to keep growing your sales, you’re going to keep having to find new houses. The people who had great roofs, the people who are environmentalists, the people who have access to good financing — they’ve already put in solar. So if you’re going to keep growing sales, you’re going to have a harder and harder hill to climb because you are going to find customers who are less and less actually interested. There will be smaller savers than before.

And then the third factor, which I think you don’t understand if you weren’t in California at the time, is that in 2018 and 2019 we had a lot of power shut-offs, preventive power shut-offs because they were worried about wildfires. So they would cut off power so that if a line hit a tree or if a tree hit a line, it wouldn’t start a fire. So in my house, we were out of power for four days at one point. A lot of people responded to that by putting in rooftop solar.

But we haven’t had any of those power shut-offs, or the rate of them dropped more than 90% between 2019 and 2022. If people haven’t recently dealt with those power shut-offs, they’re going to be less excited about rooftop solar. So all of those things are driving solar sales down. And that would be happening regardless of the NEM reform.

Stone: I wanted to ask you about that. One more question there, the equity side of things, right? So NEM 3.0 sounds like it just sort of chips away at the equity issue, right? It doesn’t really solve it.

Borenstein: No, it doesn’t solve the equity issue. I think solving the equity issue is going to actually require ending the overall subsidy for rooftop solar because we’re still essentially —

Stone: [OVERTALK] Those are fighting words, huh?

Borenstein: Yes. We are still essentially subsidizing every kilowatt hour that rooftop solar consumes on-site. Because remember, that 40 cents you’re avoiding when you put in rooftop solar and consume it in your house, 30 cents of that has nothing to do with providing electricity at that moment. Thirty cents of it is paying for wildfires and all these other things we’ve talked about. And so as long as people are able to avoid paying for those things by putting in rooftop solar, the people who don’t have rooftop solar, who are going to be disproportionately poor, are going to be hurt.

Now, people sometimes say, “Well, the solution is give poor people rooftop solar,” and there are subsidies in California for that. There are — I think this is the wrong policy. I refer to this as “Rooftop Solar Hunger Games” because basically some poor people will get rooftop solar, but nobody thinks that most people are going to have rooftop solar.

Stone: It’s a drop in the bucket?

Borenstein: It’s a drop in the bucket. And all the other poor people are made worse off by that, because now that’s pushing up rates even more. The solution is to actually adjust rates so that it sends a signal about rooftop solar that you still are going to pay your share. And there are two ways to do that. One is take all these costs that we’re paying that are mostly driven by climate change, and pay for them through the state budget.

Stone: On the income tax?

Borenstein: Well, the state budget comes from the income tax, some sales tax. It’s much more progressive than electricity. If we do that, we could lower the price of electricity to just reflect the cost of providing the electricity that helps electrification, and it also gets rid of this regressive approach to financing all of these costs. The legislature, you’re probably not surprised, isn’t excited about this. I’ve never met a legislator who wouldn’t prefer to have somebody else pay for their policy priorities, and that’s what we’re doing in California right now.

The other alternative is what I mentioned earlier, the income-graduated fixed charge which is making a bit of progress, as I mentioned, but I do have to point out that in California, only about one-third of all the electricity goes to houses. Two-thirds goes to commercial and industrial. An income-graduated fixed charge does nothing to address that.

Stone: So let me ask you: The IGFC, the income-graduated fixed charge, are you saying in a sense that’s kind of a second-best solution since politically moving everything to the state budget is not possible, this is an option? And this is the idea that you originated with your paper in 2021, that the California PUC is going to decide on the final design of that in July of this year.

Borenstein: Yes, I will say that that original paper actually first said, “A great solution to this would be to move these costs to the state budget.” And then said, “To the extent we can’t do that, the income-graduated fixed charge is a partial solution,” and it is very much a second-best because it requires a whole new administrative apparatus, because you have to verify income and implement this new tax, essentially, through electricity rates, instead of the administration we already have to do that.

So it’s definitely not the first choice, and it, of course, doesn’t address commercial/industrial, who also have incredibly high rates, and that undermines the business environment in California.

Stone: Interesting point on this income-graduated fixed charge, and I think this comes from the blog post that you published earlier this month. California’s IOUs propose a fixed charge of 51 dollars. That’s the investor-owned utilities. In January of this year, some Democratic lawmakers put forth Bill AB 1999, which proposes a 10-dollar fixed charge for everyone, or a 5-dollar fixed charge for low-income households. This gets to one of the challenges, potentially criticisms of the IGFC. That number has to be very high for there to be a significant reduction in the cost-sharing burden.

So politically, the low number — the utilities want the high number. I think they also say,

“We’re going to make some concessions here for low-income households.” But I want to get your thoughts on that. Can you get an IGFC that’s high enough to really move the needle on the equity issues?

Borenstein: Well, I think the evidence is we have not gotten it, and it doesn’t look like we will get it, but it’s important to remember we’re paying for this. It’s all being paid for. It’s being paid for through the volumetric price now, disproportionately hurting low-income people and undermining electrification. So either way, we’re going to pay for it. Unfortunately, those legislators, all of whom voted for the bill that actually implemented the income-graduated fixed charge, have changed their minds and have decided that that’s not what they really want to support.

I think that we have to recognize that the political process is going to be very difficult here. I would like to think that they will do the right thing after they’ve tried everything else. I’m not sure. But the proposal of a 10-dollar fixed charge is a proposal to maintain the status quo. The status quo is not sustainable. There is no way we’re going to continue down the road of rates going up as rapidly as they have in the last few years without having a real rate-payer revolt.

So I think the legislators who think that and are arguing, “Well, the problem is the income-graduated fixed charge,” are missing the point. The problem is not the income-graduated fixed charge. The problem is that the revenue requirement is going up and up and up. About a third of that in the last few years, according to my calculations, is because of the cost shift from rooftop solar.

Stone: I want to jump back to NEM 3.0 for just a moment. There’s something interesting that you’ve said in the past about the signal it may send for the installation of home battery storage. It could potentially have a significant impact on that, and again, getting back to this equity issue, what would the equity implications of that be?

Borenstein: NEM 3.0, as you remember, says that if you use it on-site, you can avoid paying the full retail price, but if you export it into the grid, you get paid a quarter of that. Well, of course, what a battery allows you to do is keep the power behind the meter, and so you can use it all on-site, or much more of it on-site, and it makes the economics of running a solar system much more attractive. Now it costs something. Batteries aren’t free, although their cost is coming down.

But who is going to be able to do that? It’s not going to be renters. It’s not going to be low-income people who don’t have access to capital. It’s going to be wealthy people. And they’re going to do it, even saying perfectly legitimate things like, “I want a battery for resilience. I want to be able to get through a power shut-off.” But once you have the battery, actually the software that comes with it is going to automatically keep that electricity behind the meter for you to use, and then by doing so is going to maximize the returns to your installing solar.

But then we’re sort of just back to NEM 2.0, because you’re getting the full retail rate for every kilowatt hour you produced off of your roof or for the vast majority. And that means the cost shift goes up again.

Stone: California has very aggressive goals for decarbonization of the grid. It wants to be carbon-neutral by the year 2045, about 20 years from now. It sounds like what we’re looking at here is a lot of imperfect, incomplete solutions — NEM 2.0, the fixed charges we’ve talked about. It doesn’t look like politically, from what I’m gathering from this conversation, we’re going to see anything moved to the state budget anytime soon, or at least significantly.

So I want to take a pause here and ask you kind of a big-picture question. Where we are today, and what the policies we’re seeing coming through are — where does that leave solar development in the State of California? How optimal can it be, and how will it align or compare with the trajectory that the state needs to be on for residential solar?

Borenstein: I think the trajectory is really dysfunctional right now, and we’re on a course that ultimately is not sustainable. The legislature is going to have to revisit this. It may take a full-blown crisis, and we’ve seen that in California 20 years ago, and I hope we will head it off before then. You asked about the trajectory of solar. Most solar in California is not rooftop. Most solar is grid-scale solar, and it’s incredibly cost-effective.

So we have a way to decarbonize — solar and wind, and we are putting in batteries on the grid at amazing speed. California has more than half of all the battery capacity in the country. So we know how to do this. I don’t think, at least over the next four or five years, we face a real challenge, if we do it correctly, in meeting our goals. In the longer run, we’re going to have to do something about long-term storage, which is a deep challenge, but that’s a decade out.

To me, our near-term goals — we just have to get smart about the way we do renewables. Renewables have gotten incredibly cost effective at grid scale, but we are setting up incentives for rooftop solar right now that is over-investing in rooftop solar, under-investing in grid renewables, and making the whole process much more costly. And I’ll just add one more thing. The other piece that people often talk about with renewables is reliability and intermittency. Some of that is not having enough renewables, and sometimes it’s having too much renewables.

When we have too much renewables, what we do in California is we curtail. We say, “You can’t put your power into the grid.” We don’t do that with rooftop solar, because we have no technology to do that. We only curtail grid scale. And so you can see now that we’re actually making the problem even worse because it’s making it even harder to run the grid because a system that, for residential customers, is now producing 20% of all the power off of rooftops. We have no ability as a grid operator — and I should mention I’m on the board of governors of the grid operator — to actually do anything about excess supply from those producers.

Stone: So as you hinted at a moment ago, there are many incentives for rooftop solar. The cost of rooftop solar is coming down, so California is ahead of the curve, but we’re going to see this expand to other parts of the country. You just mentioned that in some of these places, rooftop solar makes no sense, yet we’re incentivizing it. So the question here is what are the takeaways from the California experience that should be applied elsewhere to make sure we have cost-effective rooftop solar in the places that we need it, and that it’s handled equitably?

Borenstein: I think that the bottom line takeaway is rooftop solar is one tool in the toolbox of decarbonizing the grid. It has some benefits beyond others, such as resilience. If it’s at the house and has a battery with it, it can reduce some of the distribution costs, but it also has some real costs, which is that it is more expensive. When policymakers start thinking about how we get to massively lower carbon emissions, they should view it as one tool in the toolbox and should say, “Okay, that should have to compete with all the other tools in all of the costs and benefits.” And the rooftop solar advocates will say it has a lot of other benefits. I don’t agree with them on each of the numbers, but you’ve got to include all of them and then make a decision of how should we incentivize it to reflect those costs and benefits? And that’s what we should be doing with grid-scale solar, with grid-scale batteries, with wind, with geothermal, with all of these technologies. They should compete against each other.

If you do that, you’re going to get solar in the places where it’s maximally helpful, and I’ll give you a couple of examples. In California, there is, I think, a very strong argument in the low-density, rural areas for putting in solar as part of a local grid that you can actually shut off from the rest of the grid during high wildfire seasons. And so those sorts of applications could be incredibly cost effective, particularly in reducing fire risks.

But if you just say, “No matter where you put it in, you get the retail rate,” you’re going to get it where rich people are, who can save a lot of money, and it doesn’t necessarily help the grid very much. So I think we need to take policy much more seriously, as we already do for wind and solar at grid scale. And if we don’t, you can find yourself sort of locked into a policy that is taking you in the wrong direction.

One thing I have learned from my more than 30 years of working in the electricity industry is when you make bad policy, market actors respond to it in the way that benefits them. And I see nothing wrong with that, but they make investments around that policy. And once they’ve made those investments, when you start talking about changing the policy, they will fight like hell to stop those changes. Even if it’s good policy to change it, they will say, “Wait a second. I just put a bunch of money in, and you’re devaluing my investment.”

And we’re seeing this in rooftop solar, where people who put in solar ten years ago and have more than paid for it, have saved so much money — it was a huge win — are still going to fight like hell not to change the rate structure in a way that makes their solar less valuable. And that is exactly what we’re seeing right now in California.

Stone: Well, the environment is constantly changing — the rate environment, the economic environment. So things are updated from time to time, but as you say, policies need to be consistent for everybody to have assurance of how to move forward.

It’s very interesting. Hawaii is a classic example of this. Two years ago, they implemented a new policy promoting solar plus storage, because they were going to retire a major coal fired power plant. That new solar-plus-storage capacity would fill in the blanks in the meantime. And a year or two later, they switched back, and everybody is up in arms, right?

Borenstein: Yes, there’s a real tension. Technology evolves, goals evolve, and so policy has to evolve. But it can’t evolve too quickly or in too unexpected ways, or people just consider that unfair, and it actually can undermine people’s willingness to respond to policy, if they don’t think that policy is going to stay in place for a long time.

So I’m sympathetic to the people who say, “Wait, you’re changing the rules.” But on the other hand, I think we also have to signal, “The rules are not forever. The rules are now. We will do our best to make sure nobody is made worse off by the change in the rules.” But if, for instance, you put in a solar system ten years ago and have already more than saved the amount that the solar system cost, we’re not going to say you get to keep that forever, either.

Stone: Severin, thanks very much for talking.

Borenstein: This has been great. Nice to talk to you.

Stone: Today’s guest has been Severin Borenstein, Faculty Director of the Energy Institute at the Haas School of Business at the University of California, Berkeley and a Visiting Scholar here at the Kleinman Center.