On February 20th and after several months of review, the California Energy Commission (CEC) approved Sacramento Municipal Utility District’s (SMUD) proposal to use offsite solar to satisfy the 2019 solar photovoltaic (PV) requirement on new single-family and low-rise residential homes. While this approval redefines what can be considered “community solar” and clarifies the qualifications for future projects, there is still a lack of accord on where community solar can come from, how it will have on impact renewable affordability, and how it will shape future renewable and building developments.

In a decision that could shape the future of solar power in California, the CEC ruled that, “…SMUD’s application as the administrator of their Neighborhood SolarShares [community solar] program…meets all of the § 10-115 [2019 Energy Code] requirements.” The Energy Commission reviews community solar programs based on the following requirements:

  1. Enforcement Agency – The solar system must exist and be available for agency review early in the permitting process, and shall not cause delay in the review and approval of the building.
  2. Energy Performance – Energy savings must match or exceed those of rooftop solar.
  3. Dedicated Energy Savings and Bill Reduction Benefits – The building’s energy savings shall come in the form of energy reduction, utility energy reduction credits, and/or payments to the building resulting in bill reductions. The system must present a greater benefit than cost.
  4. Durability – System must be operational for at least 20 years.
  5. Additionality – Benefits must be provided to the building and cannot be double counted to other buildings or purposes.
  6. Accountability and Record-keeping – Records must be kept and be accessible for a period of 20 years.

SMUD had asked regulators to allow developers to use its Fresno-located solar installation to draw power for several new Sacramento housing developments. After fierce criticism by rooftop solar advocates arguing that the solar facility was too large and distant, SMUD revised its application to locate all of the resources supplying the community solar program in its service territory. Additionally, it stated that it will only use new solar resources that are 20 megawatts (MW) or less and will assist builders to facilitate offering either rooftop or community solar for home-buyers.

Other community-owned utilities have shown interest in SMUD’s plans, with the Los Angeles Department of Water and Power, Modesto Irrigation District, and Pacific Gas & Electric submitting letters showing support. Investor-owned utilities, like San Diego Gas & Electric, have yet to signal their intent to pursue community solar.


The CEC’s ruling on SMUD’s proposal was destined to face criticism regardless of which way it leaned. While involved actors are in it for the same goal – a sustainable future for California – and a precedent has been set for future projects, there is little consensus on what community solar entails, where it should come from, and how to manage its market dynamics, with key issues being affordability and future development.

While advocates of community solar say it has no upfront cost to residents and is therefore a viable option for low-income housing or renters, opponents are quick to point out that homeowners will be missing out on the benefits should community solar gain traction. They argue that if developers find community solar to be cheaper than rooftop, they will opt for that and consequently hurt the progress made by the rooftop solar industry. On the other hand, community solar may fill a market gap by not restricting developers to only using a rooftop approach.

This brings up the issue of the term “community.” While the Energy Code does not explicitly define the term, the CEC’s ruling has provided some insight into what it believes satisfies the Energy Code’s intent. After receiving backlash for suggesting a location over 100 miles away, SMUD revised its application to draw upon SB 43’s definition of the term. SB 43 requires that utilities procure renewable energies located “in reasonable proximity” to participants and “close to the source of the demand.” By accepting SMUD’s application, the CEC effectively ruled that drawing power from elsewhere within the utility’s territory is an acceptable method for compliance, although it is still unclear how this will play out with more expansive utilities. What is clear is that this ruling has set the precedent for the next several years for how developers and utilities can meet the solar requirement.

For more information on Energy Code consulting services, as well as Title 24 energy calculations, please contact VCA Green below.

Contributing Writer: Luca Costa, Assistant Project Manager

Moe Fakih, Principal

714-363-4700 x501



California Senate Bill 43: http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140SB43


2019 California Energy Code, Residential Compliance Manual, Chapter 7:



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Regulators loosen California’s groundbreaking rule to require residential rooftop solar: