California's Rooftop Solar Fight: Builders, Landlords, and Renters Take Sides

A Rule Change With Big Stakes

In 2023, the California Public Utilities Commission (CPUC) moved forward with a proposal to revamp how rooftop solar on apartment buildings is credited and compensated under the state's net metering framework. The proposal drew in a coalition of players who don't usually find themselves in the same room: homebuilders, apartment landlords, tenant rights organizations, affordable housing advocates, and environmental nonprofits.

At issue was whether a multifamily property owner could keep using solar power generated on the roof to offset tenants' metered electricity use, and how much the building would earn for any excess power sent back to the grid.

The Builders' Case

California already requires virtually all new residential construction to come equipped with solar panels under the state's Title 24 energy code. Builders oppose anything that erodes the economics of those required solar systems. If a new apartment building spends thousands of dollars per unit on mandated solar hardware, the project depends on a reasonable payback through net metering or tenant billing arrangements to keep rents affordable and financing viable.

The Landlords' Case

For rental property owners, solar is one of the biggest available revenue streams when they weigh major energy investments such as heat pumps or upgraded hot water systems. A change that weakens solar economics also weakens the case for broader electrification of apartment buildings, because landlords rely on solar to offset higher utility loads that come with electric appliances.

Apartment-dwelling renters are also the group most likely to be hurt by the rule change because they cannot install their own rooftop system. If the building does not carry solar, tenants pay full retail electricity rates.

The Renter Advocates' Case

Tenant-focused groups warned that the rules threaten what limited solar access renters already have. Without a "self-consumption" provision that lets a building's solar offset tenant meters, the economics of multifamily solar largely collapse. Ivy Energy, a company that provides solar billing for apartment buildings, argued the rule "would eviscerate the economic value proposition" for multifamily solar "rendering all new projects infeasible and unfinanceable."

The Utilities' Case

California's investor-owned utilities and their allies defended the rule change. Supporters argued that newer rates, which vary by time of day, better reflect the actual value that rooftop solar provides to the grid. They also contended that earlier net metering structures effectively shifted grid costs onto non-solar customers, many of whom are renters or lower-income households that cannot install their own systems.

Where the Debate Landed

Landlords, tenant rights organizations, affordable housing advocates, environmental nonprofits, and the building industry banded together in formal comments calling on the CPUC to preserve a self-consumption option for apartment buildings. The coalition's warnings about the collapse of the multifamily solar market helped keep the issue front of mind through the decision process, and Governor Gavin Newsom eventually intervened in related legislation, though in some cases by vetoing bills that would have protected solar rights for schools, renters, and farmers.

Why It Matters Beyond California

The California fight is an early preview of a nationwide debate. Many states are rethinking their net metering rules as rooftop solar adoption grows and as the cost of grid modernization rises. How California handles the multifamily carve-out will influence policy in states like New York, Massachusetts, and Illinois, where apartment-building solar is only now beginning to take off.