Fremont solar equipment company to lay off 350 workers as industry slows
On Friday, solar equipment company Enphase Energy in Fremont will lay off 350 workers.
The company said market conditions are forcing the move, but solar advocates are saying those conditions were created by the state when it changed the amount it pays solar owners for the energy they create.
Since then, the demand for solar has plummeted.
Enphase produces inverters that convert the energy the panels collect into usable household power. In a memo to employees, the company attributed the layoffs to an increase in interest rates and a decision the California Public Utilities Commission made last April to severely cut the amount it pays people who contribute excess energy to the grid.
To that, solar advocates, like Cailey Underhill with the Solar Rights Alliance, are saying, "We told you so."
"More public comment came into the CPUC about this issue than any other topic in CPUC history," she said. "And still, the Governor and the CPUC chose to cut the solar credit for all of these consumers. And we are seeing the cliff that this has created, starting now."
For any new systems installed after April 15, 2023, the "net metering" rate — the amount of credit given for excess energy — would be slashed by about 75%. That led to a mad dash to install the systems before then, says Keith Kruetzfeldt, owner of Suntegrity Solar in Santa Rosa.
"For the first part of this year, we were insanely busy. It was kind of like hell for most of the solar companies to keep up with that amount of demand in such a compressed time frame," he said. "That demand, after April 15th, fell off a cliff. It stopped. Once April 15th happened, it went away."
Since then, Kruetzfeldt said he's seen many solar companies go out of business, especially those who grew too fast during the run-up.
"Basically, no businesses, in their entirety, survive a cliff when it comes to a drop off in demand. You can't design for that," he said.
But Severin Borenstein, Director of the Energy Institute at UC Berkeley's Haas School of Business, said the old rate was much too generous, leaving those without solar to pay a higher cost to support the power grid. And he said the new policy will still be a good deal for solar adopters, just not quite as good as before.
"The solar industry has fought a very hard fight against this change in policy by saying the new policy would devastate their industry because nobody would find it profitable to put in solar. That's not true. I think it is a closer call than it used to be, and so fewer people are going to put in solar, but we are not going to see solar go away," said Borenstein.
But the advocates said the changes to net metering work against the state's clean energy mission.
"Now they've created a situation where it's a really tough economic proposition for someone to adopt this clean energy resource," said Underhill. "We need more rooftop solar, not less."
Ironically, it may be utilities like PG&E that will save the industry. Kruetzfeldt said his solar systems become more desirable every time the big power companies ask for another rate hike.
"They just got one, and they're already asking for the next one. And that's not going to stop," he said. "So, we're going to be there to solve that problem."
But in the meantime, it will be tough going for a once-glowing industry that is seeing its profitability dim.