The four main bottlenecks of developing small-scale utility solar in California 

Think of a wine bottle and how it gets narrower at the spout, slowing down the flow. That narrow area is called the bottleneck, which is also a common engineering expression for project obstacles. A wine bottleneck is a great visualization of what’s happening to small-scale utility and community solar developers in California.  

While California still leads the nation in solar deployment, project developers face unique bottlenecks that are slowing the flow of meeting the state’s ambitious goal of achieving net zero carbon pollution by 2045.  

Before we get into our four main bottlenecks, let’s define small-scale utility projects as being between 1 MW (AC) and 20 MW (AC) and located near the communities that they serve. These types of projects can serve California’s Community Choice Aggregators (CCAs), investor-owned utilities (IOUs), as well as future community solar customers. 

 More recently, California passed the Community Renewable Energy Act, finally setting the stage for a viable community solar and energy storage market in the state. Now, the California Public Utilities Commission (CPUC) has the challenge of designing the program in a way that attracts both community solar developers and subscribers. 

But even with a well-designed community solar program, the local solar bottlenecks will remain. In our experience developing over 250MW across 35 small-scale local utility solar projects in California, the following four bottlenecks are slowing down the clean energy flow. 

Bottleneck #1: Interconnection backlogs 

Connecting projects to the grid is one of the biggest challenges across the United States. Renewable energy and storage projects can get stalled in long interconnection queues for years, which results in about 75% of them dropping out. Many projects are never even considered because of these issues. 

Projects in California face additional interconnection obstacles. Because the state has high renewables penetration, it can be challenging to find locations on the grid that have enough capacity for additional solar generation.  

For this reason, a utility may require that developers provide upgrades to a substation, distribution line, or transmission line before connecting a project to the grid. The cost and timeline for construction of these required upgrades in many instances make projects infeasible, and then they die. Delays at this stage can be compounded by constrained supply chains and long lead times for major equipment needed to make the upgrades.  

An experienced solar developer can identify locations that already have enough capacity and don’t require upgrades, but the process doesn’t stop there. Once you have identified a viable location for your project, you still need to navigate the complex utility interconnection process. In California, that includes going through several interconnection studies that can be cumbersome and tough to navigate efficiently. 

Projects over 1 MWac in California face an extra interconnection step. As part of the California Independent System Operator’s (CAISO’s) New Resource Implementation (NRI) process, developers need to design a Remote Intelligent Gateway (RIG) and implement it on the site. This lengthy, multistep process can be especially challenging for inexperienced developers and takes specialized engineering resources to complete. Missing any one of the many required submissions can delay your project significantly.  

This bottleneck tends to slow projects even further due to utility workforce issues – the utilities haven’t staffed up to meet the continued demand of renewables trying to connect to the grid. Because interconnection is so complex in California, utilities need experienced staff that thoroughly understand the process. Unfortunately, many California utilities are understaffed and experience can only happen over time. Consequently, even with all our interconnection t’s crossed and i’s dotted, utilities can be slow to move our distributed projects through their queue.  

The solution for us has been to maintain strong utility relationships and attention to detail, carefully providing all the requirements and avoiding further questions or changes. You have to actively manage up to push things through.  

Bottleneck #2: Permitting 

Efforts are being made across the U.S. to streamline and standardize solar permitting. But California remains one of the most challenging states in this regard.   

Permitting processes vary throughout California. Developers have to adhere to different requirements for each local jurisdiction, whether a city or county. That complicates the process for any developer working in more than one city or county. 

That said, what all the jurisdictions have in common is a requirement to follow the California Environmental Quality Act (CEQA) process for reviewing projects and determining their potential environmental impact.  

The lengthy CEQA process can require many subject matter experts and consultants, which often presents another bottleneck for developers. While some items assessed in this standardized process are straightforward and clear, CEQA also considers factors like visual and agricultural impacts that are somewhat subjective. 

The only true solution here would be to pass legislation that streamlined permitting for renewables and mandated statewide permitting standards that would apply to all authorities having jurisdiction (AHJs), cities, and counties. 

Bottleneck #3: Land use considerations 

Impacts to agricultural land are a common concern. As community solar and local utility solar projects gain popularity around the country, concerns like these are making it more challenging to find appropriate sites for them.  

This issue is especially significant in California, which is home to some of the most productive agricultural land in the U.S. For this reason, the state has taken steps to preserve farmland through both CEQA and the Williamson Act, a program that allows specific parcels of land to be restricted to agricultural use in exchange for reduced property taxes. 

As a result, California solar developers aim to either avoid building on prime agricultural lands or mitigate the potential impacts of projects on these lands. These restrictions mean that California has significantly fewer viable sites for local solar development.  

To open this bottleneck, California or other AHJs could recognize that solar is a temporary, low-impact use and that at its core, solar is preserving land, not permanently impacting it. Unlike building an industrial building on site or paving a large parking lot, solar developers have a decommissioning plan that removes the system and restores the ground to its original condition. To codify this difference, the State should create a decommissioning standard of care for solar built on prime agricultural lands, enabling more sites to open up throughout California. 

Another solution for land use concerns would be the State providing incentives for agrivoltaics. This dual use of farmland can increase production for crops that do better with some shade and can decrease water use, a key benefit in California. Agrivoltaics also compensates farmers for the use of their land, providing an additional income stream. Solar panels can also be sited on unproductive parts of a farm, increasing the farm’s income without disrupting their operations.   

Another land use approach that Renewable Properties has implemented at many sites is planting pollinator vegetation alongside solar panels, increasing yields for farms throughout a region. Additionally, the grazing of small livestock is another alternative that enables farmers to continue their operations alongside a solar project.  

In the end, we’ve found that AHJs that prioritize renewables will find ways to solve land use bottlenecks with solutions that satisfy all stakeholders involved. 

Bottleneck #4: Workforce constraints 

With the passage of the Inflation Reduction Act (IRA), the limited supply of skilled workers has become a huge bottleneck for all solar developers, large and small. California could solve all of its current supply chain, permitting, interconnection, and financing bottlenecks, but without increasing the local skilled workforce, projects cannot be built and will face delays. 

The IRA requires that for solar projects larger than 1 MW to receive the full Investment Tax Credit or Production Tax Credit, developers must pay prevailing wages. This requirement supports small construction businesses and allows them to operate as part of a union or right-to-work entity. However, there aren’t enough classes and experienced trainers in California to take advantage of these provisions. 

One answer is for California and local communities to incentivize attracting solar energy workforce development in their community colleges, labor unions, and trade organizations. Of course, even with incentives, those worker training programs require skilled and experienced teachers who are needed and working out in the field.  

The good news is that if you’re looking for a job, the renewable energy industry is actively hiring and in need of skilled labor across a variety of trades – construction, electrical, civil, engineering, legal, accounting, finance, permitting and land. If you’re talented and have a conviction for fighting climate change, the renewable energy industry is open for business and welcomes you! 

Opening up the bottlenecks 

These four bottlenecks in California can be frustrating, and Renewable Properties is doing everything we can to advocate for better policies and to open up the solar development flow before California’s new community solar program goes into effect. But we can’t do it alone.  

We urge the CPUC, California legislators, and local AHJs to review these four bottlenecks and to rapidly apply changes that will streamline local solar development throughout California. If they don’t act this year, then the bottlenecks will become even more severe, constraining jobs, CO2 mitigation, and clean energy deployment.  

Climate change is a global problem that requires local solutions. Solving these bottlenecks is California’s opportunity to continue leading and to be part of the solution! 

Aaron Halimi is the founder and CEO of Renewable Properties, a small scale utility and community solar developer and asset owner operating in 15 states and headquartered in San Francisco.