Two Reasons Tesla May Not Be To Blame For California's Solar Slowdown

California's residential solar installations plunged in 2017 for the first time in recent history, and some experts believe Tesla's acquisition of SolarCity is to blame.
New solar installations in California's residential sector dropped 18.6 percent in 2017 from their record high in 2016, according to a new report from Next 10, a San Francisco think tank that works on innovation and sustainability.
The residential plunge pulled the state's entire solar industry down 10.5 percent for the year, despite record growth of 26.3 percent in its commercial sector.
It's the first time solar installations have fallen short of the previous year in the decade that Next 10 and Beacon Economics have been publishing their annual California Green Innovation Index. Released this week, the 2018 edition of the index describes several potential reasons for the drop:
"A plausible reason is that Tesla-owned SolarCity has reduced its marketing spending and growth in 2017 to concentrate on profitability," according to the Index.
The Index cites a March Bloomberg report documenting that Sunrun had surpassed Tesla as the country's leading solar installer in 2017. The report fingers Tesla for a national slowdown in solar installations since it acquired SolarCity:
"Tesla has since prioritized profitability in solar over growth-at-all-costs as the company seeks to transform itself into a solar and battery giant to complement its electric vehicles," writes Bloomberg's Brian Eckhouse. "Tesla has ceded solar market-share in most quarters since that deal, and without SolarCity trumpeting solar, the U.S. residential market contracted in 2017 after at least 16 consecutive years of growth."
But Next 10's Index allows there may be other reasons:
1 New Regulations
"Another potential driver of the decline may be that interconnected solar customers in 2017 faced new regulations under “NEM 2.0” tariff pricing," the Index says. With that change to its net-metering regulations, California implemented new time-of-use rates that make the economic picture more complicated for the prosumers who generate electricity at home.
Solar industry experts had already cautioned that the new time-of-use rate structure would make installations less predictable.
2 Industry Maturity
The index's authors believe the California slowdown could be good news.
"Whatever the main drivers for the decline of interconnected solar may have been in 2017," they write, "it is not necessarily a bad sign for the state, as this trend might simply reflect that California’s solar market has reached a point of maturity."
The state's cumulative solar capacity stood at almost 6,000 MW at the end of 2017—an almost 2,500 percent increase over the capacity it had a decade ago, the Index reports.
Whatever reason the industry suddenly hit the skids, the experts are confident the state's coming rooftop mandate will revive it.
"Any slowdown is expected to be resolved in 2020 when a new mandate from the California Energy Commission requiring all new homes in California to have rooftop solar takes effect."