California Commercial Solar Requires Union Labor

California commercial solar requires union labor starting January 1, 2023.  Assembly Bill (AB) 2143, which was signed in September 2022, includes new prevailing wage requirements on large solar energy projects that opt-in to receive net energy metering, as well as tools for enforcement and goal setting.  This state mandate will increase project costs roughly 30%!

What’s in AB 2143?

AB 2143 requires prevailing wages for all construction workers and apprentices who work on renewable energy projects that are under NEM contracts, unless the project (a) is a residential facility with a maximum generating capacity of less than 15 kW, (b) a single-family home, (c) a facility that serves only a modular home, a modular home community, or a multifamily housing development under 2-stories.

Solar contractors who work on these qualifying large projects will have to submit payroll records twice a year to the Public Utilities Commission to verify their compliance. Projects built by “willfully” noncompliant contractors will not be able to receive electricity service under the NEM contracts.

Finally, AB 2143 designates new reporting requirements for the California Public Utilities Commission (CPUC). Every year CPUC will be required to publish information on where solar is, or is not, growing in disadvantaged communities.

Pros & Cons to AB 2143

When AB 2143 was proposed, industry response was mixed. The California State Association of Electrical Workers and the Coalition of California Utility Employees both provided arguments in support of the bill, arguing that the law would improve safety and equity for workers and make it easier to track whether or not solar is making it to underserved communities.

Members of the private solar community expressed worries, however. Among them, solar installer Sungenia wrote about the law’s potential to make solar more expensive, particularly in inland areas that require more electricity and, often, larger solar panel systems. California Solar + Storage Association (CALSSA) also submitted comments to California legislators regarding the bill, expressing concern that the bill would slow solar adoption and hurt small businesses and affordable housing and commercial projects.

Corporate & Commercial Buyers Should Act Now

Now that the bill has become law, California solar companies and buyers can plan for both near-term and long-term strategies around AB 2143.

In the near-term, solar buyers may want to start preparing for the end of 2023.  If firms have been considering large-scale projects, now is the time to get them underway.  This is particularly true if the projects will become less viable after AB 2143 goes into effect.

In summary, while the law only applies to projects over 15 kW, this law may cause ripples throughout the industry. AB 2143 is set to bring changes and, hopefully, opportunities to the world of solar.