California regulators on Thursday unanimously approved a controversial shared solar program proposed by the Sacramento Municipal Utility District. The municipal utility will use the program, called Neighborhood SolarShares, to help meet new state building standards that require solar installations on all new residential roofs.

The state’s new building code, which went into effect in January, allows community solar to act as an alternative to installing solar panels on the roof of each new home. SMUD’s is the first program under the codes to win approval from the California Energy Commission — but not before generating significant controversy within the solar industry.

Solar advocates picked apart SMUD’s original proposal, arguing it didn’t align with the core tenets of community solar, and the CEC eventually tabled it. SMUD then submitted a revised proposal in January, which regulators approved in a February 20 meeting.

SMUD CEO and General Manager Arlen Orchard said in a statement that SolarShares was designed to “provide options” to customers. The CEC also emphasized that the program helps adapt the new code to consumer needs.  

“Community solar was built into the Energy Code to provide flexibility in satisfying the solar requirement,” said Commissioner J. Andrew McAllister, the CEC’s lead on the new standards, in a statement on the approval. “We expected that the marketplace and stakeholders would find solutions appropriate for their communities. SMUD has created a proposal to do that.”

In its current form, SolarShares will draw from solar projects of under 20 megawatts to be located in SMUD’s territory. While those projects are built, SMUD will rely on a 13-megawatt project slated to come online in November, or feed-in tariff resources if demand is significant before that project is operational. Customers will sign 20-year contracts offering bill savings of $10 per kilowatt per year.  

The building standards require that community solar programs approved under the code rely on additional solar resources that offer dedicated energy savings, can last for 20 years and closely match the benefits of rooftop solar. Energy commissioners unanimously agreed that SolarShares meets all of the code’s requirements.

Though McAllister noted that “other community solar proposals will look different,” some solar advocates and developers are worried that the SolarShares approval will open the floodgates for similar programs. In the last round of comments on the program, those stakeholders pointed out several changes they’d like to see made before it is approved, such as increased savings for customers and more defined engagement with disadvantaged communities.

Vote Solar, in a statement on the approval, noted that SolarShares will jump-start community solar development in SMUD’S territory. But the organization remains wary because “SMUD’s proposal lacks a clear commitment to develop future projects that benefit Sacramento’s disadvantaged communities,” said Ed Smeloff, the group’s senior director of grid integration and a former SMUD board member.

Rick Umoff, senior director and counsel in California at the Solar Energy Industries Association, echoed concerns about access for disadvantaged communities. He said SEIA is pushing SMUD to add a low-income offering to the program. The organization also expressed concern that SolarShares consumers may be discouraged from installing solar on their homes if they later decide to switch to that option.

Despite the doubts, SMUD has lined up numerous supporters including 33 state legislators and the Natural Resources Defense Council. The utility said the new program will help it achieve a generation portfolio that’s 80 percent carbon-free by 2030. In addition to projects associated with SolarShares, SMUD has outlined plans to build 270 megawatts of new utility-scale solar in the next three years. The utility also plans to spend $20 million to update infrastructure and distribution system software to cope with renewable energy additions.