California Advances Small Business Solar Growth with New Public Works Exemptions

California lawmakers have approved significant updates to renewable energy regulations with the passage of Assembly Bill 1104, known as the Small Business Renewable Energy Access and Protection Act. Amended in the Assembly on April 21, 2025, the bill clarifies and streamlines the treatment of small-scale, nonresidential solar projects under state labor and utility codes—an effort aimed at encouraging investment, protecting small businesses, and supporting the state’s 2045 clean energy targets.

Key Provisions: Simplifying Compliance for Small-Scale Commercial Solar

AB 1104 amends Sections 769.2 and 2868 of California’s Public Utilities Code to refine how nonresidential solar projects under one megawatt (MW) are classified under public works law. Under previous rules, renewable energy installations were broadly designated as public works projects, requiring compliance with prevailing wage, reporting, and contractor requirements even for small private-sector projects.

The new bill creates a tailored exemption:

• Entities engaging contractors for solar projects under 1 MW are not classified as awarding bodies under the Labor Code.
• While contractors must still meet wage and apprenticeship standards, the nonresidential customer is shielded from broader public works liability.
• A 90-day cure period is granted for technical or unintentional violations, allowing contractors to rectify issues without penalizing the project host.
• Facilities remain eligible for Net Energy Metering (NEM) 1.0, NEM 2.0, or the Net Billing Tariff even if wage violations occur, provided restitution and penalties are fully paid.

These changes aim to relieve administrative and legal burdens that have discouraged small businesses from installing on-site solar and battery storage systems.

Strengthening Access to Net Energy Metering

A notable aspect of AB 1104 is the protection of eligibility for California’s NEM programs despite contractor violations. Previously, a contractor’s willful labor violation could jeopardize a project’s ability to participate in favorable net metering programs, placing undue risk on businesses. The amended legislation:

• Preserves NEM eligibility for projects once restitution and fines are satisfied.
• Focuses penalties on contractors rather than the contracting entities.

This shift reflects a growing recognition that policy misalignment and excessive administrative risk have stalled clean energy adoption in the commercial sector, undermining broader state climate goals.

Expanding Opportunities for Independent Solar Energy Producers

In addition to public works reforms, AB 1104 modifies the definition of independent solar energy producers. Prior law restricted producers to selling energy to no more than two off-takers adjacent to the generation site. AB 1104 expands this allowance stating independent solar producers can now generate electricity for use by, or sale to, up to 20 separate entities per generation system.

This clarification supports more flexible business models for shared commercial solar installations, aligning California’s rules with incentives provided under the federal Inflation Reduction Act (IRA).

Legislative Intent: Reigniting California’s Commercial Solar Market

In its findings, the California Legislature underscored the urgency behind the bill:

• California’s commercial solar sector has faced significant job losses tied to restrictive policies.
• Misaligned labor and utility regulations have hindered business investment and slowed progress toward 100% renewable retail electricity sales by 2045.
• The federal IRA offers an opportunity to align state policies with national frameworks promoting small clean energy projects.

By removing procedural barriers and reducing compliance risks for nonresidential solar projects, AB 1104 seeks to accelerate clean energy deployment, stimulate economic growth, and preserve labor standards without compromising California’s broader climate ambitions.