Are Utilities Actually Subsidizing Rooftop Solar Users?

Posted by Joseph Bebon on October 19, 2016 1 Comment
Categories : Policy Watch

Counter to some utility claims that solar owners don’t pay their fair share, a new report says solar panels on homes, schools and businesses often provide more benefits than they receive through programs like net energy metering (NEM). The report, released by the Environment America Research & Policy Center, says solar panels provide pollution-free energy that delivers far-reaching benefits to the environment and the electric grid.

“Solar power’s rewards are far greater than its costs,” said Bret Fanshaw, Environment America’s solar program coordinator and report co-author. “We should be encouraging even more solar, not penalizing it.”

Environment America says the report, Shining Rewards: The Value of Rooftop Solar Power for Consumers and Society (2016 edition), comes as policymakers around the U.S. consider proposals from utilities to undermine successful solar energy programs, including NEM.

“Today, the vast majority of our electricity comes from sources like gas and coal that are pushing us toward the brink of catastrophic climate change,” said Gideon Weissman of Frontier Group, report co-author. “Our analysis shows that the people and businesses who invest in rooftop solar aren’t just guiding us away from the cliff, they’re also providing benefits to society and to their fellow ratepayers.”

The report says solar energy on rooftops can help communities avoid greenhouse-gas emissions, reduce air pollution harmful to public health and create local jobs. As the study explains, NEM programs credit solar panel owners when they generate more power than they use, providing electricity for other customers. Utilities then credit solar panel owners a fixed rate – often the retail price of electricity – for providing excess power to the grid, similar to rollover minutes on a cell phone plan.

The report says these arrangements have helped solar energy skyrocket, but in recent years, utilities have increasingly attacked them as unjustified “subsidies,” including in Nevada, where utility NV Energy urged regulators to end the state’s retail-rate NEM program.

Environment America claims that its report, an examination of studies from around the country, tells a different story – that the dollar and cents value of solar is often higher than the credit utilities provide to customers.

“When value exceeds costs, everyone benefits through lower rates,” said Karl R. Rábago, the Pace Energy and Climate Center’s executive director. “Utilities should start working with customers and regulators to make more solar and more savings happen.”

Of the 16 studies reviewed, 12 found that the value of solar energy was higher than the average local residential retail electricity rate. The median value of solar power across all 16 studies was around 16 cents per unit, compared to the nation’s average retail electricity rate of about 13 cents per unit.

In other words, the report says, utilities were likely underpaying solar panel owners, not subsidizing them.

“Rooftop solar users are givers, not takers, when it comes to the value they provide to society and the electric system,” said Fanshaw. “In many cases, it appears that solar programs are a bargain for utilities, not a burden.”

According to the report, all 16 studies found that solar panel users offered the electric system net benefits.

“There’s so much to gain by going big on solar, but so much to lose if some utilities get their way,” added Fanshaw. “Let’s make sure we take full advantage of all the benefits by allowing solar to continue to grow in all our states.



  1. Sadly, more he said – she said. What is quite evident from this report is that the outcome of all of these “studies” depends on who the sponsor is. And this compilation report is no exception. If you tell me who the report sponsor is, I can pretty much tell you what it says… without reading it! Said differently, tell me what you want the outcome to be and I can construct a study that gets you there.

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