For those with the money to pay for rooftop solar panels, the monthly cost of powering a home can drop significantly. Tesla, maker of solar panels, says that in California its solar-power setup can cut the month’s power bill to $22 from $179.
Those without the money to pay for rooftop solar, however, are paying more because their panel-possessing neighbors are getting a sweet deal on extra juice they feed back into the grid, according to a UC Berkeley Haas School of Business professor.
People with solar have smaller power bills, so to cover the fixed costs of running a power grid, the utility raises prices for everyone else, said Lucas Davis, associate professor of economic analysis and policy, who studies energy markets:
Solar-powered households pay for only the electricity they use beyond that generated by the panels.
“Implicitly, this means that they get compensated for their solar panels’ sales to the grid at the retail electricity rate,” Davis wrote on the Haas Energy Institute blog Monday.
“This is too high, significantly exceeding what the utility saves from not having to supply that electricity.”
The upshot? In California, homeowners without solar pay an average of $65 more per year because of other people’s panels, Davis argues.
“The total revenue shortfall works out to about $0.01 per kWh, or $65/year for the average California household,” he says.
“This is more than I expected. And, I’d bet most Californians are not even aware that this cost shift is happening.”
And, as with many other things in life, if you have money — in this case to buy solar — you save money, but if you don’t, you don’t.
The savings that high-income households reap is “almost certainly bad from an equity perspective,” Davis wrote.
“Rooftop solar isn’t getting rid of the utility. It’s just changing who pays for it.”
Davis suggests that if households effectively received the wholesale rate rather than the retail rate for the grid power they supply, “you would not have this ‘cost-shifting’ away from solar households.”