ICYMI: UC Berkeley Energy Expert Responds to “Myths Solar Owners Tell Themselves”

Posted on June 16, 2022

Sacramento – In a recent blog post, California’s foremost energy policy expert responded to questions/comments he’s received from solar owners who have clearly been misinformed about the state’s rooftop solar subsidy program, Net Energy Metering (NEM).

Severin Borenstein, E.T. Grether Professor of Business Administration and Public Policy at the Haas School of Business and Faculty Director of the Energy Institute at Haas, UC Berkeley, delves into seven “myths” including the cost shift, retail compensation for exported solar power, whether the utility business model is “outdated,” and whether people with incomes under $50K a year are really buying solar panels as the industry says.

Here are some excerpts:

When I inject electricity into the grid, my utility sells it to my neighbor for the retail price, so if they pay me the retail price, it’s a wash.”

“Alas, no. The utility would still sell the electricity to your neighbor, even if you did not have rooftop solar, only it could have bought the power for your neighbor at the wholesale price, which in California averages less than one-third of the retail price.”

Rooftop solar is disrupting the electricity industry and utilities are just fighting against their inevitable extinction. The solution is to let them go under, like Kodak and Blockbuster, rather than continuing to subsidize their outdated business model.”

“This comes from a misunderstanding about what electric utilities do these days. For the most part, they are not in the electricity generation business anymore…. Electric utilities may go extinct someday, but that will be when we no longer need transmission or distribution lines because every customer is generating all of their own power – 24 hours a day, 365 days a year. That’s unlikely to happen in my lifetime, and probably not in yours…”

There aren’t barriers to poor people going solar anymore. Companies will put the panels on a homeowner’s roof for free and sell them the power.”

“There are companies that offer such long-term power purchase agreements (PPAs) to homeowners with good credit, along with what is effectively a lien on the house, and at a higher cost per kWh than buying or leasing the panels.  Of course, low-income households are much less likely to be homeowners and less likely to have good credit. So, in the real world, there are still very large barriers to poor people going solar. That’s why, as of 2019, 4.6% of the 1.3 million PG&E households with annual income below $50,000 per year have solar, while 15.4% of the 0.7 million households with income above $200,000 have solar, according to research we will be releasing in July.”

With electricity rates above 25 cents per kWh, rooftop solar is the only thing that makes it cost-effective to electrify my space heating, water heating, or vehicle.”

“There is certainly truth to that, but let’s be clear on how solar customers are affording electrification: by having other customers subsidize them through even higher electricity prices.”