ICYMI: UC Berkeley Energy Policy Expert Corrects Six Common Fallacies Made by the Rooftop Solar Industry Regarding Net Energy Metering

Posted on April 7, 2022

Sacramento – In a recent op-ed in the LA Times, the state’s foremost energy policy expert reaffirmed that “In California, households installing solar are disproportionately wealthy (as well as disproportionately white), so the result is clear: Net energy metering shifts costs onto the poor.”

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, also refuted one-by-one a “litany of claims [by the solar industry] that attempt to explain why there is no cost shift, or that it isn’t big enough to matter, or that it doesn’t really hurt the poor.”

Below are excerpts from the op-ed:

Claim 1: Rooftop solar reduces pollution, and the monetary benefits of that must be added to the estimated utility savings. In fact, the savings estimate does take into account reduction in local pollution damage and climate change. In fact, the figures overstate the environmental benefits of rooftop solar because new installations in California aren’t crowding out polluting power generation. The alternative would be large-scale wind and solar power that is three to five times cheaper than rooftop solar.

Claim 2: Rooftop generation is local, so it saves on distribution costs. True, but studies based on detailed engineering or total-cost accounting show those savings are tiny — less than 1 cent per kilowatt-hour — compared with the size of the cost shift onto non-solar households.

Claim 3: Low-income customers are protected from the cost shift because California mandates reduced electricity rates for them. The California Alternative Rate for Energy program indeed lowers the price of electricity for poor customers, with a 30% to 35% discount. But that just means the cost shift onto the poor is 65% to 70% of the shift onto others — a smaller but still substantial burden for those who can least afford it.

Claim 4: Rooftop solar helps low-income customers because it allows the state to shut down conventional electricity generation that pollutes their neighborhoods. There is now so much solar energy produced in California that adding more is not helping to shut down power plants fired by conventional fuel. To shutter those polluting plants, we need generation that can produce when solar isn’t available — from batteries, “dispatchable” renewables (hydro or geothermal power) and imports from other areas — and we need to incentivize demand reductions at those times.

Claim 5: Utilities want to end net metering because they are interested in increasing their profits, not in helping low-income families. Vilifying utilities is a clever strategy, but the loudest calls for ending the current net energy metering system are coming from the leading consumer advocate organizations: The Utility Reform Network and the CPUC’s Public Advocates Office, which estimates the cost shift from rooftop solar households to everyone else is more than $3 billion per year and quickly rising. The Natural Resources Defense Council is also on board, in large part because of the equity issues.

Claim 6: As the cost of rooftop solar has dropped, more of the systems, and the subsidies, have gone to low- and middle-income households. Actually, the rooftop solar wealth gap has declined from enormous to merely huge.

Lawrence Berkeley National Laboratory study found that in 2010, when the industry was tiny, the average income of solar adopters was 158% greater than the median California household income. By 2019, the gap was 54%. The gap is tough to close because not only are upfront costs a barrier, low- and middle-income families also have smaller roofs and are more likely to be renters.

And even if poor households increase their share of rooftop systems, the cost shift would remain inequitable, because other low-income households would still be paying for those systems. Like customers at a casino, some people would go home happy, but as a group they’d still lose.