Rooftop solar saves all ratepayers money, whether or not they have solar. But rooftop solar also reduces utility profits, which is why the utilities are running a misinformation campaign about rooftop solar. Decision-makers and opinion leaders should look under the hood, and see just how rooftop solar is a vital tool to control unsustainable electricity prices for all Californians.
Rooftop solar and batteries can reduce the cost of the electrical grid by $120 billion by 2050.
That’s the conclusion of a report by Vibrant Clean Energy, led by energy researcher Dr. Christopher Clack.
The report found that making electricity closer to where it is used reduces the need for long-distance power lines and giant wind farms.
The report confirms a trend we have been witnessing for several years.
In 2018 alone, state energy officials scaled back $2.6 billion worth of power line projects. That’s thanks to both rooftop solar and energy efficiency. The Protect Our Communities Foundation has shown how rooftop solar and batteries could have eliminated or reduced the cost of several major grid projects and saved ratepayers billions of dollars.
The Vibrant report shows that these kinds of savings could be huge in the years to come if rooftop solar continues to grow.
Utility spending is out-of-control. Rooftop solar and batteries can help bring it under control.
Utility spending on transmission and distribution has increased 500% over the last twenty-five years. This increase happened even though peak energy demand has been flat. This chart by energy economist Richard McCann illustrates the problem:
Utilities are incentivized by the government to engage in this kind of spending. Since the state deregulated the energy markets in the late 90s, California utilities get a guaranteed 8-12% profit off of every dollar they spend on long-distance power lines. And 60% of utility spending is “self-approved”, meaning it isn’t subject to any regulatory approval. The remaining 40% is usually rubber-stamped. (see this CPUC report)
As if this were not bad enough, the utilities are now warning about the need to build even more long-distance power lines as well as additional costs for “wildfire mitigation” in order to facilitate the state’s switch away from fossil fuels.
In an ideal world, lawmakers and regulators would be looking for every possible way to both scrutinize utility spending, and reduce the need for that spending. Rooftop solar and batteries should be a welcome solution, right?
Wrong. Instead, bowing to pressure from the utilities, the state has gutted its rooftop solar program. And perversely, they are doing because they say it will help reduce the cost of electricity. Huh?
The so-called “cost shift” argument is a utility fabrication.
The utilities and their allies have pushed a false “cost shift” claim that rooftop solar is to blame for rising electricity prices. This claim has infected the highest level of California’s government as well as utility-aligned nonprofits like NRDC, and is the basis of the CA Public Utilities Commission (CPUC)’s relentless dismantling of the state’s wildly successful rooftop solar policies.
Yet, this claim does not hold up to scrutiny. The claim originated around 2012 by the national utility trade group, the Edison Electric Institute. This leaked strategy memo outlines their approach (start on p. 12). The supporting evidence for the “cost shift” comes from the utility-aligned consulting firm Energy + Environmental Economics (E3), or from other research firms that replicate E3’s methods. E3’s client list contains thirty-two investor owned utilities including PG&E, SDG&E, and SoCal Edison. In contrast with Vibrant’s study, E3’s work on rooftop solar is riddled with problematic and cherry picked assumptions that grossly distort the truth about rooftop solar, which we itemize in this white paper.
Rooftop solar saves all ratepayers money. But they also reduce utility profits. That’s what this fight is all about.
Underneath all of this is a simple fact: utilities make their profits by spending more money – your money – building and maintaining long-distance power lines.
Because rooftop solar reduces the need to spend as much money on giant wind farms and power lines, utilities make less profit if rooftop solar keeps growing.
What’s crazy is that the utilities still stand to make tons of profit in the years to come, even with rooftop solar. And yet, they are still trying to kill rooftop solar. If they win, we all end up paying more.
Don’t let the utilities get away with it.
