Quantifying Subsidy from Non-Solar to Solar Customers
Barbara R. Alexander is an independent consultant who represents state and national consumer advocates. Ashley Brown is the executive director of the Harvard Electricity Policy Group. Ahmad Faruqui is an economist and principle with the Brattle Group. The views expressed in this article are those of the authors and not of the organizations of which they are affiliated of, or of their clients.
We have written this article to make the case that the net metering policy that many states adopted to support and subsidize rooftop and community solar programs is, in today’s context, too expensive. It’s unfair to most consumers who are compelled to pay more than their fair share of costs, and socially regressive.
We are not opposed to renewable energy or solar energy. We support the need to pursue them to the extent that they are a cost-effective means of mitigating the impact of climate change. These resources are important to the nation’s future energy supply and they should be encouraged by appropriate federal and state policies.
However, net metering is now causing an unfair shift of costs to non-solar customers. This policy is unfair because it is too expensive, because it shifts essential electricity service costs to those who cannot afford or install solar on their roofs, and because its justification to jumpstart a nascent industry is no longer applicable. Initially, most states capped the amount of solar capacity available for the net metering subsidy. These caps are now being expanded and increased, to the detriment of non-solar customers.
Net metering gives solar customers a credit on their bill when their rooftop panels generate excess power and sell it back to the utility. This subsidy means that solar customers pay a tiny electric bill to their electric utility, or none at all.