Shift Key is off for the holidays, but we hope you’ll enjoy this classic episode.
Rooftop solar is four times more expensive in America than it is in other countries. It’s also good for the climate. Should we even care about its high cost?
Yes, says Severin Borenstein, an economist and the director of the Energy Policy Institute at the University of California, Berkeley’s Haas School of Business. In a 2024 blog post, he argued that the high cost of rooftop solar will shift nearly $4 billion onto the bills of low- and middle-income Californians who don’t have rooftop solar. Similar forces could soon spread the cost-shift problem across the country.
On this week’s episode of Shift Key, Rob and Jesse talk with Borenstein about who pays for rooftop solar, why power bills are going up everywhere, and about whether the government should take over electric utilities. Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University.
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Here is an excerpt from our conversation:
Jesse Jenkins: I should say, it’s not really a problem with solar per se, right? It is sort of a wicked combination of significantly escalating costs in California due to wildfire prevention, and liabilities, and other investments in the distribution and transmission grids — which are largely fixed costs that you don’t avoid when you produce more solar power — and the particular way in which we design electricity rates, which then dictates how solar is valued if either you consume it on-site or, in the case of net metering, if you export it to the grid and are basically credited as if you could avoid a full kilowatt-hour of consumption, as well. So it’s this sort of combination of those three factors.
I just want to stress for listeners, like, this isn’t a problem with solar per se. It’s kind of a problem with how we design and structure electricity rates.
Severin Borenstein: Absolutely. If rates really reflected the actual cost of providing those additional kilowatt-hours then people would be facing exactly the right incentives on whether to put in solar or not. Unfortunately, nowhere do they really reflect that, but in California, they’re just completely out of line, and have gotten drastically more out of line in the last few years.
The two biggest utilities, PG&E and Southern California Edison — PG&E rates have gone up 80% in the last five years, and Edison’s rates have gone up 90%. So these are just huge increases. Some of it is directly connected to delivering electricity. A lot of it isn’t — a lot of it is the impact of climate change, and it’s the decision by the state legislature that we’re going to pay for these costs by raising your electricity price when we could easily be paying for these through the state budget.
Not easily, I mean there’s still costs. But it would be natural to pay for many of them through the state budget.
Mentioned:
Shift Key’s rooftop solar series, featuring Mary Powell, Severin Borenstein, and Heatmap’s own Emily Pontecorvo
Jesse’s distributed energy research at MIT
Australia’s Solar Choice Price Index
More on Texas’ Griddy debacle
Leah Stokes et al. on utilities’ climate record
This episode of Shift Key is sponsored by …
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Music for Shift Key is by Adam Kromelow.
