Cost Shifting

“Sounds like a great deal—but there’s no free green lunch, and non-solar utility customers must underwrite this hidden subsidy.” – Editorial from Wall Street Journal on net metering, December 28, 2015

Despite being billed by many as an inexpensive energy alternative for consumers, real-life evidence has shown that solar power comes with a number of hidden costs and consequences.

For example, studies from across the nation reveal that the policy of net metering – the reimbursement to solar rooftop owners for electricity generation they return to the grid – can actually create a great deal of hidden cost. By overpaying solar rooftop owners through poorly-designed net metering schemes, costs for the electrical grid we all share can slowly be shifted from solar rooftop owners to those who don’t want, or can’t afford, solar panels.

In California, these policies have come with a price tag of $1.3 billion, placing a higher burden on all consumers who don’t use solar. In Hawaii, the cost shift amounted to $10 more per month for non-solar customers. In Nevada, customers who don’t use solar were footing an additional $50 more per month to subsidize the solar rooftops of other customers. These stories are not unusual in states and service territories with high solar power usage.

The problem has become so pervasive that the National Black Caucus of State Legislators has raised red flags that minority, low-income households who spend a significantly larger percentage of their monthly income on electricity could be increasingly forced to to pay more because of cost shifting from solar users.

“In short, net metering is regressive political income redistribution in support of a putatively progressive cause.” – Editorial from Wall Street Journal on net metering, December 28, 2015

Direct Hidden Costs

The increasing use of solar power also comes with hidden direct costs to both the consumer and to the power grid itself. A recent research paper entitled Solar Power in the U.S.: Lessons Learned and Guidance for Policymakers details many of these hidden costs, exposing added consumer costs that are often obscured by solar companies.

For example, customers leasing rooftop solar systems are often unaware of additional maintenance costs for which they are responsible. In fact, they are often required to purchase additional maintenance agreements with the company they are leasing from. Average panel cleaning costs can be as much as $20 per panel, costing customers with large photovoltaic systems as much as $700 per year for cleaning.

Solar customers sometimes find that their rooftop system increases their property taxes when the home is reassessed after installation of the system. Other dangers, such as potential fraud from solar installers, predatory leases, and obstacles to real estate transactions involving leased equipment can also pose hidden costs to customers. These dangers often go unreported by the media.

Solar power can also increase the cost of maintaining our shared electrical grid. In 2013, a study by Western Electric Industry Leaders discovered that solar power can increase voltage and stress along the electrical distribution system. The intermittent nature of solar power, drastically and unpredictability adding electricity to the system, can provide additional wear and tear on a system that must be maintained with customer dollars.

In one example, Hawaiian Electric Company had to disallow solar users from connecting to the grid due to the amount of power being forced back into the transmission lines and causing disruptions for other users. Elsewhere in the world, Germany has been forced to retrofit 315,000 inverters to accommodate additional solar power, costing nearly $300 million.

Solar power is not free. It comes with hidden costs.