Solar’s value to ratepayers is higher than retail price


The recent boom in rooftop solar power installations tied to the local grid has led to a lot of teeth-gnashing about how much utilities should be paying for excess electricity that they buy from distributed solar installations.  In many states, the starting point has been paying the customer the going retail rate per kWh; but utilities have been pushing hard to lower these payments, aiming for a wholesale rate instead, largely due to account for the utilities’ upkeep of transmission systems, both regional and local.  Some have even claimed that new solar can impose a net cost on the electric system as a whole, meaning installations should be limited.  A recent report commissioned by the Maine Public Utilities Commission reframes this debate in a dramatic way, by looking at the full range of costs and savings that distributed solar offer to utilities and ratepayers.  While current retail electric rates in Maine average 13 cents per kWh, the report finds that new solar capacity is worth 18 cents/kWh in the first year, and 33 cents/kWh levelized over 25 years.  The cost savings are about equally split between avoided market costs (paying for other energy sources, transmission saved by on-site/nearby use of solar, etc.) and societal benefits (health/enviro costs of pollutants, effects on overall price of electricity).  This kind of analysis could pave the way for solar to continue booming, unfettered by regulatory concerns. To learn more, check out the report, or see RMI’s summary here.


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    Ben Sullivan


    Appreciate the dialogue & reference to recent analysis done in Maine. One thing that is important context for this discussion is the specific local avoided utility cost, which is very different around the Country. When average avoided cost is higher that PV, the analysis needs to shift to comparing rooftop vs. utility PV, and the associated costs and benefits of those two. We’ve got to get beyond the ‘solar vs big bad utility’ mindset and allow a comprehensive look at the system and how to optimize it for clean energy. Thanks for contributing to that end!


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