By Peter Rive, SolarCity Co-Founder and CTO
February 10, 2015
The electric utility industry’s central criticism of distributed solar is that it creates a “cost shift” from rooftop solar customers to non-solar customers. This isn’t entirely true because most solar customers cover the cost for utilities to serve them, thus shifting no costs. A study commissioned by the California Public Utilities Commission found that across the state’s three investor-owned utilities, solar customers pay on average 103% of the utilities’ cost to serve them1. The cost to serve covers not only transmission and distribution but also regulatory costs such as nuclear decommissioning and public purpose programs.
Solar customers cover the utilities’ cost to serve them
Solar customers continue to pay utility bills after going solar that are on par with those of many utility customers who do not go solar. It does not make sense to treat two utility customers differently from one another if they pay the same utility bill, and they both cover their cost of service, but one of them arrives at that level of utility power consumption in part by having solar on her roof.
Meanwhile, these solar customers not only pay their fair share but also reduce the utilities’ cost to serve neighboring homes. In 2014, a study for the Nevada Public Utilities Commission2 found that solar customers provide a net benefit to all ratepayers. So did a study commissioned by the Mississippi Public Service Commission.3 The primary direct benefits (not including job creation or environmental benefits) include savings on the costs of energy and generation capacity, savings on costs associated with maintenance and upgrade of transmission and distribution infrastructure, transmission losses, and compliance with state renewable portfolio standards. For full article…