Your neighbor’s solar system is saving utilities — and you! — lots of money

We hear a lot about the “cost” of solar when utilities attempt to weaken net metering rules.

“Solar is only for the wealthy,” they say. “Poorer ratepayers subsidize every rooftop solar installation out there.”  “Why should the poorest ratepayers help pay for a more affluent person’s solar system?”

Yes, you do hear these claims a lot — generally with little or no data to back them up.  But, you know what?  We just got some real data about the cost of solar, and it changes this whole discussion.

The California Independent System Operator (CalISO) manages the utility grid in California.  They are a great source of information about energy usage, demand, and supply. They also create an annual spending plan on transmission infrastructure that will be needed to keep the grid humming.

The CalISO Board just adopted its latest spending plan and this is where things get interesting!

In a CalISO press release, the Board agreed to cancel or modify 39 previously approved transmission projects, avoiding an estimated $2.6 billion in future costs!

That’s some serious savings! How did this happen?

A home utility meter for a homeowner’s solar system in Aurora, Colo.

It turns out that we all did it together. Here’s what the Board noted:

“The changes were mainly due to changes in local area load forecasts, and strongly influenced by energy efficiency programs and increasing levels of residential, rooftop solar generation.”

This is really important.

Historically, CalISO has pretty much ignored the contributions to the grid of residential solar generation since they do not have direct visibility into that production.  (That’s in contrast with utility scale PV systems whose production data is monitored by CalISO.)

What is significant is that now residential solar generation is a sufficiently significant player in the state’s energy mix, that — along with energy efficiency programs — residential solar is changing how CalISO decides to approve transmission infrastructure spending.

Put another way: Residential solar just helped save the ratepayers in California some 2.6 billion dollars!

So let’s go back to that whole “cost” of solar thing.

It seems that — thanks to the investments made by hundreds of thousands of individual homeowners throughout the state who installed solar power systems funded mostly out of their own pockets, — all ratepayers are getting to share in the return on that investment.

Moreover, this is not a one-time return. Those systems with 20+ year life expectancies will help avoid additional infrastructure costs for all of us for the next couple of decades.

This explains why some utilities are not so thrilled by these results. Turns out that the Investor-Owned Utilities (or IOUs, specifically SCE, PG&E, SDG&E) make their money through rates that are based on providing a guaranteed rate of return on built assets — such as transmission lines.

Build fewer transmission lines (or power plants) and there is a smaller asset base from which to derive that return. The ratepayers save money, the shareholders of the IOUs make less money.  Oops.

So, the next time someone starts squawking about how residential solar is “installed on the backs of the poor” you might point out that we are actually saving everyday homeowners a bunch of money — all while making the world a greener place!