The utility company would normally pay wholesale rates for solar energy (which has an aggressive duck curve), but instead they're forced to pay retail prices to net metering customers.
California pays wholesale rates now (they're on NEM 3.0) with a fixed fee for maintaining the wires even if you don't use them a whole lot.
If you believe burning carbon fuels is a big negative externality, then solar users are subsidizing everyone else.
When the utility puts up capital to build a plant, they are promised a return on that investment over time.
If the energy company is paying you $0.12 to sell electricity for $0.09 - they're losing money. Not to mention, they aren't covering any of the costs of maintaining their network (which is a large chunk of the overall cost).
If they're forced to buy rooftop solar from homeowners at a loss - they are FORCED to transfer that loss onto other costumers - which means the other customers are subsidizing that.
There isn't anything tricky about who is subsidizing whom.
Your issues with "dirty" energy are entirely separate.
They spend 0.12 for power that would have cost them much less than 0.12 to generate. The consequence is that they make up for it by charging other customers more.
If you supply a kWh to the grid at midday and then consume a kWh overnight, what should your balance of payments be? If you're getting the wholesale rate during the day, do you also get the wholesale rate at night?
What this is really about is, how should we pay for the fixed costs of the infrastructure?
There isn't an objective answer to that. You could say that everyone pays a fixed service charge and then there is no contribution per kWh, and then the per-kWh rate for retail and wholesale are exactly equal. That's the most economically efficient thing, but then people who don't use a lot of electricity are paying a high fixed fee.
Another high efficiency thing is to use time of day metering, so that the difference between the wholesale and retail pricing is highest when supply is most outstripped by demand. That also gets rid of your problem with solar because then they can get retail, but get retail based on the time of day, so supplying power when it's cheap and using it when it's expensive isn't going to net out.
But charging retail and paying wholesale to the same customers isn't ideal, because those customers also have a choice. If they're getting paid $0.04/kWh for generation during the day but then paying $0.12/kWh or more at night in order to pay for the infrastructure, they might find it more economical to install a battery system locally and then stop buying power from the power company at all on most days. And then they're still not contributing anything per kWh to the fixed costs of infrastructure, but now you've actually made it worse, because a local battery system is going to be configured to align with the needs of the owner rather than the needs of the grid. Instead of incorporating the battery system into the grid so it can dump its full capacity during the nasty part of the duck curve and then fulfilling the lower demand for the rest of the night from baseload generators, the homeowner has the incentive to sell nothing from their batteries to the grid at 7PM (because they're only getting wholesale) so they can have it left to use for themselves to avoid paying retail at midnight.
Then the grid still has to cover its fixed costs from the other customers and can't even affect their usage with time of day metering because retail off-peak is too close to wholesale on-peak.
How does that figure?
I won't even insist you account for second order effects of having the solar panel, just that the consumer is only paying for their net draw of energy from the grid (which has decreased).
The utilities and ISO’s do not argue against this. They want to eliminate NEM 2.0 in favor of NEM 3.0 bc the difference in rates are to then be provided by alternative incentives such as battery pay-for-performance programs.
Disclaimer: I own an energy company that does C&I and Residential energy aggregation and participates in wholesale market energy supply and incentive programs.
If you look into e.g. PG&E's financials, their expenses are dominated by operation and maintenance of the grid, not what they pay for electricity.
You appear to be claiming that the grid fees cover this cost entirely, but they're not high, e.g. $15/mo on some plans.
You're obviously very knowledgeable about the space, but I suspect you may be talking your book a bit here.
Given that they are correcting a "common misconception", I think it's entirely appropriate to ask for a source.
I'm not against subsidies. Germany pushing solar well before it made financial sense, enabling the economies of scale we see today, was one of the greatest wins of public policy in the 21st century. I paid a lot of tax when I lived there and was happy to contribute in some small way to that effort.
But subsidies risk turning into middle class welfare, continuing long after they make sense from a public policy point of view because interest groups form that don't want to give them up.
It's not really, that's the entire idea behind economic externalities. Power generation using carbon sources brings with it a cost in the form of pollution and greenhouse gases not directly paid by the customer. That cost is effectively spread out evenly across society, so those who use less carbon intensive energy are more or less subsidizing those who use more. Or to put it another way, if the folks with rooftop solar were instead just using electricity from coal or gas plants like their neighbors, their neighbors would have an increased pollution/global warming cost even if they don't see it in their electric bill.
Of course the math may or may not actually work out since the net metering costs for rooftop solar are based on electricity rates rather than any pollution based externalities. But the idea that it's strictly an economic transfer from people without solar to those with solar doesn't seem entirely accurate. And the economic impacts of "dirty" energy are definitely not a separate issue.
Distributed generation is great because generation and consumption are next to each other, and this can theoretically reduce peak load on the grid. The problem is that the sun goes down every day at the same time, and we're back to the same peak load.
The lowered rates in NEM 3.0 actually incentivize homeowners to buy batteries and load shift, which does actually help reduce peak load. Batteries are still too expensive, though, and the hope is that falling battery costs make it economical.
Externalities exist, yes, but they only matter when they get priced in. Capital moves energy markets, not vibes.
Which doesn't mean it's bad policy! The solar industry needs help to grow. But this sort of thing (utilities ending net metering) is only to be expected. California switched to NEM 3.0 with only 20% rooftop solar adoption. Nationally we are at like 4-5% (but I might be out of date).
https://americanexperimentnd.org/stealing-with-solar-how-wea...
One is not just buying power from the grid, one is buying the capability of demanding that power at any time.
The main rebuttal to this is why are non of the public utilities (Sacramento, Santa Clara, and La power) in California trying to get on nem 3.0 if it’s such a profit loss and causing so much “unfairness”? The answer is because it’s made up and the investor utilities want to be able to sell you all the power. They would love to get rid of rooftop solar.
IOUs like Dominion and especially the ones in California are corrupt. They do want to discourage rooftop solar and NEM 3.0 is a battle between the solar industry and IOUs.
But the economics still stand, and your local power co-op is still going to have to end net metering at some point, too. Its a matter of when, and you could absolutely argue it’s too early.
My ideal model is what the city of Cambridge, MA did:
They built their own solar farm, started their own retail electricity provider (only found in MA and TX), and automatically opted everyone into cheaper, cleaner power by default.
We need the flexibility of REPs to de-emphasize the role of IOUs in building generation. Because then they don’t compete as directly with distributed generation.
With net metering, if a customer generates more energy than they consume, the utility does not cut them a check at the end of the month, it only offsets their use, possibly with limited rollover. On average, the customer only consumed their own energy and the utility got some for free as well.
I would also point out that with solar this free excess is directly helpful to utilities because it happens in the middle of the day when summer energy use peaks. This allows the utility to have less base load capacity which saves everyone money.
Feed-in laws require utilities to buy all power fed to the grid at retail rates. They generally don't exist in the US but Germany grew a lot of its renewable capacity that way.
This is exactly the problem. During the day when solar energy is plentiful, the homes don’t use energy – great! But at night, they do, and it costs the power company a lot more money to serve this power at night than they are saving during the day.
> I would also point out that with solar this free excess is directly helpful to utilities because it happens in the middle of the day when summer energy use peaks
It is not. Peak load happens in California in the summer, yes, but the moment the Sun goes down. Not during the day.
If the houses have batteries for load shifting, then yes, distributed generation is helpful for peak load. But not without.
Feed-in tariffs in Germany were a huge “gift to the world” [1] and instrumental to the solar industry. But not sustainable :P
The SREC situation is more complicated. I'm not familiar with Virginia's program, but I could see a case that Dominion doesn't deserve those credits... or one that says if they're building/operating their grid around accepting rooftop solar, some of those tax credits should accrue to their operations. I don't know. I wonder if commercial PPAs also transfer credits in exchange?
It's not sustainable or efficient to continue subsidising solar at this point. If we paid wholesale prices for electricity generated by solar customers, incentives would shift - getting 0-5c on your solar energy would demonstrate that the grid doesn't actually need more energy during the day - the 50c+ prices in the evening would show that we need more batteries (or other dispatchable power)
Like once we start referring to the solar industry trade group as Big Solar or Big Clean Energy...
solar + 12 hour LiFePO storage is cheaper than nuclear TCO, in all US territories south of canada. today ( except tariffs, so... who benefits? big solar or big russia, big UAE ? ) get ......! XD
https://www.theguardian.com/technology/2025/apr/24/elon-musk...
There's huge swing between day-time (think AC and factories) usage and night-time (people sleeping ...).
In the limit, we have a grid where people make their own power during the summer and the grid only sells during winter (and rare extended cloudy periods). Imagine what rates would have to look like in that situation.
and check my profile links for more of that 120% energy price. SEASONAL.
I’m an executive at a non-VA residential solar EPC.
Eventually, homeowners will be charged for the capability of drawing power from the grid, even if they don't use that capability. Take-or-pay pushed right down to the individual residence.
using solar on site is not virtue signaling
Building your house to NOT waste as much energy as possible is not virtue signaling.
( What your house loses thru chimney/flue is same amount of energy my house needs to let me be in luxurious west comfort. and if disaster happens, and power gets cut, my house will not fall under 29C/67F for three days without power.... in coldest of days overcast. so i have 3 days before i have to put hoodie on, to find energy to keep my house going, one tenths of amount of energy you need, at least 1/10 if not more. while your children start to cry because they are cold next morning. we do not talk in same language. it is different universe. my house needs same energy to heat as you lose thru chimney. i need less energy for heating than for hot water. with PV my hot water is 85+% of year 100% from solar (PV!), 5%-99% from sun rest of the year. only hot water PV got paid in 5 years, what is expected life for PV? so it is 1/2 or 1/3 or 1/4 "TCO" vs net metering ? )
use subsidies to renovate your house. google/ask AI what is difference between "passive" and "net zero" house standard. so you do not get scammed again.
leverage - bank loan.
opportunity cost with houses can be tricky, i admit but it is also - what can i achieve in properly designed and properly built house vs in house where im constantly nervous, ill etc?
1/10 of energy for comfort + 50% of that 100% from own roof per year... virtue for your wallet.
I think you meant 20C/67F?
Right now, a 50kw LiTo pack will run about $10kusd (FOB China). LiFeO2 more like 5$K for LiFeO2.
With batteries such as LiTo, cycle life goes to around 20k so batteries would be a 20year+ cost, potentially 40 years… so I expect we will see stationary batteries becoming much more cost effective. 50KW will handle most household needs, so that would work out to about $25-$50 a month for battery costs.
I’m not sure how utilities are going to survive long term, as their expensive distribution infrastructure is hard to justify for household use where solar is viable.
I guess 2x -5x rates is probably going to be the answer, which is only going to accelerate solar / battery adoption?
laurencerowe•8mo ago
This seems to be more about the US market than rooftop vs utility scale. Australia shows it is possible to install rooftop solar cheaply. Why can't we?
detourdog•8mo ago
Last year the second Massachusetts changed the electrical repurchase agreement and I just checked the bill for April. I produced 480 more kWh than used. I ended up with a $58.04 credit. National Grid pays me $.24320141 per kWh. I will be pumping just under 6,000 kWh a month into the gird until October.
I don't see solar as expensive I see it as a good value. I will always be buying electricity and it will always be rising in price. I'm happy to have the opportunity to invest to reduce these costs.
I agree that the system is not fair...
laurencerowe•8mo ago
I don't mind subsidising renewable energy, but as a renter who is not eligible to partake in these deals I would far rather my dollars were spent more efficiently on cheap utility scale systems than expensive rooftop systems.
detourdog•8mo ago
I'm trying to be as generous as I can.
laurencerowe•8mo ago
conradev•8mo ago
NREL, NFPA, UL, and Tesla got together and developed SolarAPP (https://gosolarapp.org). It enables instant online permitting for standard installations, and California passed a law mandating its adoption.
It's also sales. Solar is currently sold by salespeople and they need to be paid. The small solar companies contract out to the larger solar companies for crap rates because top of funnel is very hard for them. There is a YC company going after that opportunity: https://projectsolar.com/
Software providers like Aurora (https://aurorasolar.com) are used for making proposals, but they sell software to solar installers rather than vertically integrating and going after it themselves.
Tesla sells online, but the online experience ends after you pay and they try to sell you too much solar. Everything, including design, is subcontracted out in my understanding.
Sunrun is a great option even though you don't own the panels. PPAs are more popular at the moment because interest rates are so high.
utsolartemp•8mo ago
I have experience in the Utah solar industry. I stopped recommending Project Solar to people after seeing so many bad experiences. You can find stories of good Project Solar installs, but your odds of having a good experience with them seems to be going down year by year.
You can see a sampling of complaints by searching Reddit and other solar forums: https://www.reddit.com/r/solar/comments/1cheio5/do_your_rese...
Years ago I recommended Project Solar to a lot of people. Now I almost feel obligated to warn people whenever the topic comes up as penance for all of the trouble I caused multiple people by recommending them. I hope they can clean up their business, but for now I'd approach with a lot of caution.
Aurornis•8mo ago
Are you thinking of a different company? I can't find anything online linking Project Solar to Y Combinator.
conradev•8mo ago
(sibling comment got killed for no good reason – definitely talk to a real person with experience with any solar company before diving in. they can have a wide variety of outcomes)
Analemma_•8mo ago
This isn't specifically a rooftop solar thing, the entire construction industry in America has been bottlenecked on labor for years. You can insert your own personal hobbyhorse here about why that is (immigration, undervaluing trades, etc.), but whatever it is it sure is a headwind on solar migration.
Aurornis•8mo ago
The US solar market is extremely weird. For many installs, a majority of the money could go to dealer fees (financing charges) and sales commissions.
The solar sales industry operates on a "redline" model. The redline is a $/W minimum rate that goes to the equipment and installer, but also to the manager, dealer, district manager, regional manager, etc.
The sales people are essentially free to pitch any price they want and they collect the difference. The sales people basically make up the price on the spot based on what they think they can convince you to buy.
Many companies have tried direct sales options where customers buy direct and skip the sales commission. They still get hit with large "dealer fees" which go to the financing companies unless they're self-paying though.
It is possible to do a full self-pay, direct-buy install with certain companies, but there's a problem: The redline commission model is so lucrative that a lot of the direct-sell companies give up and switch to redline commission models to make bank while they can. There's also a shortage of installers, who get drawn to the high commission companies by their higher rates.
I think eventually the market will settle out. For now, there is so much demand from consumers who aren't price sensitive and so many expiring subsidies to create a false sense of urgency that the high priced companies can continue operating.