Why “cheaper” solar raises costs. Part II: The hidden costs of residential solar
Posted on May 22, 2025 by curryja
by Planning Engineer (Russ Schussler)
In Part 1, we showed how wind and solar’s low costs over 80% of the time are overwhelmed by expenses at peak times such that they offer no cost advantages to the generation mix. Residential solar follows a similar pattern: it seems affordable for homeowners, but raises system costs through rate structures that over-incentivize adoption. Generous subsidies, like retail-rate net metering, drive excessive solar growth, risking grid stability and shifting costs to non-solar customers that are often less affluent. Less generous rates for residential solar slow adoption, but better align solar adoption with grid needs, ensuring fairness and sustainability.
The Economic Problem: Cost-Shifting Through Rate Structures
It’s hard to understand why many don’t see the unfairness in rate structures, as similar arrangements would seem absurd in other industries. Imagine hotels required to keep rooms ready for all customers (at standard rates) just in case they “might” want them. Worse, during low occupancy, hotels must send guests to customers’ Airbnb properties whenever there are excess rooms. Or consider pizza chains forced to buy excess pizzas from restaurants during slow hours while supplying low-cost pizzas during peak hours and covering all pickup and delivery costs. In all of these cases, the major problem is that large infrastructure investment is required that will sit idle most of the time and receive inadequate compensation from the beneficiaries.
How Residential Solar Rate Structures Work
Residential solar systems, typically tied to net metering, let homeowners generate and sell power in ways that appear cost-effective:
https://judithcurry.com/2025/05/22/why-cheaper-solar-raises-costs-part-ii-the-hidden-costs-of-residential-solar/
