Opinion | Why rooftop solar in Mass. is flawed, and how to fix it

Using 25 years of data, we found that utility-scale wind and solar generation do not drive up electricity prices but are actually associated with lower retail rates. Rooftop solar, however, is different: The integration of small-scale solar energy systems, like rooftop solar panels, into the electric grid correlates to higher electricity rates for a majority of the state’s residents.

About 13 percent of Massachusetts homes currently have rooftop solar. In Massachusetts, solar owners do not pay for electric-grid infrastructure they rely on, shifting those costs to other residents who do not have solar installations. This is not an argument against rooftop solar. It can provide real value by reducing peak demand, improving resilience against climate change and extreme weather, expanding consumer choice by allowing for an alternative to electricity from utilities, and potentially providing a backup power source during outages when paired with batteries. But the current compensation structure for the electricity produced by solar panels turns a climate solution into an inequitable cost shift that burdens many residents.

More than half of a typical Massachusetts electricity bill now reflects delivery charges — the fixed costs of maintaining poles, wires, and transformers. Yet those costs are recovered almost entirely through per-kilowatt-hour charges. When households install rooftop solar and sharply reduce the electricity they buy from the grid — often to net zero over the course of a year — they pay little toward those fixed costs, even though they still rely on the grid when panels are not producing and when exporting excess generation. Those costs do not disappear. Someone else must cover them. In fact, simple arithmetic implies everyone else pays roughly 15 percent more in distribution charges than they would if those costs were spread evenly.

Here’s how the math breaks down. A typical Massachusetts household pays roughly $170 per month for electricity, much of it to maintain the grid. If about 13 percent of households install rooftop solar that offsets most of their annual usage costs, the fixed costs of supporting the grid do not disappear, they are shifted onto everyone else.

Even under conservative assumptions, this implies at least about $15 per month in higher charges for the remaining households, and probably more, since solar adopters tend to use more electricity than average. Part of this shift is already visible as explicit net-metering surcharges: On a recent Eversource bill, those charges amount to about 1.6 cents per kilowatt-hour, or roughly $9 to $10 per month for a typical household. The rest shows up as higher distribution rates through the rate-making process as revenue shortfalls are realized. When distribution rates are set, they have to cover costs associated with more rooftop solar. The policy charges cover explicit policy costs, but as rooftop solar increases, the distribution network needs to be beefed up. These additional costs then go into the distribution charge.

These costs are spread across all nonsolar customers, including households least able to afford them. So in effect, low- and moderate-income households without rooftop solar pay higher rates so those with solar panels can reduce their bills. That is a regressive outcome driven by Massachusetts’ rate design, not by the inherent cost of clean energy.

Additionally, Massachusetts has chosen to fund energy-efficiency programs and electric vehicle subsidies through Massachusetts residents’ electricity bills themselves, a policy choice, not an economic necessity. Those programs could just as easily be financed through taxes or other mechanisms that spread costs more equitably.

The current approach may be politically unsustainable. In the high-solar-adoption state of California, backlash against such cost-shifting led to abrupt, severe rollbacks in how much solar owners are paid when they export power to the grid.

Massachusetts can choose a better path. Rate design is determined by the Massachusetts Department of Public Utilities, but the Legislature can pass laws to force it to do certain things. For example, a bill currently under consideration would require more of the fixed costs associated with transmission and distribution to be paid through fixed charges. Right now, customers pay for those fixed costs through a volumetric charge. A fixed charge would reduce the cost shift from solar owners to other ratepayers.

The state needs to prioritize large-scale wind and solar deployment and fix how residential solar exporters are compensated. New Hampshire offers a model: Its electricity bills feature higher fixed customer charges and compensate solar owners for exported rooftop solar electricity at roughly half the retail rate. Solar households still save money, but they pay for the grid they rely on. Distribution costs are recovered more evenly and equitably, and pressure on nonsolar customers is reduced.

Massachusetts has long been a clean-energy leader. It can remain one by showing that decarbonization and affordability can go hand in hand.