It sounds counterintuitive, but solar on your neighbor’s house actually helps you. According to a recent study of the value of solar (VoS) in communities, solar panels lower costs across the grid. Obviously, installing solar panels saves money for you. But how does solar power help your neighbor? The VoS findings dispel a persistent myth that solar panels raise energy costs. Instead, solar panels reduce peak demand and essentially subsidize the local electrical grid.
Among other factors, researchers found that utilities save money through solar by reducing their need to improve infrastructure. From the paper:
“…grid-tied utility customers are being grossly under-compensated in most of the U.S. as the value of solar eclipses the net metering rate as well as two-tiered rates.”
The paper refutes the argument that utilities must charge higher rates to compensate for income “lost” from solar.
The researchers, Michigan Tech professor Josh Pearce and grad student Koami Soulemane Hayibo, argue that regulatory reform is needed to propel the solar market. Their paper, “Review of the Value of Solar Methodology with a Case Study of the U.S. VOS,” is published in the March 2021 issue of Renewable and Sustainable Energy Reviews.
Their Value of Solar results show grid-tied utility customers are under-compensated in most of the U.S. The Value of Solar eclipses net metering rates and two-tiered rates, meaning solar customers are not paid fairly for solar panel production.
The avoided costs they considered include:
- Plant operations and maintenance (fixed and variable)
- Fuel cost
- Generation capacity
- Reserve capacity
- Transmission capacity
- Distribution capacity
- Environmental and health liability<
- Value of increased security
Their “value of solar” findings represents the sum of these avoided costs.
What is the Value of Solar?
In 2014, Minnesota became the first state to adopt a VoS policy. The basic concept behind VoS is that utilities pay a transparent and market-based price for solar energy. VoS is based on:
- Avoiding the purchase of energy from polluting sources
- Avoiding the need to build additional power plant capacity to meet peak energy needs
- Providing energy for decades at a fixed price
- Reducing wear and tear on the electric grid, including power lines, substations, and power plants
Based on the researchers’ holistic and highly technical analysis, solar photovoltaic owners are unfairly subsidizing electric utilities.
For example, the externalities of health are considerable. They demonstrate the impact of air pollution. One recent study claims some 8 million deaths world-wide are linked to fossil-fuel pollution. The VoS paper cites a study that shows over 50,000 deaths can be prevented by replacing coal-fired electricity with solar power in the US. The significant health benefits of eliminating coal and going solar come from massive reductions in air pollution. Surprise! Clean air is good for you and reduces associated health costs.
The VoS paper also suggests that an even higher value of solar can be found by evaluating the “secondary health and environmental effects such as increased crop yields from PV-reduced pollution, and accurate estimations of the value of avoided green-house gas (GHG) liability costs, or avoided GHG emissions liability insurance.”
So what’s the plan to increase community solar power?
Last week a broad clean energy coalition launched a plan for “30 Million Solar Homes” in the US. The comprehensive policy outlines a path to install rooftop solar on 30 million American homes and expand community solar projects. The 30 Million Solar Homes plan was delivered to Congress on Feb. 11, 2021.
Led by the Institute for Self-Reliance (ISR), Initiative for Energy Justice (IEJ), and Solar United Neighbors (SUN), the policy recommendations estimate the creation of 3 million clean energy jobs. In addition, carbon emissions would be cut by 1.5% annually and drop energy bills by at least $20 billion. Other 30 Million Solar Homes (30MSH) sponsors include the Sunrise Movement, League of Conservation Voters, Solar Energy Industries Association and the American Council for an Energy-Efficient Economy. The solar plan also includes an extension of the federal solar investment tax credit (ITC) to 2025. (It’s currently set to expire in 2022.)
Read details from the 30MSH plan here.
Much of the aggressive solar policy is geared to making solar incentives more equitable and building in so-called solar “deserts” and marginalized communities. The coalition wants to boost community solar by granting eligibility to nonprofits, local governments, and rural electric co-ops for the federal solar ITC. They recommend that the 26% ITC be refundable instantly for solar projects as a cash refund.
Commercial solar projects that pay “Davis-Bacon” prevailing wages will receive an additional 10% tax credit, paid as a cash grant. Solar projects built in marginalized communities, both residential and commercial would receive another 10% tax credit.
Increased federal assistance energy funding for the Department of Health and Human Services’ (DHHS) Low-Income Home Energy Assistance Program (LIHEAP) program will create a solar “carveout” for eligible households and community solar subscribers.
By allowing LIHEAP service providers to develop bill assistance with a transferable solar share, more energy consumers can gather under the sun-powered “umbrella” of community solar energy.
Part of the plan combines energy efficiency with rooftop solar to reduce energy costs for low-income households including:
- Increased funding for the Department of Energy’s (DoE) low-income Weatherization Assistance Program (WAP)
- Expanded WAP income eligibility
- Using WAP funds for rooftop solar
- Removing the WAP household spending limiting for renewable energy
Private investment in Equitable Solar Energy
The 30MSH plan also specifically targets private investment in equitable solar.
By modeling Clean Energy Victory Bonds on World War II bonds, clean energy investments can finance projects on the local, state, and federal level. From the 30MSH solar blueprint:
“Federal actions can increase access to private capital for these projects and allow all Americans to invest in our nation’s equitable climate and economic recovery.”
In addition to bonds, the plan calls for a National Loss Reserve at the Dept. of the Treasury (DoT) to diminish the risk of Community Development Financial Institutions (CDFIs) investing in an equitable clean energy transition.
Other recommendations to catalyze private investment:
- Create a grant program at the DoT with $100 million seed funding to CDFIs for loss loan reserves that support solar financing in marginalized communities.
- Establish a national green bank like the National Climate Bank Act (S.2057) with a Pay As You Save (PAYS) financing to expand access to community-owned solar installations for marginalized communities.
Solar for Renters?
Typically, public housing residents and renters cannot benefit from solar energy savings. This plan would aid federally subsidized housing to install solar in these communities.
About a third of Americans rent their homes, but community solar can bridge the gap and extend solar energy to more people. The 30M Solar Homes plan addresses legal and financial barriers for renters to ensure all households can access solar energy. It would create a new Department of Energy (DoE) program by providing loans for projects up to 2MW.
To be eligible, community solar projects must dedicate a minimum of of 50% to low- and moderate-income households and marginalized communities.
Solar Schools and Tribal Solar
Schools and rural business owners face steep upfront costs to install solar panels. The 30M Solar Homes plan requests federal funding that prioritizes K-12 schools, especially those with a high proportion of low-income families. The plan recommends quadrupling funding for the US Department of Agriculture (USDA) Rural Energy for America Program (REAP). REAP provides grants and loan guarantees to rural businesses. The plan further outlines a REAP Tribal carveout for farms and business on Tribal lands and giving technical assistance for REAP applicants.
Streamlined Solar Deployment
The plan addresses long permitting times, unclear costs, and other barriers to solar energy adoption through:
- A national solar marketplace coordinated by the DoE to compare solar install quotes
- Assisting local governments to adopt automated permit processing and reduce wait times
- Prohibiting homeowners associations from solar restrictions
Solar Energy and Storage
30M Solar Homes has guidelines to mitigate and minimize disaster impact by creating a $1 billion resilience grant through the DoE. The grant competition would help install solar and energy storage on key anchor institutions essential businesses and residential buildings.
By supporting workforce development for underrepresented communities, the plan diversifies solar energy installation through training programs focused on BIPOC, women, formerly incarcerated people, LGBTQ+ individuals, and transitioning energy workers. The workforce development targets installers, supply chain manufacturers, research and development, engineering, and other fields.
The comprehensive plan officially launched on Feb. 10, 2021.
What do you think? How important is equitable solar energy and the value of solar power?
Did you know?
On Feb. 11, the Federal Energy Regulatory Commission (FERC) created a senior position to address environmental injustice.