African-American state lawmakers are worried that policies encouraging the use of rooftop solar panels may be widening inequality between rich and poor communities, hitting minorities especially hard.
The National Black Caucus of State Legislators embraces green energy sources, like solar power, but worries that current subsidies for rooftop solar panels hurt blacks and other poor communities because they are essentially a wealth transfer from poor to rich.
“We are concerned about the regressive nature of the cost-shifting that results from the net metering policies used to make [distributed generation (DG)] appear to be a more attractive financial proposition,” NBCSL wrote in a recent report.
“The end result is that households not able to afford DG systems are inadvertently left to pay more for the electric grid. These costs will continue to escalate as DG providers continue to market to more affluent households,” NBCSL reported. “The last in line will continue to share an increasingly larger financial burden.”
Traditionally electricity is centrally generated from a power plant and sent out to households in its service area. But now, an increasing amount of homes are using rooftop solar panels to generate their own electricity and offset utility bills. Generous subsidies, including a policy called net metering have made generating power from solar panels extremely popular.
Net metering allows households to offset the amount of power they get from the electrical grid and even sell back excess power to the utility at or near retail electricity rates. Herein lies the problem, according to NBCSL. Retail electric rates cover the cost of maintaining the electrical grid and other utility fixed costs, meaning net metering customers “are avoiding paying for the full range of services provided by the grid, leaving a smaller group of customers to pick up the slack,” says NBCSL.
“In this way, many DG programs make it possible for participants to avoid paying their fair share for maintaining the electric grid,” NBCSL reports. “As current trends make clear, there is a very high likelihood that this shrinking group of customers will be comprised of disproportionately large numbers of low-income, fixed-income, and minority households.”
State lawmakers across the country have been debating net metering policies, but resistance from green energy advocates, environmentalists and the solar industry has been fierce. Detractors of the policy say it’s a wealth transfer from poor to rich that harms the integrity of the electrical grid. Proponents of net metering, however, argue that subsidies are necessary to spur innovation and keep driving down the cost of solar power. Many see it as a way to break the so-called monopoly electrical utilities have on generation and rates.
California residents have learned the hard way that net metering policies for solar can increase your utility bill. The state’s utility regulator estimates that net metering will add $1.1 billion to yearly annual bills of non-rooftop solar customers by 2020.
The median income of a home with solar panels is “$91,210, compared to the median income in California of $54,283,” California utility regulators reported. NBCSL worries that wealthier homes will be able to push the costs of maintaining the grid onto poorer families.
“The unfortunate irony is that those who would benefit most immediately and most profoundly from these programs — minorities, low-income households, and those on fixed incomes, who already pay a greater percentage of their income for electricity service — are disproportionately picking up additional costs,” NBCSL reported.
Black lawmakers have even gone so far as to call for an end to solar subsidies, saying the price has come down far enough for people to afford it without them. They argue that “[g]enerous subsidies, tax breaks, and incentive programs were vital to the early success of many DG systems, including solar at a time when equipment and installation costs were high. Such subsidies are no longer justified given current market conditions.”