The Cost of Solar Power to Electric Companies

by Alex Elder

Solar panels have long been touted as a simple source of renewable energy. The have even become widely available to average energy consumers; a homeowner can simply attach solar panels to their roof and gain access to solar power energy. Utilization of solar panels has increased greatly over the past several years, with one rooftop solar system being installed every four minutes in 2013 (Than 2013). However, despite the availability of solar panels and their ease of use, some people have raised concerns about their impact on the energy market.

This new source of energy is not good for electric companies because as more and more solar panels are installed, the smaller their dividends get. Although this may seem like a positive consequence of increased reliance on renewable technology, electric companies disagree. They feel as though people who receive subsidized electricity bills through their use of solar panels are not paying their fair share. Although solar panels are a good source of electricity, consumers still rely on the infrastructure originally built by electric companies to connect households to the electric grid. Thus, users of solar panels are depending upon this groundwork without paying the cost, or so electric companies believe.

As a result of this perceived imbalanced cost, electric companies have tried to scale back the discounts solar panel users receive. Electric companies all over the country are petitioning local governments to reduce the government-provided rebates from rooftop solar systems. The cost of utilities, these companies argue, is not simply for the energy consumed but also for access to the electric grid. David Owens, executive vice president at the Edison Electric Institute stated that “it’s not about lost revenue. We want to make sure the grid is maintained, that it can be enhanced.” However, it is unclear whether or not the electric companies’ backlash against residential solar energy is truly about grid access or is simply a cover for an effort to regain lost profits.


Than, Ker. As Solar Power Grows, Dispute Flares Over U.S. Utility Bills. The National Geographic. Published December 24, 2013. – news/energy/2013/12/131226-utilities-dispute-net-metering-for-solar/


Kind, Peter. Disruptive challenges: financial implications and strategic responses to a changing retail electric business. Edison Electric Institute, 2013.


Carley, Sanya. “State renewable energy electricity policies: An empirical evaluation of effectiveness.” Energy Policy 37.8 (2009): 3071-3081.

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