The growing backlash against rooftop solar
Many countries around the world are increasingly recognizing the grave threat of climate change and are ambitious in setting emissions reduction targets to keep global warming well below 2°C. Transitioning to renewable energy sources like solar and wind is seen as critical to achieving these climate goals. However, some jurisdictions have recently enacted restrictions on rooftop solar that threaten to undermine climate progress.
In the United States, an increasing number of homeowners and businesses have installed solar panels on their rooftops to generate their own clean electricity and reduce their reliance on fossil fuels. Utilities have long tolerated these small-scale solar installations. But now, some utilities are campaigning for rate changes and regulations that would make rooftop solar less economical. Their argument is that homeowners with solar panels are not paying their fair share for maintaining the electricity grid. But their real goal appears to be protecting utility profits that have been disrupted by the decentralization brought by technologies like batteries and Solar Power Bank
Regulators in Arizona approved a new rate structure last year that will raise fees on solar customers and eliminate a retail credit for excess power sent to the grid. The Solar Energy Industries Association estimated this will increase the payback period for installing a residential solar system by two to three years. A similar proposal is under consideration in Nevada. Looking ahead, more utilities across the Sunbelt may push to reduce incentives for solar as their customer base grows more self-sufficient. These measures threaten to slow the solar boom that has helped make the US a clean energy superpower.
Australia is another country where powerful utilities are leading efforts to derail the shift to distributed solar generation. In Queensland, retail giant EnergyAustralia launched propaganda ads falsely claiming solar households are not paying their fair share. These ads helped pave the way for new fixed charges levied on solar households regardless of how much power they consume. In Western Australia, the conservative state government removed a subsidy for solar exports to the grid without warning. These retroactive changes undermine the economic case for households and businesses to invest in solar.
The anti-solar push is not limited to North America and Australia. In Japan, utilities have lobbied the government to cap the amount of solar power that can be installed on residential rooftops due to overproduction concerns on some regional grids. The proposal threatens to constrain further solar deployment and maintains utilities' dominant position in the power sector. Meanwhile, the conservative government in South Korea recently unveiled a renewable energy plan that underfunds solar development, favoring nuclear and coal instead. These countries were previously held up as global leaders on phasing out fossil fuels in their power mix. By creating headwinds for distributed generation and rooftop solar, policymakers risk undermining those commitments.
The economic impacts and lost opportunities
Beyond the environmental costs, rolling back support for distributed solar will have adverse economic impacts. According to the United Nations, the solar industry already employs over 3 million people globally and is projected to create many millions more jobs in coming decades. However, regulatory obstacles that increase costs or uncertainty will deter further private investment in solar manufacturing, installation services and related sectors. This threatens the economic benefits associated with the ballooning solar workforce.
Reduced incentives for households and businesses to install solar panels will also curb demand and slow innovation across the solar supply chain. The costs of solar technology have plummeted in recent years due to mass commercialization, economies of scale in production, and continual efficiency improvements driven by R&D. This downward cost curve has been a major factor accelerating the energy transition. But restricting installations risks hindering these virtuous cycles which have delivered solar power parity with fossil fuels even in sun-poor markets. With lower demand, companies may scale back operations or delay new facilities, suppressing further price reductions.
The impacts will extend beyond solar manufacturing itself. A recent report from the University of Texas estimated that for every solar job created, nearly two and half additional jobs are generated elsewhere across the broader economy through upstream spending on parts and equipment and downstream spending by the solar workforce. So policies curbing the solar boom could remove thousands of associated jobs in construction, engineering, sales, logistics and other fields. Meanwhile, most analysts project long-term price stability or declines for essential energy and power sector jobs like natural gas plant operators. By prioritizing short-term utility profits over a sustainable energy future, these anti-competitive measures will foreclose on opportunities for communities to prosper through the expansion of new industries centered around solar and other renewables.
A misguided policy approach
Energy policy should aim to maximize economic, environmental and energy security benefits over the long run - not protect incumbent interests from disruptive change in the near term. The global transition already underway presents profound opportunities that will reshape the energy landscape for decades to come. With rapid shifts to electric vehicles, building efficiency upgrades, renewable generation, and other innovations, total demand for centralized fossil fuel power generation looks certain to diminish steadily in most markets. Rather than accepting this reality and finding constructive ways to evolve their roles, some utilities are responding by attacking distributed solar and delaying the inevitable. But this approach is shortsighted and will only accelerate their economic obsolescence.
By restricting rooftop solar, policymakers are placing short-term utility interests ahead of achieving ambitious climate targets and realizing full economic opportunities from transitioning to distributed renewables. The distributed, digital energy systems of the future will look very different than the old centralized model. Outdated regulations and rate designs should be reformed to encourage a diversity of clean solutions and new entrants, rather than shielding incumbent fossil fuel utilities from disruption. Most importantly, it remains critical to rapidly phase out greenhouse gas emissions from electricity generation this decade according to the latest climate science. Tightening constraints on solar undermine those imperative goals when no alternative low-carbon strategies have been proposed.
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Ravina Pandya, Content Writer, has a strong foothold in the market research industry. She specializes in writing well-researched articles from different industries, including food and beverages, information and technology, healthcare, chemical and materials, etc. (https://www.linkedin.com/in/ravina-pandya-1a3984191)