Hidden subsidy in rooftop solar

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Even without net metering actually earning income for the owner, rooftop solar[1] reduces the owner's electricity bills according to the amount of self-generated energy the household uses. This consequently reduces the earnings of their grid electricity supplier. The supplier saves a little of that lost income through having to buy a bit less fuel, but they still have the costs of keeping their generators and the grid network running. Since they make less income from the solar-owning customer, the supplier will have to charge everybody else a bit more to keep its income steady and stay in business. This enriches relatively well-off people who own their own homes and who can afford solar installations at the expense of everyone else, disproportionately hitting society’s poorest people who tend to spend the greatest proportion of their incomes on fuel.

Net metering further subsidises the owner of rooftop solar. By offsetting electricity exported to the grid from energy consumed by the household (effectively or actually making the electricity meter run backwards when the rooftop panels are generating more than the household is using) it effectively pays the household the same rate for electricity they generate as consumers pay for energy they consume; a far higher price than large utility suppliers get. If the metering period extends over periods of many months, rolling over credits for electricity generated from one month to the next, it allows the owner to use payment for electricity generated in, say, July against electricity they consume in January.

Footnotes and references

  1. This does not have to be literally on a roof but includes any solar PV, which could for example be installed in a garden, which is connected to the consumer's side of their electricity meter.