Your Neighbor's Solar Panels Are Secretly Saving You Money
Solar panels save their owners and their neighbors energy costs.
A new holistic analysis looks at all the ways panels save utilities money.
In fact, researchers say, utilities should be helping panel owners even more.
There’s a persistent myth that says houses with solar panels could raise energy costs for their neighbors. But a new analysis puts that notion to bed, showing that solar panels actually drop the cost of power, even for nearby houses.
How’s that? Scientists say solar panels lower peak demand on stressed traditional grids and have reduced the amount of infrastructure dollars that energy utilities must invest. By hooking your solar panels to the grid, you’re sneakily a hands-on investor in your local utilities.
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In the March issue of Renewable and Sustainable Energy Reviews, Michigan Technological University professor Joshua Pearce and graduate student Koami Soulemane Hayibo publish their new findings about the cost of solar panels. They say utilities have worried that solar panels increase the cost for surrounding homes, maybe based on the idea that these neighbors could be charged higher rates to compensate for “missing” electricity customers.
Instead, Pearce and Soulemane found that homes with solar panels are heavily subsidizing their local electrical grids—to the point that their research calls for regulatory reform.
To calculate this number, they broke down the “value of solar (VOS)” into a list of parameters: “The avoided costs considered are: plant O&M [operation & management] fixed and variable; fuel; generation capacity, reserve capacity, transmission capacity, distribution capacity, and environmental and health liability.”
By considering each variable with an individual sensitivity analysis and then combining all those values into one master VOS figure, the scientists quantified how much solar-powered homeowners feed back into the grid. That’s not just their actual excess solar power during peak sunlight hours, but also the way their investment in panels saves utilities from investing their own money in infrastructure improvements, for example.
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The researchers say this is the first calculation of its kind to holistically look at the costs and saved costs to utilities of homes with solar panels. They explain:
“VOS calculations are challenging and there is widespread disagreement in the literature on the methods and data needed. To overcome these limitations, this study reviews past VOS studies to develop a generalized model that considers realistic future avoided costs and liabilities.”
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This means it’s important to quantify what solar panel customers are doing for the grid and take that into account when crunching the numbers. And when it comes to solar, the devil is in these details:
“The results show that 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.”
So what does this mean for you? Well, tax incentives and environmental reasons have already made solar panels attractive to a lot of people. But if the scientists are right, the future could hold policies that make utilities consider solar-paneled homes with even more financial incentives to balance out these homes’ contribution to their local grids. That could lead to savings and even lowered upfront costs—and more homes letting the sunshine in.
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