Shift Key with Robinson Meyer and Jesse Jenkins Shift Key Classic: California’s Rooftop Solar Question
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Dec 31, 2025 Severin Borenstein, an economist and director at UC Berkeley's Energy Institute, delves into the high costs of rooftop solar in America and its impact on low- and middle-income Californians. He reveals how net metering shifts nearly $4 billion onto non-solar households, challenging the fairness of electricity pricing. The discussion also touches on equity issues related to electrification, the historical shift in energy pricing, and the potential benefits of public ownership in utilities. It's a deep dive into the complex landscape of energy economics.
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Solar Cost Shift Is Large And Hidden
- California's high retail electricity rates far exceed the utility's marginal cost of supply, creating a large subsidy to rooftop solar owners.
- Severin Borenstein estimates the residential cost shift from solar is about $4 billion in 2024, raising non-solar bills by roughly $300 per household.
Marginal Cost Of Electricity Is Much Lower
- The true incremental cost of an extra kilowatt-hour is roughly 5–10 cents, far below many retail prices.
- Much of what customers pay is fixed system or public-policy costs that do not drop when households self-generate.
High Rates Undermine Electrification
- Overpriced electricity discourages electrification of cars and heating, undermining decarbonization goals.
- Simultaneously, fossil fuels like gasoline remain underpriced, further biasing choices away from electrification.