Eversource price hike could convince skeptics to adopt solar
According to solar experts I spoke with for this article, solar adoption has historically appealed to people you might otherwise assume don’t care for “going green.” These people dislike the “propaganda” around renewables, but they like solar because of the autonomy it provides from entities like Eversource.
If your Eversource bill and Google search history is anything like mine, you’ve probably begun to see a lot of advertisements for switching to solar. I’ve never identified as an environmentalist, but Eversource’s price hike resulting in a bill literally double what I paid last year is the type of traumatic event that can shake you out of the malaise that comes from believing everything is just fine.
I’m not alone. Some of my staunchly conservative, non-environmentalist friends have recently taken the leap to solar. These people are rural-living, climate change skeptics, but even they are suddenly interested in their own personal renewable energy generation specifically to free themselves of reliance on Eversource. Is it possible this Eversource price hike may be the most convincing case for switching to renewables? Well, it’s complicated.
According to solar experts I spoke with for this article, solar adoption has historically appealed to people you might otherwise assume don’t care for “going green.” These people dislike the “propaganda” around renewables, but they like solar because of the autonomy it provides from entities like Eversource. That’s the number one reason that was given based on a handful of anecdotal interviews I conducted. The second reason given is the cost of solar installation is more stable than traditional energy bills. The most recent price hike made the math finally work out in favor of going green. These are the claims that are stated, but neither of them are completely accurate.
The pitch for residential solar panels has been the same for a decade. It’s a long-term investment that pays for itself after a decade or two.
If you’re a homeowner, you already have an energy bill you’re paying every month. Installing solar panels may require getting a loan you can finance over many years, but your monthly payment for that loan is comparable to your monthly energy bill — or maybe cheaper. The panels go up immediately and provide “free energy” so you can effectively swap your energy bill for your loan payment. The obvious benefit is your loan payment stays the same every month whereas you can’t predict your energy bill (or future price hikes).
The industry for installing solar has changed in Connecticut in the past 10 years. One guy I spoke to said he previously considered solar back in 2008 when oil prices were high, but at the time the industry in Connecticut only provided for solar panel leasing. Which meant the solar company and Eversource got a tremendous benefit but that wasn’t shared with the person paying for the energy generation.
Today, residents can pay to install solar panels that they subsequently own, but typically the investment takes 10-20 years to pay off. After that initial investment you get “free energy” — assuming you produce more than you use. Ten years is a long time, but the arithmetic has changed thanks to Eversource’s price hikes.
Solar panel investment can now be financed for roughly the cost of your Eversource bill. Two people I spoke with who pulled the trigger on installing panels said their monthly loan payment is roughly 15 percent cheaper than their average Eversource bill from last year. Remember that 15 percent estimate, it’ll come up again in five paragraphs.
The savings are not the result of solar becoming more affordable but rather the result of the industry being subsidized by the state of Connecticut and the federal government.
One subsidy was approved by the federal government last year. If you have solar panels you can now get a tax rebate which will continue to be available until 2034. That comes from federal taxes, but Connecticut’s subsidy is a little different.
Solar subsidies in Connecticut are funded through fees charged to Eversource customers. In other words, if you pay Eversource you are already paying for solar panel installations — you just don’t get the benefit (check your bill for “Combined Public Benefits Charge” and “Federally Mandated Congestion Charge”). This is unique from other state subsidies that are typically collected through state taxes and are captured in the state’s annual budget.
Fees are a kind of flat tax, which is another way of saying the cost disproportionately affects lowerincome residents. If you make $200k a year you probably have a monthly budget of $11k — so an additional $50 to your energy bill isn’t a huge deal. If you make $50k you’re working with a $2.8k monthly budget and another $50 makes a far more substantial impact.
How much of your Eversource bill comes from fees supporting green initiatives such as solar adoption? According to Connecticut’s Office of Legislative Research, roughly 15 percent.
To add insult to injury, the high cost of solar adoption means the people most likely to benefit from the subsidy are people already on the high-end of economic outcomes. Simply put, a family surviving on a $50k household income isn’t in a position to consider an investment paid over 20 years. Realities like this are why you may have heard skeptics use the phrase “environmentalists are willing to sacrifice the poor in favor of renewable energy.”
A good way to reverse this economic injustice would be to simply stop subsidizing solar. Alternatively, the state could shift the subsidies to be paid for through the state budget — which ideally collects tax revenue more fairly than a flat fee. The state currently has a budget surplus so maybe now is the best time to make this change. Of course, either of these actions would highlight an obvious question: are you actually saving any money by switching to solar? The adoption would require additional savings beyond the current subsidies.
When I worked on Caroline Simmons’ mayoral campaign in Stamford in 2021, a solar advocate recommended a method of providing additional savings for solar adoption. Solar panels are installed by independent contractors and deal directly with individual households. The uncertainty of this direct-to-consumer business model adds to the cost. This means there’s an opportunity for the City of Stamford to coordinate with interested residents and negotiate with a contractor for a lump sum of installations at a bulk discount. The loan would be owned by the city, which participating residents would pay over the course of their financing. That could provide further savings in solar adoption.
This wouldn’t solve the problem of solar adoption largely benefiting people already financially well off, but there’s an answer for that one too. Instead of working with individual residents, the city could simply build its own solar farm on school parking lots or other municipal property. Residents could then purchase a share of this solar farm and reduce their energy costs commensurate with their investment. This would be far more accessible for lower-income households.
However, a solar farm of any meaningful size would cost tens of millions of dollars. At that point, it may make more sense to pledge the same amount of money to the state in support of expanding the Millstone nuclear power plant. Millstone has its rate locked for the next five years and historically has always been cheaper than what Eversource has negotiated (fun fact: Eversource doesn’t actually generate electricity, it negotiateds prices from producers similar to how Medicare negotiates with health care providers).
One elected official I talked to about this said “in energy there are no solutions, only trade-offs.”
Solar only works because of subsidies, but it’s immediately available. Nuclear may be the most cost effective, but it takes decades to implement. Oil continues to be the cheapest and most reliable, but it comes with environmental harm. Pick your tradeoff.
I asked friends if they would have gone solar if their bill was 15 percent cheaper. They said no. Of course, now they’re bought into solar’s success so they probably wouldn’t want the subsidy to be cut. The number of people in that situation is only going to grow.
So the math works out in favor of solar adoption — for now.