By: Andrew Follett |
Maine is considering slashing solar subsidies after the state’s Public Utilities Commission concluded they unfairly penalize people who don’t own solar panels.
Maine’s Public Utility Commission is considering phasing out net metering financial incentives for both new and existing users. The commission will be accepting written comments on the changes until November 2nd and will make a decision by the end of the year.
The state’s governor, Republican Paul LePage, is a harsh critic of net metering governor and previously vetoed legislation which would have expanded it.
Many states have enacted net-metering policies for homeowners with solar panels. Solar companies and environmentalists have pushed these policies as a way to encourage solar power and fight global warming, but utilities argue net-metering shifts the costs of maintaining the electrical grid on to households that don’t have solar panels. Currently, Maine forces utilities to buy the electricity produced by rooftop solar panels at two to six times the market price through net metering.
Net metering increases electricity prices for American families and redistributes money from poorer individuals who don’t own solar panels to richer ones who do, according to a study by the free market Institute for Energy Research (IER). IER’s findings closely mirror those of a 2015 study by the Massachusetts Institute of Technology (MIT) which found rooftop solar subsides increase costs and the business model isn’t viable without government support. Effectively, net metering forces people who don’t own rooftop solar panels to pay more to maintain the grid.
Even proponents of solar power and net metering recognize their reliance on subsidies. Without high net metering payments, rooftop solar “makes no financial sense for a consumer,” Lyndon Rive, CEO of SolarCity, told The New York Times in February.
Solar power get 326 times more in subsidies than coal, oil, and natural gas per amount of energy generated, according to 2013 Department of Energy data collected by Forbes. Green energy in the U.S. got $13 billion in subsidies during 2013, compared to $3.4 billion in subsidies for conventional sources and $1.7 billion for nuclear according to data from the Energy Information Administration (EIA).
Most solar subsidies go to the kind of residential installations and includes a 30 percent federal tax credit, while wind is usually industrial scale and is thus somewhat more efficient per dollar spent. Solar-leasing companies install rooftop systems, which cost a minimum of $10,000, at no upfront cost to the consumer. Companies do this because the state and federal subsidies are so massive that such behavior is actually profitable. Solar companies simply cannot compete without government support.
Despite these lucrative subsidies,wind and solar power only accounted for 4.7 and 0.6 percent of all electricity generated in America respectively last year, according to data from the EIA.
Solar subsidies hurt the poor and ethnic minorities most because more impoverished people tend to spend a higher proportion of their incomes on basic needs like energy. As essential goods like electricity become more expensive, the cost of producing goods and services that use electricity increases, effectively raising the price of almost everything. Policies like net metering hurt the poor 1.4 to four times more than they hurt the rich, according to a study by the National Bureau of Economic Research.