FREEING ENERGY

Is utility-scale solar really cheaper than local solar?

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Even for solar advocates, it can be hard to shake Big Grid thinking. Most experts tell us that the economies of scale of utility-scale solar plants will always make them the cheapest way to build solar. But these lower costs rarely, if ever, benefit the most important group of all: the electricity customers and the communities they live in.

There are several reasons why cheap utility solar won’t necessarily lower costs for electricity customers:

  • First, the lower price of utility solar is offset, in part, by the costs required to deliver it to customers. Sometimes the distribution and transmission of a solar kilowatt hour can actually cost more than the generation of the kilowatt hour itself.
  • Second, utilities have huge sunk costs–like existing power plants and transmission upgrades–that can eat up any new savings a solar plant might provide.
  • Third and finally, US utilities are facing hundreds of billions of dollars in unpaid waste cleanup costs, like coal ash ponds, long term nuclear waste storage, and uncapped natural gas wells.  It is unclear who will pay these costs in the future but it is unlikely utilities can lower bills too far with these outstanding liabilities.

 

John Farrell, the Director of Energy Democracy at the ILSR puts it best, “local energy competes in an entirely different market.”

The Freeing Energy Perspective

In order for the clean energy economy to replace the current fossil fuel-dominated one, it will require contributions from all types of clean energy: wind, solar, geothermal, etc. And small-scale solar systems are frequently overlooked opportunities to further accelerate the shift to clean energy .

Small-scale solar systems offer many benefits to consumers including reducing the energy bills and creating far more jobs than utility-scale solar projects do (see Small-scale solar installations create 10-times more jobs per megawatt than utility-scale solar). 

If you’re interested in learning more about solar energy, be sure to check out our series “Solar Myths” where we debunk common misconceptions people have about solar.

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