Market update · Global
US Power Prices: Utility-Scale Solar Lowers Costs, Rooftop Solar Linked to Higher Rates
MIT research finds that renewable portfolio standards (RPS) and utility-scale renewables, especially solar, are associated with stable or lower residential electricity prices in the US. In contrast, rooftop solar correlates with higher residential rates and increased distribution costs, potentially due to current tariff structures and grid design challenges.
SolTraCo market update · · 3 min readImpact of Utility-Scale Renewables on Residential Prices
MIT researchers analyzed data from 1998 to 2023, covering residential prices, RPS stringency, generation mixes, and utility spending. They found no association between RPS or utility-scale renewables and higher residential electricity prices. Instead, utility-scale solar is strongly linked with lower prices, with a 10-percentage-point increase in its generation share correlating to an 8% reduction in residential prices.
Utility-scale solar also contributes to lower transmission, distribution, and operation and maintenance costs, likely because large solar plants reduce network congestion and do not require fuel inputs.
Rooftop Solar and Residential Electricity Prices
In contrast to utility-scale solar, rooftop solar is associated with higher residential electricity prices and increased distribution operation and maintenance costs. A 5-percentage-point rise in rooftop solar's share correlates with roughly a 16% increase in prices.
Researchers suggest that current tariff designs in some states shift fixed costs from rooftop solar owners to other ratepayers through additional volumetric rates. Additionally, the distribution network's lack of design for bidirectional power flows contributes to higher costs.
Context and Policy Implications
The findings align with a June 2025 Lawrence Berkeley National Laboratory study that found no broad upward effect on retail prices from utility-scale wind and solar built outside RPS programs. However, rooftop solar's cost-shifting remains a contentious issue, exemplified by differing estimates in California regarding the financial impact on ratepayers.
MIT researchers emphasize the need for improved integration of low-cost renewables and more equitable cost recovery strategies to ensure an affordable energy future.
Sources
This update is an original SolTraCo synthesis of the linked industry sources. Reported facts and commercial interpretation are kept separate. It does not contain confidential deal information and is not investment, legal or technical advice.