American Solar Energy Society

In the 1800s, many American families were farmers. Think Little House on the Prairie or some other scenario that is vastly different from your current life. Farm work was all about getting the ground ready for seeds, putting seeds in the ground, and hoping to harvest enough for the winter.

If you had a mule or a horse, you could access about 10 times the power of a person. That factor of ten made it possible to plow, plant, and harvest more than your family could consume, providing a cash crop. Cash was king.

For many parts of our country, the Erie Canal brought commerce. You could sell your farm’s produce to a wider market and get a new shirt that arrived on a canal boat, many times easier than the shirt you wanted before the canal existed.

Attached to the boats by a rope, mules and horses walked along a towpath next to the canal, pulling the barges behind them as they went. Teams of horses or mules worked in shifts. Compared to overland travel of their time, these barges were the equivalent of today’s jumbo jets in terms of efficiency and scale.

Today, I use a solar electric mule to power the boats I sometimes ride on the Erie Canal. But instead of a couple of acres of grassland to feed my solar-powered mule, the area on the roof of the boat provides a couple of horsepower. This remarkable ratio, maybe 1000 to 1, results from both the inefficiency of the food chain from sunlight to animals and the over 20% efficiency of doped silicon crystals in converting solar photons into a direct electric current.

Having traveled 1400 miles, the equivalent of Maine to Florida, voyaging with my son from Bellingham, Washington, to Glacier Bay, Alaska, in a 100% solar electric boat, I feel confident to say I have a solar electric-powered mule.

Solar Sal Boats is building our 12th 100% solar powered electric boat. One of our boats, a 25-foot model, has been in operation for 14 years on an Adirondack lake with no road and no electricity. As a launch, it takes people, their baggage, and most importantly, their food to up to 50 people living in the woods in tents. Sometimes it takes lumber or a cement mixer!

The most well-known Solar Sal boat is a 44-foot commercial tour boat that generates revenue for the Hudson River Maritime Museum in Kingston, New York. Named Solaris, she is the first 100% solar U.S. Coast Guard-inspected boat.

An outing on Sol, the first wooden boat. © David and Harriet Borton

Solar Boating and Alaska

During the Covid slowdown in 2020, our son Alex suggested that he and I make a solar voyage 1,400 miles to Glacier Bay, Alaska, from his home in Bellingham, Washington. This suggestion did not come out of the blue. He had been cruising around the San Juan Islands in our 27-foot solar electric boat, long enough to know the boat was good for the trip. Since I had been designing, building, and piloting solar electric boats, I knew that we could afford the fuel (free solar energy). And Covid-related slowdowns meant we could afford the time.

A Short History of Our Boats

After a couple of experiments to test the concept, in 2011 my wife Harriet and I built a 25-foot wooden solar electric boat in our garage. I named her Sol (Spanish for Sun) because I put my soul into it, and she is the sole boat I thought I’d ever make. But things turned out differently: Sol was such a good boat that I couldn’t stop! She was designed as a launch for a lake in the Adirondacks and is still in use today.

Solaris Construction at HRMM. © DHudson River Maritime Museum

The hull form of Sol was found by our son Alex. Dennis Wolfe in Michigan had made a plug in version that looked perfect for our boat. Dennis made the ribs, or forms, and bulkheads that define the cross sections of the boat for us. These shapes are mounted on a wooden frame attached to the floor of our garage. This ladderback or hardback sets up the coordinate system for shaping the boat. Once the frames are firmly attached to the hardback, I choose to use 1-inch x 1-inch red cedar strips to frame the hull.

Other traditional boat-making techniques use wider planks and other woods and make the boat right-side up. By making the boat upside down, however, the entire hull is available for attaching the strips, then smoothing the surface, and, in this case, adding a couple of layers of fiberglass for extra strength and durability. The process of getting a smooth final shape is called fairing, and the finished result is ready for painting.

Typically, the sides are painted with the desired color, and a red “boot stripe” is painted at the waterline. The bottom usually has “bottom paint,” which is formulated for saltwater or freshwater and contains ingredients to reduce the growth of plants and animals that need a surface to grow on. ‘Roll over’ is the exciting process of releasing the hull from the hardback and turning it right side up. The interior of the boat can have a wide variety of designs and features, but some items are required. Sol has an electric outboard motor hidden in a motorwell just ahead of the transom. The motor is controlled from the helm and steered by a round or spoked wheel. A throttle controls the electric power going from the batteries to the motor and thus the boat’s speed and direction.

Sol has a solid roof that supports 1.5 kW of solar photovoltaic panels. The panels’ electrical output is connected to a charge controller that provides the correct amount of power to charge the battery. This power level depends on the type of battery and the state of charge, or how full the battery is.

Attaching panels to Solaris roof.© David and Harriet Borton

For me, a solar-electric boat is practical if the power available on the roof approximately equals the power required to move the boat through the water at its hull speed. Hull speed is the physical limit for a displacement hull moving in the water. As the boat moves, it generates a wave, and as the boat moves faster, it generates a wave with a longer wavelength. When the wavelength equals the length of the boat, the water is pushed higher, but the boat doesn’t go faster.

Experimental Model on Mohawk River. © David and Harriet Borton

Speed boats have a flatter bottom and more powerful, fuel-powered engines that can push the boat up and over the bow wave. This is a different physics that supports the boat in a planing configuration. Sol’s displacement hull is supported by the water around it. Planing boats are supported by pushing the water down hard enough to lift the boat up.

Family volunteers helping to build Solar Sal. © David and Harriet Borton

The solar panels on a solar electric boat are chosen for their high efficiency in converting light into electrical power. The system’s wiring is chosen to minimize power loss during transmission. Good charge controllers have high efficiency, and efficient batteries are a topic in and of themselves. Boat motors used to have a commutator that controlled the position of the magnetic fields by connecting carbon brushes to different windings. Recently, high-power electronic current control has enabled brushless motors and requires essentially no annual maintenance.

These practical boats have no fuel cost, require no plugging in to charge, and are usually fully charged when you step to the helm and turn on the motor. Like turning on a light switch, the power is instantaneously available.

Electric motors have several specific advantages over internal combustion engines. One is that the torque that turns the propeller is fully available when you turn up the throttle. For a fuel-powered engine, the torque depends on RPM, and so the engine must speed up to get to full torque.

A more important difference is that a fuel engine must be turning at a minimum idle speed; it can’t operate below that speed without stalling. The engine clunks into forward or reverse at idle. In contrast, an electronically controlled electric motor powers at every speed from zero to full speed, with no clunk and instant torque. This control is important for ease of docking and maneuvering in tight spaces.

Sal on the Erie Canal

My next boat was a 40-foot wooden solar-electric boat, designed as proof of concept for both cargo and passengers. She was planned for the Erie Canal, and during the building by volunteers, the group was thinking of the Erie Canal song.

“I’ve got a mule, her name is Sal, 15 miles on the Erie Canal…”

A friend suggested “Solar Sal,” and the name stuck. (We have since adopted the name “Solar Sal Boats” for our entire line of solar-electric boats.) Just after completion in 2015, the original Solar Sal made a cargo trip the length of the Erie Canal from the Hudson River to the Niagara River at Buffalo. There she picked up four tons of cardboard and returned to a paper mill a little north on the Hudson River, a 750-mile solar-powered recycling trip. This was the first carbon-free trip on the Erie Canal since mules.

Solaris and Solar Sal 24, traveling together near Kingston, New York. © David and Harriet Borton

These boats did not generate a lot of buzz in the boating world, so we made a plan—a 44-foot, U.S. Coast Guard-inspected boat certified to carry paying passengers. That was a big change because I’m not recognized by the Coast Guard as either a boat designer or a boat builder. Therefore, we found an excellent and well-known Marine architect, Dave Gerr, and in 2017, put his detailed design out to bid. We chose the Riverport Wooden Boat School in Kingston to build her. The Boat School is part of the Hudson River Maritime Museum, and during the build, they realized she was the perfect boat for them. The museum bought her, christened her Solaris, and since her launch in 2019, they have been giving regular tours on the Hudson River and Rondout Creek. She is very popular and never needs to be plugged in.

If you think any of this was straightforward, you’d be wrong. As required for a boat carrying paying passengers, the Coast Guard was actively involved throughout the construction process. But they had incomplete rules for electric boats and no regulations for solar boats, and we had the first 100% solar-electric boat seeking Certification. That was a learning experience in both directions.

Alex, living on the West Coast, wanted to introduce solar electric boats out there. He found Sam Devlin, a well-known and respected boat builder, and together they developed a 27-foot Solar Sal for the Pacific Northwest. Our other son, Chuck, who also lives in the east, came up with the name for the west coast boat, Wayward Sun, pun intended! Alex cruised Wayward Sun around Puget Sound, the San Juan Islands, and into the Strait of Georgia in southern British Columbia.

In 2021, Alex and I prepared the boat for the Alaska trip and cruised to Sidney on Victoria Island to see if the Royal Canadian Mounted Police would let us into the waters of British Columbia during Covid. The land portion of BC was shut down to Americans, and even internal travel was curtailed. The Mounties thought our boat looked on the small side, but let us in if we followed the rules: don’t go on land; do go the shortest route; don’t stop unnecessarily, etc.

Wayward Sun in Glacier Bay. © David and Harriet Borton

About three days were sunny during the cloudy, rainy, foggy Inside Passage, but we had lots of solar energy. Because electric motors are quiet, we heard lots of whales spouting, saw lots of charismatic mega-fauna, and enjoyed mountains, glaciers, and waterfalls. Covid restrictions kept passenger vessels and cruise ships out of the waters and the docks along the way. Barges with timber and wood chips, shipping containers, and construction equipment enlivened the first half of the BC route, but thinned out the rest of the way. Occasional fishing boats went by, and a couple of times we saw them fishing.

David and Alex arrive in Ketchikan, Alaska on Wayward Sun. © David and Harriet Borton

We did get a sunny day during our stop in Ketchikan and again in Juneau. The best was the sun for our day at the face of the Margerie Glacier. We could see 14,000-foot mountains and snowfields at the top of the glacier. Calving ice made lots of different noises and various iceberg pieces around us — a small boat at the foot of a 250-foot-high, half-mile-wide glacier face. It was fun to restock our food cooler with chunks of glacier ice.

To make our boats more affordable, we decided to build a smaller fiberglass model – a day boat designed for families and small groups. After making molds for a Solar Sal 24’ model, we built three 24’ fiberglass boats, all of which are currently for sale.

Our most ambitious and high-end solar boat is now nearing completion in Port Townsend, WA., with the launch expected this August. A departure from our previous boats, its semi-displacement hull allows for higher speeds, assuming plug-in charging when needed. This will give the Townsend 34 the speed and range of a comparable diesel trawler.

Townsend 34 artist rendering, launch expected August 2026. © Alex Borton

I know that the physics works, and I consider these solar-electric boats to be practical. Some folks may think that the speed of these boats (hull speed or sailboat speed) is too slow. But the go-fast boats require either petroleum fuel or shore-based electric power to charge their batteries. Solar electric boats silently charge themselves and take me where I want to go. And the sun’s energy is free forever.

About the Author
Capt. David Borton has been in canoes and Adirondack guideboats since birth. After the 1974 oil crisis, David put his physics Ph.D. to work in solar energy research and development and in teaching solar energy engineering. More recently, he has focused on developing solar-powered electric boats. www.solarsal.solar

In 2000, the National Academy of Engineering named mass electrification and automobility as the first and second greatest engineering achievements of the 20th century.1 Now, a quarter century later, the two are converging through electric vehicles (EVs). However, many developments have been met with resistance.

EVs are giant batteries on wheels. They could smooth out the daily and seasonal variations of energy flows on the electric grid, making the grid more reliable and everyone’s electricity cheaper. But a self-serving alliance of disparate interests is working hard to discourage EV adoption. One front of their many attacks involves apocalyptic tales of grid collapse.

Reduced photovoltaic (PV) system prices have made storage costs the main hurdle to going off-grid. But if your car provides storage, the marginal cost of cutting the cord (“grid defection”) drops drastically. Grid defection is less than ideal for society, no matter how much sense it makes to an individual. But utilities, seeking to maintain their monopolies and to usurp all the benefits of solar for themselves, are creating an environment in which defection has become a logical option for many customers.

None of this opposition is based on truth. Ultimately, it will fail. But even short-term success would be problematic. If we’re to end up with the environmentally, economically, and democratically optimal energy system we deserve, we have a lot of work (education, lobbying, etc.) to do.

The Value of the Grid

The electric grid is a shining example of community in action. Shared use of the equipment necessary to produce and deliver electricity results in massive cost, efficiency, and environmental benefits, compared to users acting independently. Unfortunately, these advantages introduce a huge sociopolitical challenge.

Because the benefits of cooperation are so strong, the grid is a “natural monopoly.” Unlike the “free” and “fair” markets which are the focus of undergraduate economics curricula, natural monopolies are “winner-take-all” markets. Even if competition were allowed, economies of scale would mean that one participant would eventually dominate, putting all others out of business.

At the dawn of the electric age, governments recognized this reality and chose to optimize capital efficiency by granting utilities territorial monopolies. These utilities were vertically integrated, with all necessary components vested in the same company: generation, transmission and distribution (T&D), and control. The granting governments, recognizing the dangers of relying on monopolies for a critical service, chose to retain citizen control by establishing public utilities commissions (PUCs). PUCs are state-level entities, but are now complemented by a wide assortment of federal agencies.

What a Tangled Web

Regulated utility monopolies are among the most successful and visible examples of public-private partnerships in the United States today. The language and concepts of free market purity, competitive advantage earned through customer satisfaction, and other tropes of laissez-faire capitalism simply don’t apply. But that doesn’t stop dishonest actors from using such language as they try to co-opt the regulatory process.

Very soon, the grid will undergo a major shift. Climate and other sustainability goals demand much greater flexibility, far better T&D connectivity, and less reliance on inflexible base load generation. Existing storage, put in place mainly to accommodate high fractions of base generation (especially nuclear), will become increasingly useful (and hence see improved capital efficiency) in the presence of higher fractions of intermittent generating assets like wind and solar.

From Outer Space to a Wire Near You

Before the 1990s, PV only made financial sense off-grid (starting with the ultimate off-grid application: spacecraft). As technology improved and markets expanded, prices dropped. Though still high, they fell enough that committed individuals could justify installing PV on the grid. By the early 2000s, ASES and other advocacy groups were winning fairer compensation and interconnection protocols, most notably net metering. The resulting market growth lowered system prices enough to make both utility-scale PV and grid-tied distributed generation (DG) financially attractive. For those interested in history, Home Power Magazine, now available through an online archive, chronicled this evolution in real time from 1987 until 2018.2

Customer-owned DG represents a major disruption of the investor-owned utility (IOU) business model. IOUs are fighting tooth and claw to retain their obsolete monopolies. Using a script provided by the American Legislative Exchange Council (ALEC), a segment of conservative politicians disingenuously attacks DG by reducing or eliminating net metering compensation, adding bogus fees, and erecting other hurdles. Their arguments accuse net-metered customers of freeloading, claiming that DG systems add costs that their (presumably wealthy) owners don’t pay, creating a cross-subsidy from less affluent ratepayers.

Contrary to ALEC’s main line of attack, numerous independent studies have concluded that net metering introduces no significant cross-subsidy.3 In fact, many studies show the opposite: a significant cross-subsidy from net metered customers to other ratepayers.4,5

Because batteries are usually the most expensive part of an off-grid system, most grid-tied PV systems don’t include storage, and anti-islanding safety features prevent them from generating power during grid outages. Accordingly, much of ALEC’s model legislation “encourages” net metered ratepayers to add storage. The real purpose is to raise system costs, lengthening payback times, and discouraging investment.

Driving to Resilience (The Opportunity)

EVs disrupt an even broader group of industries than PV. Automotive OEMs (original equipment manufacturers, the people who build complete vehicles) have generally accepted their fate: they can either develop competitive EVs or they can surrender to China and go bankrupt. But other industries (oil and gas, biofuels, ocean shipping, and automotive suppliers, to name just a few) are still resisting. Their primary weapons are euphemistically called “disinformation” and “spin”; in plain language, lies.

One pervasive claim is that EVs will crash the grid. But the opposite is true. Cars are typically parked 22 hours a day, so EVs represent an almost totally dispatchable load. Drivers can be encouraged to charge during off-peak hours by offering modest incentives, such as lower prices. With significant added revenue and almost no added expense, utilities get a much smoother load profile, making the grid more reliable. Ratepayers get lower rates.

The extent to which EVs can be used to power non-automotive loads varies, and is described using a host of associated terms.6

Quite a few existing and proposed vehicles can export power.7 It is not the purpose here to definitively establish nomenclature, nor to catalog product offerings in such a rapidly evolving market. So let’s just call all bidirectional power capability V2L (vehicle-to-load), and emphasize that it already exists and is growing fast. As IEEE (formerly the Institute of Electrical and Electronics Engineers), SAE (the Society of Automotive Engineers), ISO (the International Organization for Standardization), and other bodies standardize hardware and related protocols, we can expect V2L to spread even faster.

Ford F-150 Lightning electric pickup truck powering a construction site. © Ford Motor Company

With V2L, EVs’ potential as storage and dispatchable supply becomes at least as attractive as their dispatchable demand. Numerous companies are already enlisting EV owners to participate in virtual power plants, which will use the EVs’ batteries to completely replace gas-fired peaker plants, the most expensive power on the grid.8

Playing Well with the Other Children

As stated earlier, the grid is a community that facilitates resource sharing. But communities only work when everyone practices the kindergarten lessons of sharing and fairness.

For example, in the western North Carolina mountains (my home), electric demand peaks in the winter, and my net-zero PV system produces a summer surplus. But that overproduction isn’t wasted; the grid carries it to the piedmont of North and South Carolina, helping power the air conditioners that define summer peaks there. Conversely, a net-zero system in the piedmont might overproduce in winter, helping run my heat pump. Grid connectivity also allows ratepayers who can’t invest in PV to share in the benefits available to those who can, such as lower rates and greater reliability.

Storage tells a similar story. Duke Energy’s Lake Keowee / Jocassee / Bad Creek pumped storage hydroelectric facility in upstate South Carolina was built to absorb the excess off-peak output of the Oconee nuclear station. But it also buffers the intermittency of all other generators
on the grid, notably solar and wind.

Utility-owned batteries, located at the substation level in the distribution network and shared by all customers in that zone, could provide buffering with far fewer batteries than an equally capable array of independent, customer-owned systems. But the ALEC playbook pushed by most IOUs “encourages” individual, civic-minded customers to install (and fund) the batteries. Through punitive fees, inadequate reimbursement rates, and other sleight of hand, the same playbook seeks to create a system which lets utilities hoard all the benefits, just as it does with customer-owned generation.

A related dynamic is playing out with massive proposed expansions to support hyperscaled data centers for artificial intelligence (AI) and cryptocurrency operations. These investments are only necessary because of the projected new loads, but well-connected lobbyists for these uber-wealthy industries are seeking to push the expense into the rate base funded by all customers.

Overlanding (Leaving the Main Road)

Until recently, most ratepayers would have been forced to accept such unfairness, leaving only the IOUs to make the investments (the real goal of the subterfuge). But EVs with V2L are game changers. And there’s nothing like a disaster to put change in the spotlight.

When Hurricane Helene hit western North Carolina in September 2024, EVs did yeoman service. Some EVs have built-in AC plugs, both 120 and 240 volts.9 Over-the-counter adapters can turn the J1772 AC charging port on other EVs into a 120V AC outlet. Both approaches proved useful in running medical equipment, chainsaws, and other tools as people recovered from the storm. A friend and fellow EV advocate used a simple homebrewed inverter setup to run five refrigerator/freezers and a variety of other household appliances for a week, using only half the battery capacity of his Chevy Bolt (about 32 kWh, out of 64 total).

Post-Helene, generator sales in the area have increased markedly. But a typical generator costs $12,000, installed, and requires quite a bit of ongoing maintenance. Usually fueled from a methane line or a propane tank, and always loud, you only run it when you absolutely must. On the other hand, a PV system with modest battery backup is useful 365 days a year, with very low fuel costs, no noise, and almost no maintenance.

Most grid-tied PV systems lack batteries, mainly due to cost. Batteries also carry an environmental penalty, since they consume, rather than generate, electricity. The most productive way to build a flexible, reliable, environmentally optimal system is to have more customer-owned generation directly feeding the grid, with utilities building the bulk of the storage.

However, with memories of the hurricane (and wildfires or other disasters in other locations) still strong, many home PV owners are adding battery backup. Battery prices have fallen, and continue to fall, precipitously – 99% since the 1990s. Concurrently, punitive changes to net metering tariffs are leading many to consider a minimal battery pack to enable greater self-consumption and lower bills. But it’s a slippery slope.

If a microgrid can island itself for a few hours or days, the main impediment to staying off-grid permanently is the cost of the battery pack required for the most extreme sunless stretch, which only occurs every few years. But an EV with an average-sized battery can power an entire house for several sunless days, then drive to a power source and bring home a fresh load of electricity when its charge gets low. Even the most extreme case is covered, with no need for the hawk-eyed attention to consumption required in those off-grid homes described in early issues of Home Power.

People Get Ready (Just Get On Board)

Affordable energy is a luxury by world standards, but has become essential for life in developed countries. As with most necessities, freedom and democracy matter a lot in the energy arena. However financially viable it may become, defection from the grid by DG owners would be highly undesirable for society at large. But it’s a serious risk, given the way IOUs are resisting this evolution.10,11

ALEC’s propaganda claims that penalizing DG owners protects less affluent ratepayers. But, as more PV owners defect, the grid’s fixed costs would be spread among fewer customers, leading to even more defections. Ultimately, only lower-wealth ratepayers would remain on-grid, and large amounts of extra capital would have been expended creating a socially undesirable electricity system (no longer a fully interconnected grid) that is neither economically nor environmentally optimal.

The electric grid of the near future will require significant up-front capital investment to realize the most cost-effective long-term solution. Storage and distributed rooftop solar will play an essential part in meeting those goals.12 Fair tariffs and other protocols are essential to protect IOUs from the fate already experienced by landline telephone companies.

Any game must be fair to everyone playing to be sustainable. The rules of the electricity game are heavily influenced by the people in charge of utilities and utilities commissions. We must help them make the right choices.

“It goes on one at a time, it starts when you care to act, it starts when you do it again after they said no, it starts when you say We and know who you mean, and each day you mean one more.” – Marge Piercy (from “The low road”)

About the Author
Automotive engineer and ASES Life Member Dave Erb has developed vehicles using gasoline, diesel, biodiesel, alcohol, methane, electric, and hybrid electric powertrains. He wrote Chapter 1 of David Hrivnak’s “Driving to Net 0: Stories of Hope for a Carbon-Free Future,” a collection of 15 first-person accounts of families combining electric vehicles with solar houses and other sustainability strategies. He hasn’t bought gas
since 2019.

Sources:

1. tinyurl.com/2r5nc2ba
2. homepower.com
3. emp.lbl.gov/publications/putting-potential-rate-impacts
4. tinyurl.com/brookingsnet-metering
5. tinyurl.com/sciencedirect-solar
6. tinyurl.com/insideevs-v2g
7. tinyurl.com/insideevs-v2l
8. tinyurl.com/lazards-lcoe-june2025
9. tinyurl.com/ev-f150-vs-silverado
10. tinyurl.com/eei-disruptive-challenge
11. tinyurl.com/forbes-electric-utilities
12. tinyurl.com/pvmag-roadmap-grid-distributed

Californians are paying the second-highest residential electricity rates in the Country, and a popular explanation — that rooftop solar customers are shifting costs onto everyone else — has it backwards.1 Bundled average rates in PG&E’s service territory rose from roughly $0.24 per kWh in 2018 to $0.37 per kWh in 2024 in real USD — an increase of about 52% in six years after accounting for inflation.2 That trajectory is real, painful, and worth solving. But the data show that the principal drivers are wildfire-related capital spending, an aging long-distance transmission system, electric rate design flaws, and authorized utility returns3 — not the roughly 18 GW of customer-owned solar that Californians have installed since the early 2000s.4

This article explains how data and the law converge on two findings that lead to a single conclusion. First, the largest, fastest-growing components of Californians’ electric bills are utility capital costs — wildfire hardening, transmission expansion, and grid infrastructure — driven by forces unrelated to rooftop solar, and which distributed solar measurably helps to constrain by reducing peak transmission load and deferring infrastructure investment. Second, California’s rate-making framework — built for a one-way grid that no longer exists — neither credits the system benefits that customer owned solar delivers nor allocates costs and benefits fairly across ratepayer classes. Modernizing rate design, by unbundling the recovery of fixed grid infrastructure costs from the variable price of energy generation, is the structural fix. Together, these findings point to one conclusion: the most realistic path to affordability as electrification, EV charging, and data-center loads expand is to revisit our approach to rate design and to help many more Californians — especially renters, small businesses, and dense urban neighborhoods — own their own solar-energy supplies.

What is Actually Driving the Rate Increases

PG&E, California’s largest investor-owned utility (IOU), charged residential customers an average of $0.39 per kWh in June 2025.5 When economists, such as those at U.C. Berkeley’s Energy Institute at Haas, dissect the typical California residential rate, only about 12–15 cents per kWh reflects the competitive marginal cost of generating and delivering electricity.6 The remaining 25 cents or more covers fixed cost-recovery for capital projects, public-purpose programs, securitized wildfire claims, and authorized return on the utility’s investments.7 The California Public Advocates Office attributes roughly 21% of the rate — about $0.08 per kWh — to wildfire-related capital and operating costs, making them the single largest driver of recent rate increases.8

PG&E’s 2020 and 2023 General Rate Case decisions, together with separately recovered wildfire-cost memorandum accounts, authorize billions of dollars annually for vegetation management, system hardening, public safety power shutoffs, and undergrounding.9 PG&E’s 10,000-Mile Undergrounding Program alone has been projected at costs ranging from approximately $3 million per mile to nearly $6 million per mile, depending on terrain, urbanization, and contractor pricing.10

California’s liability framework intensifies that pressure. Under inverse condemnation as applied to IOUs, an electric utility can be held strictly liable for wildfire damage tied to its equipment even where no negligence is found.11 Utilities have rationally responded by deploying as much capital as the CPUC will authorize.

Authorized capital earns a regulated return on equity, which as of the date of this report, is between 10.23% and 10.33% for the three California IOUs, and above the national average.12 That return is paid on a rate base that has grown by more than 50% since 2018, but that far outpaces load growth, which has been essentially flat over the same period. Out of this dynamic has emerged the cost-shift claim: that net energy metering (NEM), California’s program of bill credits for energy solar customers’ exports to the grid, amounts to a subsidy running from lower-income, non-solar households to wealthier solar owners. It is the most repeated argument against solar ownership rights in the state. However, the myth fails under scrutiny.

A Closer Look at the Solar Cost-Shift Myth

The “cost shift argument” compares the retail credit that NEM customers receive for exported energy with a modeled “avoided cost” the utility would otherwise pay.13 The “cost shift” that comparison purports to measure is largely a mirage produced by California’s rate design itself — a design that picks and chooses how to load ratepayers with costs they should not bear and fails to recognize the benefits that distributed solar provides.

The standard avoided-cost calculation is structurally biased against solar in three ways analysts have repeatedly documented:

(a) The Avoided-Cost Calculator (ACC) that drives the California Public Utility Commission’s (CPUC’s) NEM cost-effectiveness analysis excludes documented benefits of distributed generation — avoided line losses, deferred transmission and distribution upgrades, locational capacity value during net-peak hours, and resilience benefits during Public Safety Power Shutoff (PSPS) events.14

(b) Rooftop solar reduces the same wildfire-related transmission build-out that drives most of the rate increase discussed above.15

(c) The calculation is sensitive to which year’s gas price, capacity-value methodology, and discount rate the analyst chooses.16

A deeper problem is that the purported “cost shift” occurring does not measure a transfer at all. The Natural Resources Defense Council’s (NRDC’s) Powering Change report shows that the dynamic behind California’s rising electric rates is not solar customers receiving a benefit at someone else’s expense. It is the mechanics of how utilities recover their costs. NRDC’s analysis claims that today’s non-solar residential rates are approximately $0.07 per kWh higher than they would be without NEM, which is around 16% of California’s total residential IOU retail rate today; further, they state that $0.05 per kWh of that increase has occurred since 2018.17

Critically, NRDC characterizes that figure not as a payment from non-solar to solar customers, but as a rate-design construct: the consequence of behind-the-meter solar reducing IOU energy sales. It reflects the recovery of growing fixed costs on flat or decreasing demand by increasing rates, not a direct payment from one ratepayer to another.

That distinction matters. A “subsidy,” in ordinary usage, is “a benefit given by the government, or a public or private organization, to a person, business, or industry” requiring a direct, intentional transfer. What occurs with solar is a free-market outcome: utilities lose anticipated revenue when their customers generate some of their own electricity and sell the energy on the open grid. The compensation those customers receive for that solar energy is no more a “subsidy” extracted from the utility than the income a homeowner earns selling vegetables from a backyard garden at a farmers’ market is a “subsidy” extracted from the supermarket whose produce sales they displace. In both cases, the producer is paid for a good they grew or generated.

The comparison is also rigged by mismatched timeframes. The cost-shift figure is cumulative — the alleged share of the current residential bill accumulated across every NEM customer who has interconnected since 1997. The wildfire figure typically paired against it is a recent slice. Setting one against the other is like comparing the odometer reading of your car to the trip meter from this morning’s drive. Both are in miles. Neither tells you what the other does.

Compared on a consistent basis — recent against recent, or all-time against all-time — wildfire dominates by a wide margin.18 And the trajectories diverge from there. NEM 3.0, in effect since April 2023, sharply reduced export compensation for new entrants, structurally constraining NEM’s contribution to future rate growth. Wildfire spending has no such constraints.

Wildfire-related costs are the single largest driver of California’s residential rate increases. By any reasonable accounting, wildfire-related recovery is materially larger than NEM’s share of the residential bill, and the gap is widening as undergrounding capital, insurance premiums, and Wildfire Fund obligations continue to rise.19 The CPUC’s 2023 SB 695 report confirms that wildfire-related costs — mitigation, insurance, and liability — are the primary statewide driver of rate increases over the past decade. Solar customers, by reducing peak transmission load, are helping to mitigate the very wildfire-hardening build-out that drives those costs upward.20

Finally, the cost-shift framing has a deeper problem than its arithmetic: it presumes there is a net cost to apportion in the first place. Once the offsetting benefits of distributed solar are credited, that premise collapses. A 2024 analysis found that existing solar customers collectively reduced costs for all California ratepayers by approximately $1.5 billion in a single year — through reduced peak grid demand, deferred transmission investment, and lower wholesale energy procurement.21

And looking towards the future, grid-optimization modeling predicts that a distributed clean-energy system will be $88 billion less expensive to build and operate than a centralized alternative because Distributed Energy Resources (DERs) reduce the infrastructure that the long-distance transmission system exists to carry.22

The Historical – and Continuing – Cost Shift

The phrase “cost shift” has a much longer history in U.S. electric ratemaking than the present rooftop-solar debate. As Sharon Beder summarizes in Power Play, publicly owned utilities historically charged residential and commercial customers similar rates to industrial customers, while IOUs charged residential and commercial customers materially more to keep industrial rates competitive with the public-power neighbor next door.23

In 1994, IOU residential customers paid 31% more per kWh than publicly-owned residential customers, while IOU industrial rates were the same as public-power industrial rates. The structural pattern: IOUs have been shifting ratepayer costs among other ratepayer classes long before rooftop solar.

Two further pieces of that historical pattern are visible in present-day California. First, ownership of the IOUs is concentrated among institutional investors, layered in multiple tiers of holding companies, and held by out-of-state hedge-fund stakeholders whose authorized return on equity is ultimately recovered from California ratepayers. Executive compensation at California’s largest investor-owned utilities (IOUs) is itself a cost of service that ratepayers ultimately pay. Most of it, base salary and cash incentives, is recovered as an operating expense in the utility’s revenue requirement, not through the authorized return on equity. Regulatory filings for fiscal year 2024 (reported in 2025) place IOU CEO pay among the highest in the nation. Sempra, the parent of SDG&E and SoCalGas, paid CEO Jeffrey Martin $21.5 million, ranking him the third highest-paid utility executive in the country.24 PG&E paid CEO Patricia Poppe $15.8 million with $1.4 million in base salary plus $11.7 million in stock awards and other compensation. Edison International, parent of Southern California Edison, paid CEO Pedro Pizarro $13.8 million.25 The trend has continued: an April 2026 report shows utility CEO pay rose 16% in 2025, with Poppe at $19.8 million and Pizarro at $16.5 million.26

Second, every dollar of rate base financed at a return is a dollar of revenue requirement that non-solar and solar customers alike pay to capital. In that real and quantifiable sense, all retail customers — including non-solar customers — are continuously “subsidizing” investor returns by billions of dollars per year.

True Competition Means Customer Ownership

California’s 1996–2001 restructuring experiment is often cited as proof that “deregulation” failed. But that experiment did not let households or small businesses own their own electricity supply. It merely substituted competition among large generators for competition among utilities, while leaving the customer in the same passive role.27

Genuine competition for the customer means letting the customer own the means of production when doing so is technically and economically feasible. Regulating concentrated, capital-intensive generation and transmission assets is appropriate; restricting an individual household, school, farm, or warehouse from producing and storing its own clean electricity is not.

The cost basis behind this conclusion is structural. Self-generated solar electricity is priced to the customer at the equipment cost and financed at consumer-loan rates, without an authorized return on capital, holding-company overhead, or executive compensation recovery.

Each kilowatt-hour purchased from an IOU, by contrast, includes the utility’s authorized return on rate base, corporate overhead, and the share of fixed-cost recovery identified in the preceding section. The savings are not theoretical.

The mechanisms to provide these savings are not novel — they are already in operation, at varying scales, in California and in other jurisdictions: fast track permitting, community solar programs, virtual net metering for multifamily housing, public-sector rooftop programs serving schools and warehouses, and successor tariffs that preserve cost-effective payback periods for solar installations.
Scaling those mechanisms is itself the most direct equity response, extending solar’s economic and resilience benefits to renters, multifamily residents, schools, small businesses, and dense urban neighborhoods that have historically been locked out of solar ownership.

Conclusion

California’s electricity rate increase problem is real, and so is the search for someone to hold accountable. But the data point unambiguously toward failed utility rate structuring and IOU capital spending — driven by wildfire liability, authorized returns, and a long-distance transmission system that customer-sited generation actually relieves — as the dominant causes.

California’s solar customers are not the source of the affordability crisis; the distributed solar industry is the most rapidly deployable, customer-aligned piece of the affordability solution. Stronger policies and regulations are needed to untap the ability to expand solar ownership opportunities, especially for renters, multifamily households, small businesses, and historically excluded communities.

A structural solution is rate-design reform. If California unbundled the fixed costs of grid infrastructure from the variable cost of energy generation — rather than recovering both through a single volumetric per-kWh charge — infrastructure costs allocated to ratepayers would decline over time, because distributed resources reduce the very build-out those costs recover, and energy generation would be priced on free-market terms in which distributed generation competes on level footing with utility-scale supply. As long as rates remain bundled and grid infrastructure remains privately held by IOUs whose authorized returns depend on volumetric sales, the conflict between utility shareholder interests and solar system owners will continue to shape every rate-making proceeding.

It is time to double down on policies that expand solar ownership rights not only as the best course for the environment, but also as the best course for the economic interests of all ratepayers.

About the Authors
Angela Lipanovich is a clean energy attorney with more than twenty years of experience advising clean energy companies and the customers they serve. She founded Estriatus Law, co-founded SolarWAVE Action, and previously served as General Counsel to a publicly traded solar company. She has helped shape key policy decisions protecting solar ownership rights and is a long-standing member and former Board member of the American Solar Energy Society (ASES).

Jenny Folkesson, Ph.D., is Executive Director and co-founder of SolarWAVE Action. A computer scientist trained at the University of Copenhagen, she brings two decades of experience in data science and machine learning, including image analysis at the Chan Zuckerberg Biohub. Her work centers on clean energy data analysis and the use of open-source code and data to support climate solutions and coastal and marine conservation.