Solar Holler and Coalfield Development hold a ceremony to flip the switch on a solar panel installation on the roof of West Edge on Wednesday, Sept. 29, 2021, in Huntington, W.Va.
Sholten Singer/The Herald-Dispatch via AP
Electricity generation produces a quarter of U.S. greenhouse gas emissions that drive climate change. The electric grid also is highly vulnerable to climate change effects, such as more frequent and severe droughts, hurricanes and other extreme weather events.
For both of these reasons, the power sector is central to the Biden administration’s climate policy.
President Joe Biden’s proposal to produce 45% of the nation’s electricity from solar energy by 2050 seeks to transform the power sector from problem child into child prodigy. As the details evolve, two cornerstones have emerged.
First, Biden has repeatedly called for extending tax credits for solar power and other renewables, at a projected cost of US$200 billion over the next decade. Second, his administration has proposed a Clean Electricity Performance Program to subsidize electric utilities that increase the share of solar in their sales. This initiative is budgeted at $150 billion.
Reduced emissions and cleaner air help everyone, but who ultimately pays for public spending on this scale, and who will reap the economic benefits?
I have studied renewable energy for years, including the allocation of clean energy policies’ costs and benefits. My research focuses on direct economic benefits, such as government subsidies and tax breaks.
By proposing $350 billion in policy incentives, Biden is pushing solar further into the mainstream than ever before. Most of the costs and benefits of this massive solar play are distributed fairly, but I see room for improvement.
A break for lower-income households
Many clean energy policies, including renewable portfolio standards and net metering programs — strategies that dozens of states have adopted — pass their costs onto electricity customers. Renewable portfolio standards require utilities to source a certain share of their power sales from renewable sources. Net metering requires them to credit customers for generating electricity at home, typically from solar power, and feeding it back into the grid. In both cases, power companies bill their customers for associated costs.
It may seem sensible to ask electricity customers to pay for new resources, but rising electricity rates impose heavier burdens on lower-income households. Already, one-third of U.S. households struggle with energy poverty, spending disproportionately large shares of their income on basic energy needs. The Biden administration avoids such inequities by using tax dollars to fund its solar push.
Many low-income households contribute to federal tax revenue via payroll …….