How to Fix Electricity Bills in America

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Hi, I'm Robert Sameyer. I'm Jesse Jenkins, a professor of energy systems engineering at Princeton University. And you are listening to Shift Key, a new podcast from Heat Map about decarbonization and the shift away from fossil fuels. On this week's episode, how to fix electricity bills, make rooftop solar cheap, and decarbonization. So over the past few weeks we've had And to be clear, folks do.

This episode is for you regardless. But we talked with Mary Powell, who's the CEO of Sunrun, a big rooftop solar company. The way they are. We got into this set of Because of a question posed by the first time. Which is, you know, is rooftop solar good In the wake of those conversations, we wanted to have a conversation that was just the two of us.

A topic that goes by the name of electricity rate design, but is in fact much more important than I think that name entails because it is how your power bill is And how all How the number you're charged at the end of the year. And if you think about the most basic information we know about prices, this is basically setting how the price is set. And so it's an extremely Move much more of the energy they consume from fossil fuels to the electricity grid. So, can we just start? Give us the stakes.

Yeah, so Rob, rooftop solar could be a really key tool in our toolkit for decarbonizing the grid. It could help us expand solar more rapidly while avoiding some of the land and environmental impacts that come from large scale.

quote unquote utility scale solar projects that sometimes are built out in the desert or in forest land or or take away from agricultural land. So, you know, greenfield large scale solar projects are gonna have a That is simply avoided if we're using space that is already used for human activity like roof. Things like that. It also offers a potential way to avoid or sidestep, at least in the near term, the clogged interconnection cue.

over a few episodes is just really a key bottleneck right now in the United States on the pace of decarbonization and the pace at which we can build large scale renewables. And so building solar on rooftops is another avenue to get more solar And it's a potential way to make electricity and thus the switch to electrification more affordable for households and businesses, right? If you're producing more of your own electricity from affordable solar panels on your roof.

That's and if that lowers the cost of electricity relative to what the utility would otherwise supply, that makes electrification more attractive. It makes it make more economic sense for you to switch to a heat pump or to buy an electric vehicle.

So you know, to realize that promise and like the full potential of rooftop solar, I mean, the key thing that we framed in the last few conversations is just that the rooftop solar in the US has to get a lot cheaper than And we think that's possible because if you look at other developed economies, other economies with relatively similar costs of labor like Australia or Germany or the UK, solar there costs a fraction of what.

Projects in the US might cost three to four times as much as a similarly sized rooftop solar project in Australia. And that's just a stunning cost differential. So yeah, you know, one of the key challenges is like if we're gonna deploy solar on rooftops, it has to be relatively cost competitive with utility skills. But here in the US, we're just a long way from there. Um, we don't have the rate design that tells you which locations in the grid.

make the most sense that have the most value, right? That we we have no signal for that locational value that households are are aware of. And we have a broken permitting system and uh a broken marketplace that doesn't drive the competition and cost declines that we've seen in places. So a lot of problems to to get through here if we wanna realize the potential of solar, and I think we all do.

Yes, we need solar to decarbonize the grid. I think we all agree on that. I I wanna like just walk through the problem here. So states and jurisdictions across the country. Policies to encourage people to put rooftop solar on their roof, to put solar on their roof. And a lot of these policies like hail back to let's say the When we were just trying to get people to do anything that Deploy renewables.

Basically, people generate electricity during the day using the rooftop solar panel. And so during the day, their electricity pulls from the ground. But then, you know, most Americans electricity use p usage peaks between And so they have to just pull basically a full house's worth of elect electricity from the grid between six and nine PM. Yeah. So you have to wire the grid to deliver a full house's worth of electricity to their house.

And you wind up paying both costs. You wind up both paying to install expensive solar on the roof. Is that a correct explanation of the right?

Yeah, I think that's a big part of it. I mean, I think that we've sort of glossed over the reason for that problem, which is sort of the way we compensate or charge people for producing or consuming electricity. That's the rate design problem we'll come back to in a minute. But what you've highlighted is a couple of key things, right? Which is that The thing that rooftop solar is competing with most of the

Is other solar because it's producing its power exactly as the sun comes up and you know reaches its peak and then sets. It's just like It's this mechanical aspect of solar that is true for no other form generation. Well, I mean it's also true for wind power, right, and other weather-dependent resources. But i the thing that's so clear about solar is that it is so highly correlated.

across wide areas because besides a few clouds here and there, like it's sunny everywhere at the same time, you know, in your grid region, right? And so you putting solar on your roof in Palo Alto or in San Jose, it's sunny there and you're producing the same the maximum Central Valley is all the same.

And so while you can displace initially natural gas and coal units that might be generating power during the day, what you might ultimately be doing in the long term is simply making utility scale solar much worse because now the market is flooded with rooftop solar at exactly the time that the utility skill solar would be trying to sell its power and that drives down the the value of

And so we have to be careful that we're not overpaying utility skills solar simply because it's more expensive. We only want to be paying it more than utility skills solar if it delivers more value. Right. And that's what comes back to this locational value. Where the the B, you know, the key differentiating feature between rooftop solar and utility scale solar is you can put the rooftop solar right next to where people actually consume electricity.

And that means you don't have to necessarily build transmission lines to bring the power from the Central Valley to the Bay Area or wherever else to bring it over longer distances to where people consume it. You might be able to avoid upgrades.

distribution grid, potentially, if you're producing power at a time when the grid would otherwise be at its peak. And what you've highlighted is the challenge is that especially in residential The demand for electricity tends to peak in the late afternoon and early evening.

And so while you have deployed a bunch of solar and potentially reduced your bill, which includes a lot of network-related costs or charges, so you've reduced what you're paying for the grid, you're not necessarily reducing the cost. At least as not as much as you could if you So what that means is we have this situation where we're overpaying for rooftop solar relative to the value that it delivers to the grid.

And anytime we're doing that, we're basically allowing customers to save more money than the costs that they're actually And so that means somebody else has to pick up the bill for the difference. Right. This is severance cost shift argument. We're basically four billion. costs associated with the electricity grid in his estimate are being shifted from who have rooftops solar to those who don't.

That's right. So this is where the bad or lazy rate design comes into the picture because if we were actually charging people for electricity in a way that reflected how their behavior actually dri drove costs on the grid, then you would avoid that cost shift problem. And people would really be able to see You know, does rooftop solar make economic sense for me? And if the answer is yes, they can also be confident that it makes economic sense for everyone for.

Society, those answers are only both true when we align the incentives in electricity rates with what actually drives costs for the grid as a whole and for everyone in the system. And we're just not doing There's other issues we could talk about electricity rate design and In a second, but let's say you were made grand vizier. Of all public utilities. Across. How would you fix this?

Yeah, I think there's basically two options that we have here. And this is b you know a reflection of the fact that there is no one unified. it structure in the US. We have a bunch of different ways that we do things. And so I'll just sketch two kind of classic examples, although there are lots of little gradations in between. One is a kind of traditional regulated market where you get your power from a regulated or publicly owned utility, like a municipality.

utility a rural utility district or an investor owned utility. It's regulated by And you buy power at whatever the regulated rate is. And so if that's the case, we need to get those rates right.

And by that I mean there are multiple things you're paying for when you're paying for your bill. You're paying for the energy, the actual, you know, energy you're consuming. And that is a kind of volumetric thing. It it, you know, you should pay more the more you consume, all else equal. But the interesting feature of electricity pricing is that it varies from hour to hour. because of the fact that demand is changing all the time and renewable energy availability is changing.

And so the actual marginal cost of generating electricity depends on this intersection of how much you demand and what the available supply is. And if you have a lot of cheap renewables, for example, flooding the grid. That price could be very low. It could even be zero when you're curtailing solar or wind and you have excess free power. And at other times it can be very expensive when you're running diesel generators or inefficient gas turbines to meet this sort of peak demand requirement.

Electricity prices could be several hundred dollars a megawatt. And so we have a very wide range of pricing, and we don't communicate that at all to people today. And I think we have to restore that. in in some way to uh let people understand that if you consume more energy during the middle of the day when there's lots of solar available, even if you don't have solar on your roof, it's coming from your neighbor or utility scale solar farm far away, that's the cheapest best time

electricity. And if you're consuming when fossil power plants are producing expensive power, you should think about how to reduce that. So it's really important that we get that kind of time dynamic rate right for the energy component.

So you would expose people to prices? I mean that's that's kind of your basic answer is that you would expose people to Even if and I just wanna be clear here, I mean you're talking about folks who live Washington D C, who live in New York, who live in Philadelphia, who live in San Francisco, who live Atlanta. Rural communities all over. Yeah, everywhere. I mean, th this is anybody that doesn't have competitive retail, which is the other solution.

Which is you allow competitive retailers to manage this for you. And I'll I'll come back to that in a minute. So i if you don't have any options, you only have the option of choosing from one or a small menu of regulated rates because you don't have competitive retail. You can't go out and pick whoever you want. then the default rate has to actually be the rate that reflects what you're doing costs. Yeah.

And yes, that's more complicated than it is right now. And the good news is that computers are cheap and everywhere and handle things that are complicated. So you don't actually have to think about that all that much, but your EV charging controller, your thermostat, your battery if you have one, all of that can be optimized to reflect that process. Right.

And you can also learn certain things like you wanna hit the delay button on your dishwasher so that it runs overnight and not as soon as dinner's done. You wanna think about doing laundry more often on the weekends or things like that. I mean, these are things that people do and we observe more dynamic rates in pilots and in broader

people can figure it out. It's not an overly complex thing to realize that you you can develop heuristics for your behavior and you can let your computers do all the complicated math for the more detailed calculations. And you know, if you break down where the bulk of your electricity consumption is in a home, most of it is for heating and cooling.

You know, space heating and cooling and water heating. And then the new big load that some people are adding is an EV. And all of that is easy to automate within a large amount. So, you know, by providing these signals, you can actually take advantage of that to lower your bill, which is a savings opportunity that is basically denied from people. Which it would require Or at least some of the a new thermostat, you're gonna have to invest in like a new aspect of your heating and cooling system.

Maybe. I mean, if you've bought a thermostat in the last five or six years, it probably is already wired to do this. You're just not encouraged to use it. I already have a programmable thermostat in my house that is ready to receive price signals. and doesn't get them from my utility. And so it just sits there. Right. Same thing with the gradient heat pumps that I've installed. Same thing with the EV charger that I've installed. Most of the new devices are already wired to do this.

Now, some lower income customers and others like that haven't upgraded in a long time, they may not have that capability already in their home. But it is important to note that a lot of people. controls. For those who need it, we can certainly design and we already have these you know, rebay programs and other incentives to make it cheap or free for people to swap out their thermostats if that's the key thing, or to install a controller on their hot water heater so that it can be

So th these are a couple hundred dollars, you know, type expenses. These are not thousands of dollars like installing a battery or a rooftop solar. They're not that expensive. The price means that it would be subsidizable for a Where it is really annoying if you feel like it's a little bit more than a little And you don't follow the Especially from folks on the left, but also on the right is that this is gonna feel like home.

And people don't want more homework. They don't wanna be exposed to more prices or a lot of people don't wanna be exposed to more prices and instead of delegating this to consumers, we should have a grid So there is uh an option here, which is to provide these more complicated and cost reflective rates as the default.

And then allow someone to opt onto a very simple rate if they want to, something similar to what they pay today. That rate will cost more because they're not taking advantage of the savings opportunities you get under a more dynamic rate. But if you want to pay more for simplicity, that's fine. Right? People can do that. And we know that there are strong default effects here where, you know, roughly speaking, eighty percent of people will stay on the default, whatever they're.

With small variations. And so I think it's important to take that default effect very seriously and say, yes, if you want to opt out and you want to have a very simple rate, you don't have to think about. This is your choice. You can do that. But if you are willing to take this subsidized smart thermostat, plug it in and let it control your hot water heater and your HVAC system, you can save a few hundred dollars a year on your utility bill.

Well, making your consumption better aligned with the availability of renewable energy and helping clean up the grid. And I think a lot of people will wanna do that. I wouldn't understand I mean why not? Cheaper, it's cleaner, and it also sets you up much better to take advantage of electrification opportunities when you start to do that.

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Now get the sustainability data you need in weeks, not months, with watershed. You can learn more at watershed.com watershed W-A-T-E-R-S-H-E-D watershed.com. Okay, so we're talking about what the the option is in the integrated utility system.

Well, I just wanna say there's one other key component of this, which is we the the network, right? So we talked about that's how you pay for the energy. The network, which you already kind of teed up, is the problem right now is that we pay for the network volumetrically as well. So the more kilowatt hours you consume, the more you pay for the transmission and distribution grid.

And that doesn't make any sense because it's not how many kilowatt hours the grid delivers that drives its cost, it's how many maximum kilowatts does it have to be able to deliver at the end. It's the peak capacity or the size of the wires, not the throughput that we jam through the mobile.

And so this is the big issue for solar, where it doesn't actually reduce the distribution peak because you know, you said you still need to be able to deliver a whole household's worth of demand in the evening, but by reducing the amount of electricity you consume under current rates, that also reduces how much you pay for the network. And so we also need to change the network cost structure to reflect or the network tariff to reflect the actual cost structure.

Which should probably be something like a fixed subscription, where you choose in advance what the maximum kilowatts that you want to be able to consume is, and you pay a fixed monthly amount for that right to consume that electric. And if you can lower that over time by say installing a battery or more flexibly consuming electricity, then you might be will able to lower that subscription in the future and save money every month.

But if you don't, then when you produce rooftop solar during the day, like if it's not actually reducing peak coincident consumption, then you're continuing to pay your fair share of the network. And that could also be subsidized for low income folks in in the way that it it is in California through these income graduated fixed charges to make that solution more equitable as well for those who tend to consume less because of income rather than Because they're more efficient or producing.

So those are the two key components, I think, is like dynamic hourly pricing that reflects the fact that the value of electricity is different every hour and encourages people to consume more when the when electricity is cheap and less when it's very expensive. and a subscription based network chart.

that reflects the fact that what you're signing up for is the maximum usage of the network and that's what you have to pay for. It doesn't change if you consume less electricity by different hours. What only matters is how you contribute to that you know peak draw. on the grid. Yeah. You're giving a a ballpark estimate. Yeah, they can certainly suggest a default when you I am imagining what the power bill would look like here in the first time.

I feel like I'm back in the What beautiful, elegant buildings. So the what's the other option?

Yeah, you were talking so we've every conversation we that whole conversation about people who live in utilities. What about people who live out Yeah, so the other option is that in parts of the country, we have basically said we're gonna allow uh for retail electricity.

So we're gonna say you don't have to just pay your incumbent utility. You can choose to um sign up for a different retailer that offers you a different service, you know, the same way you can switch from Verizon to ATT for yourself.

And so you're still actually using the same utility wires, but now the retailer is collecting your bill and they're paying for the wires, they're paying for And this is the approach that's been taken in all of Europe and the UK and in Texas, with I think great effect in many. Where now retailers are able to try to segment up the market and try to understand which of these customers just want that set it and forget it simple rate.

Which of the customers want to sit there with the app and get alerts on their phone and know when it's time to turn the air conditioner up by a little bit or turn off the the washing machine or whatever else, you know, kind of do the behavior. ゲームファー You know, who is the who are the customers that already have all of those smart devices in their homes and just want something to plug them into that helps them lower their bills?

Retail competition can go and offer different products to different people in a way that can kind of manage that complexity for them to the degree that they want and offer different savings opportunities and different rate structures. uh to different types of customers. And I think there's some real value to that in places where you have a dynamic rate structure that the retailer is exposed to.

And then they have to decide how they're going to manage that for different types of customers to offer a better product and therefore expand their market. That is something that we could do in more of the country as well. It it it's something that has been done to great effect in Europe and the UK. Octopus Energy is an example of a company that does this. for different types of customers, offers smart EV charging rates, offers solar friendly rates, offers uh smart home tariffs

And they've been able to grow from nothing to the largest retailer in the UK in just five years' time because of that ability to compete, right? Where they can go and offer an expand an exciting product that people like. And when they do that, they can expand their market.

And so if you don't have that competition, then you're just stuck with a regulated rate design, then you know, you just get a menu from the utility that's regulated and you choose from a couple of options. If you allow for retail competition, then there's an infinite number of options that retailers could

Right. Well, and it's tricky for when you allow for retail competition because you wind up still having to regulate the marketplace. And this is like the classic fallacy of deregulation, right? Is that you're less regulation that you're deregulating them. But you know, what must accompany any buying into a marketplace is more regulation because we've also When a company just offer the unhedged price of electricity. And now this is partially due to Electricity short.

Yeah. There was this company in Texas great. Letting consumers buy Unadjusted. From the grid. And then electricity prices in Texas were in the thousands of dollars for several days in a row, which is not something. Yeah, I mean that's one of many examples of how we have to regulate the market appropriately. You know, there's this one weird trick that even in Texas we don't necessarily do or we need to do in a lot more places.

you do retail competition, which is that there are several parts of the country, like including New Jersey, where technically retail competition exists. But what we don't do is actually charge the retailers based on the consumption patterns of their customers. Which sounds bizarre, but what we do is we basically take an average shape of customer demand.

And all retailers get their percentage of that based on the total volumetric consumption. Again, this sort of is a flaw that dates back to the fact that we haven't been using smart meters that can actually show you what your individual customers are consuming and when they're consuming. But even in places where we've installed smart meter.

We have yet to make the switch to actually charging retailers based on what their customers do. And if you don't do that, then it blows up this entire value proposition because now retailers can't actually. segment the market and find the customers that are more price responsive or want to be hedged or whatever else and offer them differentiated uh products because if they save their customers money by changing their consumption pattern.

It it doesn't actually save the retailer any money because they're still charged against this shadow profile. So it's a crazy weird little thing. Uh but you know, there's lots of little subtle changes like that that are important if you want to go down. Yeah. And they were not going to be able to do that. I just have to say they were all awful. I mean it was just like Same in New Jersey. Yeah, you just go on Shady looking company.

You're buying a mostly gas anyway and claim to be renewable or claim to have some kind of climate friendly aspect, very rarely. That's on the same grid that you are. And so you're basically just buying renewable energy credits. Yeah. Kansas plus gas. It was awesome.

And that's because they can't offer a value added product because of this impediment, the fact that they can't actually unlock the savings of changing your consumption. So all they do is slick marketing or these sorts of green products or not.

That's the only way to differentiate. So yeah, it's a broken market in much of the country, but that doesn't mean it has to be broken. And in much of the world, we've got Let's take a break and when we come back After hours and hours of podcasting, we will tell you how to make rooftops over. ShiftKey this week is sponsored by Sungrow. As the world's leading inverter supplier, Sun Grow invests heavily in research. Constantly pushing the boundaries.

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Okay, we're back. So Jesse, when we talk to Mary Powell, the CEO of Sunren, about this She said that a lot of what was driving rooftop solars heightened cost, which again. In the US than in Australia was permitting and bureaucracy, that the US just has so many jurisdictions. Do you buy that?

I I buy it in part. I think there is a ver a real vicious cycle here that you know that the US regulatory environment on permitting process does contribute to for rooftop solar. I mean the fact that every different municipality has an entirely different procedure for pulling permits. for what actually has to be permitted. Inspections. The building code, all of that is is different.

city to city or jurisdiction to jurisdiction. You also have to interface with the utility for your interconnection process. That is not standardized. Each utility, and there are hundreds of them across the country, have a different process that they go through. And what that means is that the market is both very balkanized, right? And everything you you have to figure all this out at every location if you want to run a business with any kind of scale. And it makes the consumer experience.

terrible. Right. It makes it very slow to actually get your system installed and inspected and interconnected to the grid and turned on. And it also just adds cost because that means there's more times when the solar company has to send somebody out to your house. They can't just all do it in one day. They gotta go back out and meet the inspector and

to the utility. And you know, it's just it's a really, you know, cr creaky, slow process that that makes the process, uh, the the customer experience really bad. In some ways, I mean, just to be clear, we hear this. This is a common complaint across all constructions. You hear it in housing, you hear it in multifamily apartment building, you hear it, frankly, sometimes It's just a very, very common criticism. basically the entire US and across the entire construction sector, which is

Yeah, and it's probably gonna drive up costs of installing heat pumps and ground source geothermal and EV chargers and all kinds of things as well. So yeah, definitely brought Yeah. And so what this does is it means that there are two things, right, that contribute to the high solar cost. One is that the cost of customer acquisition.

The cost of actually convincing somebody to go through this annoying weeks long process to save a little bit on their bill is very high. There's a lot of marketing, a lot of push. go marketing going on. And so, you know, I think what one of the things that we've talked about is like in the US, solar is a product that's

In Australia and Germany and other places where it's cheap, solar is a product that you buy. You just go and buy it, like you would new shingles for your roof or uh a new appliance for your home. And so that cost of customer acquisition is substantial. It's much larger than the actual cost of the modules, the solar panels put on the roof. And in places where, you know,

somebody the household just picks up the phone and calls the solar installer, the cost of customer acquisition is zero. Right. So that's one big thing. Right. Fiddling with your system to get it right. They start to think about what home rooftop solar would look like and then they maybe contact some companies. This company will lease you panels, but that company will sell you panels, but then buy the electricity from you, and then this company will And they wind up just walking.

Extra you know, seven dollars per month or something that the choosing the right plan. Uh and more power to them, but what it actually means is they get decision fatigue and never put report.

Yeah, that's definitely a factor too. And then the other thing that it does is it raises the barriers to entry. Anytime that permitting are really complicated. And so, you know, one of the things that Sunrun is good at is it it is figured this out in a bunch of jurisdictions across the country, right? It knows how to navigate this annoying set of procedures. But the that higher barrier to entry means that the US market for sol rooftop solar is uniquely

Right. There is a high degree of market concentration. This is something that I think was maybe a little awkward for, you know, Mary Powell to dive into, but you know, is a real thing that the majority of rooftop solar

installed in the US and s is installed by a handful of companies, just two or three. There's a long tail of lots of little installers that have figured this out in their own town. And so maybe a roofing company in Princeton s decides they're gonna start installing solar in Princeton. But they're probably not gonna do it all over the state or grow into a large enough company to challenge Sunrun and really be a competitive.

And that again is different in other markets where, you know, it's as easy to install solar as it is to replace the roof on your home. And so there's dozens of people who are willing to do it. And it's a very competitive market that drives down prices. And so what that does here is it means that the solar installers are not competing really with each other.

Instead, they're competing with the retail price. This is where rate design comes back in. They're value pricing against the electricity rate that your utility. And the typical sales pitch is that we'll save you something like 20% on your monthly utility bill, regardless of how they structure the financing for this. And as rates for electricity go up every year, usually a little bit faster than inflation, you can lock into this fixed price with us and save a little bit more every year over.

And that's what they're competing with is trying to beat your utility rate, not trying to beat the next solar installer. And since those utility rates are going up every year, there's just no downward pressure on solar prices.

So how do you 'Cause it seems like there's one argument how you fix this that let's be clear we follow out You make it easier to permit and that lowers that means that there are more options for consumers and you just start to change But do you think that alone would solve it?

I mean, I think that that is the most obvious place to try to cut this Gordian knot and unravel the vicious cycle that we're talking about is just make it very easy to permit and inspect and install uh solar systems. So have a standardized. Permitting process that everyone uses, have a standardized interconnection process that every utility is using.

ha use virtual inspections or other procedures that some jurisdictions have pioneered where instead of having to actually get the inspector to come out and and look at your system, the installer sends some data in and some pictures. And unless it looks really bad, they get passed right away and and you System, there are ways to streamline that whole process. There are also building code things you can do, like making every new home solar ready and the way it's wired up and make it easier.

quickly install things. All that I do think will help, right? It'll lower the cost of customer acquisition. experience easier. It'll make it easier for new entrants to compete. I think that's really key. I do think the other key piece of this is that we have to rethink how we compensate.

Because they are going to keep pricing against the utility rate, right? That is the other thing they're competing with, is the buying power from the utility. We have to get retail rate design right so that the solar systems are installed in the places where they truly deliver more value than they cost. And as long as that's happening, then we're in good shape, right? But if we don't do that, then we're gonna continue to have this problem where there's not a lot of downward pressure.

solar prices and they are saving customers more than they're saving the grid and exacerbating So I think if we do a combination of those two things, making installation and permitting very streamlined and easy and better valuing the solar itself through improved ray design. I think that'll push us in the right direction. And I hope that will drive a virtuous cycle that that steadily draws.

costs and you know, we know that it's possible to install solar cheaper. We can see it around the world. So I think there is real potential to that. I don't know. What do you think, Rob? You think that's enough to get it done? Uh I think that we should move to upshifts and downshifts. However I think that Yeah. I think we should move to up shifts and down shifts.

Just to kind of make the big point here, but I think it is notable And to answer that question, we have wandered through this wall long path that involves how Elect why the US rooftop solar market is so much more expensive. And ultimately you do get these two answers and I I they sound plausible to me, but I should be clear that they sound plausible b in part because they resemble issues that I've reported on elsewhere. hurdles involved in their construction.

Some of these issues would go away and w you know, someone could put solar on their roof with kind of climate and of course we'd also see a lot more people encouraged but so not have previously made economic sense beforehand. There's like a whole other conversation that I want to have here that Any world where your ship electricity rate design and shifting around electricity costs means that you're shifting around costs

And losers too. There's winners and losers. More on their bill now, we'll pay less in the future and how that winning and losing will come out and in some ways Behavioral change. I guess I'm not sure. Is this the kind of Yeah, I think that they're the politics of this.

the next challenge and you know, to the degree that the conversation becomes a lot more broader than just what does this mean for rooftop solar and solar cost shifts and things like that, which I think have become pretty contentious.

politically charged and have developed a narrative of noble uh little solar installers versus the evil utility, like that you know, conversation breaks down pretty quickly. And to the degree that we broaden that conversation to recognize that we're trying to really engineer A fundamental shift in the way we use energy to increase the amount of electricity we use through EVs and heat pumps.

distributed energy resources that you know, the costs of getting this wrong are mounting every year and the costs of getting it right, the savings we could have if we got it right, are also growing every year. And I hope that that drives a a more productive, you know, political karm dialogue and and a sense of consensus that some You know, electricity regulation has historically co evolved with the available technology.

And you know, when somebody when you have a regulated market, it can't just automatically shift the way a competitive market does to sort of adjust to new ways to provide these services. The regulation itself has to keep pace. And until it does, you get these big frictions. And solar is the first example of that, but it will not be the last. And if we don't get ahead of it, there's just going to be more problems like the big solar cost shift that Severin talked about in California.

Sorry, I have two things. The first is that I think one thing we are hitting here is that the temptation in climate world has been utilities into the next great villain of the climate movement, right? To say that the As the fossil fuel companies. Very early and didn't practice But I do think there's one lesson of the story is that this is just a very, very Yes, the utilities are not the world's best. But maybe some of the things that I've got to do.

become l less applicable as we get deeper into the Specifically around California.

California as several. In his work seems to be shifting a ton of costs from houses with rooftop solar to houses without a little bit of a little bit of a little And I think there's one way to understand. These rooftop solar subsidies, this rooftop solar program was always flawed. Like, look, this is the trouble of doing I think there's another way to understand this, which is like California has simply reached the next stage of decarbonisation.

And it has reached that before other US states. During the earlier stages of decarbonization, it really did make sense to deploy as much solar as we could. It just wasn't going to be so costly that it was a big deal. But now California has actually deployed enough solar that we have to start thinking about. And that doesn't mean that the program them, it does mean that we need different programs for the current stage of decarbonization.

The state finds itself. And policies should change over time and they should change to reflect the level of economic development happening. And that's just what we're gonna need to do in California, and we're increasingly gonna need to do it in other states as they kind of reach that next stage of decarbonization. Adding one additional marginal solar panel without any way Yep, that's right. We gotta keep adapting. This is not a static uh Shifting. Great, let's do upshift down shift.

Sounds good. Uh you want to go first today, Rob?

Yes, so for this week I wanted to highlight that this week in a surprise m move as my colleagues unveiled their new third generation unlike previous plants, will operate in the US at the Department of Energy's funded I wanted to highlight this first of all. We love to see efficacy go up and energy use go down. But the second thing is I wanted to highlight is that one of the big policies in the bipartisan Around the country. Reflect how much.

especially in bipartisan policy making, attention is turning toward Doing industrial policy and writ large. And so that is my upshift for the week. Finally an upshift. Uh so I also have an upshift. There was a recent report by Ember Climate, which does excellent energy statistics on the energy transition, particularly in Europe.

On progress that the European Union has made in its energy transition just over the last few years. And so from twenty nineteen to twenty twenty-three, Ember has collected the stats and noted that The growth in renewable electricity in Europe has displaced over a fifth of their fossil power generation. So they've knocked down the market share from coal.

substantially. And they did that by of course expanding uh wind and solar capacity. So the EU added about fifty two gigawatts of wind over that four year period. That's a thirty one percent increase in capacity installed. They added a hundred and thirty seven gigawatts of solar. That more than doubles the total installed solar capacity across the EU.

And that drove down coal generation by twenty five percent despite the kind of temporary shift back towards coal at the beginning of the European energy crisis that was caused by Russia's invasion of Ukraine in twenty twenty one. gas, you know, coal demand is already back down from those twenty twenty one level.

And gas fire generation has fallen for four straight years to its lowest levels since twenty five t twenty fifteen in the European Union, of course, accelerated by that energy crisis and the the increase. A very different situation there than we face in the US. We're kind of a wash in cheap natural gas. In Europe, they really are displacing both coal and gas with a uh renewable energy and they've sort of accelerated their commitment to that transition since the the European

So some progress being made. Nice to see that steady improvement in the clean energy grid. Well, let's leave it there. We'll be back next week. If you enjoyed this episode, please send it to a friend. You know, everyone has that friend who just loves electric. And can't stop talking about it. You know, you're at the bar with them and they're bringing up how their power bill costs are structured. Man, you gotta stop talking about it.

Rob, I think maybe our listeners' friends are slightly different than your friends and my friends, but but I hope not. I hope that's Oh I wish I had a friend like this. If you have that person in your life Send them this podcast. You probably already did, but word of mouth is our biggest uh way of getting new listeners, and I'm sure they would enjoy this podcast or at least have a lot to say.

If you enjoyed Shifty, you can always leave a review of it in your favorite podcast app or maybe send an episode to your friends and we'll see you next week. Tiffki is a production of HeatMap News. Our editors are Julian Goodman and Nico Loricella. Multimedia editing and audio engineering by Jacob Lambert and Nick Woodbury. Our music is by Adam Cromwell. Thanks for listening to ShiftKey and see you next week.