US power prices fall with utility-scale solar, rise with rooftop

Researchers at the Massachusetts Institute of Technology (MIT) have found that renewable portfolio standards (RPS) and utility-scale renewables are not associated with higher residential electricity prices in the United States, while rooftop solar is associated with higher prices.

Fischer J. Espiritu Argosino and Christopher R. Knittel of the MIT Center for Energy and Environmental Policy Research (CEEPR) built a state-utility panel covering 1998 to 2023. It links residential prices, RPS stringency, generation mixes and utility spending, using data from the US Energy Information Administration (EIA), the Federal Energy Regulatory Commission (FERC) and Lawrence Berkeley National Laboratory (LBNL).

“Using a two way fixed effects regression model that controls for unobserved differences across years and between states, we find that RPSs and utility scale renewables are not associated with higher residential electricity prices,” the researchers said in a summary of the paper. “Instead, RPSs have virtually zero impact on prices and utility scale renewables are modestly associated with lower prices; in particular, utility-scale solar is strongly linked with lower prices.”

Based on the paper’s regression coefficients, which measure generation shares relative to coal, a 10-percentage-point rise in utility-scale solar’s share of generation is associated with residential prices just over 8% lower. A 5-percentage-point rise in rooftop solar’s share is associated with prices roughly 16% higher. The authors cautioned that the results are correlations and said further work will apply “more rigorous econometric techniques to further strengthen the causal interpretation of these estimates.”

“One explanation is that large solar plants may reduce network congestion and place downward pressure on overall generation costs because they do not require fuel inputs,” the researchers said. A second model, which also controls for differences between utilities, found utility-scale solar strongly associated with lower transmission, distribution and total operation and maintenance (O&M) costs.

The researchers suggested tariff design may partly explain the rooftop solar result.

“One possible reason for this is that current rate structures in some states shift fixed costs associated with rooftop solar from the owners onto other ratepayers,” they said. “In effect, this means that those without rooftop solar often fund those who do through an additional volumetric rate.”

Distribution strain

Rooftop solar was also strongly correlated with higher distribution O&M costs.

“One reason for this is that the distribution network was not designed for bidirectional power flows,” the researchers said.

CEEPR does not peer-review working papers before posting them.

“Policymakers can secure an affordable energy future by improving the integration of low-cost renewables while implementing more equitable cost recovery strategies,” the researchers said.

A June 2025 LBNL study led by Ryan Wiser reached a similar conclusion on utility-scale renewables. It found that the roughly 75% of US utility-scale wind and solar built outside RPS programs had no broadly discernible upward effect on retail prices.

The rooftop solar finding feeds into a long-running dispute over cost-shifting in California. The California Public Utilities Commission’s Public Advocates Office has estimated an $8.5 billion cost shift from rooftop solar customers to other ratepayers. A 2025 report by M.Cubed Consulting and the California Solar and Storage Association found instead that rooftop solar delivered a $1.5 billion net benefit to all California ratepayers. Solar advocates have also argued that rising transmission and distribution spending is a larger driver of rate increases.

The researchers described their findings in “Renewables and Electricity Affordability: Untangling Correlation from Causation,” published as MIT CEEPR Working Paper 2025-22.