Thinking Of Going Solar? Do It Now
Under a new administration, and possible flipped legislature, the benefits of solar may not be bright for much longer.
Well, we made it. The 2024 election is now behind us. If the candidate you voted for won, congratulations! If the candidate you voted for didn’t win, I suggest you tuck your tail between your legs and find something to occupy your mind besides politics. That is, keep yourself from going insane with post-election anxiety! Don’t worry, Trumpers, I would’ve said the same thing to you if Orange Man lost. Except, instead of “tucking your tail” it would be “don’t start another insurrection”.
Donald Trump will take the Oval Office in January. I don’t think I need to remind anyone of that. What comes with it is a reversed mindset about our climate and how we produce enough electricity to meet the demands of AI. The benefits of solar may be slashed, leaving you with no way to hedge against a climbing electricity bill—thanks to rapid EV adoption, AI data centers, heat pumps, climate change grid strain, and more. In a satirical fashion, I will be making references to the classic game show, “Press Your Luck”. Right now, all we have left on our side is time. You better hope for no whammies! More on that to come.
Donald Trump has been openly against renewable energy for a long time. He has expressed his distaste for it (albeit, without a good reason IMO). I want to highlight how this has serious potential to reduce the benefits and increase the cost of solar energy for homeowners beyond what was originally expected, and now to a point where a homeowner no longer has a choice about their home’s electricity price, but an ultimatum. There are a few solid points to be made.
“… [it’s] now to a point where a homeowner no longer has a choice about their home’s electricity price, but an ultimatum.”
First, Donald has expressed interest in repealing the Inflation Reduction Act of 2022 (IRA). Important highlights of this act include the extension of the Solar ITC for homeowners and financial incentives for solar manufacturers bringing plants to the US. Both of these primary IRA benefits have reportedly brought more prosperity to Red states, making an IRA appeal ironic for Trump and party (example, manufacturing facilities and installers across the US that hire laborers). An argument can be made that these incentives boosted jobs in Red states, pulling laborers from dirty coal mines and oil fields to much safer occupations like manufacturing and installing PV solar. Reducing or eliminating the IRA would result in lost jobs, sunk funds, and increased costs for homeowners going solar. Stack this on top of the increasing cost of electricity and you deal major blows to households across the US. Electricity gets more expensive, but so does the only way to hedge against it.
The Solar ITC is often misunderstood by solar hoaxers, claiming that it uses their own tax money to help others go solar. This is not true. It is a tax CREDIT. The government is giving you back your tax money that you paid them. It’s your own money, they’re just giving it back. It’s not Joe Shmoe’s money, so don’t let him tell that. It’s not a refundable credit, but it does roll over into subsequent years. So, if you have a larger credit from going solar than your tax liability, you’re safe. Understood? Understood.
The Solar ITC is a huge incentive that helps homeowners go solar. The ITC reduces the cost of solar whether you purchase it, loan it, or take on a PPA. Currently, the Solar ITC is set at 30% until 2034, with reductions over the next two years before vanishing. It seems very likely that Trump will go for the IRA’s throat, and the Solar ITC’s length and/or value could vanish. With Trump’s vocal opinions about attempting to repeal the IRA, the cost of solar in the near future could very well rise. I wish I could type this blog and tell you that everything will be fine. Him and party will not be able to touch the IRA, or attempt to use it as bargaining, but the chances of him going after it equal the chances of him not doing so. The only thing you have left on your side is TIME.
Republicans have now taken the majority in the US Senate, raising concerns about a possible full sweep.
Another point to be made—one that I did not consider until watching election results come in on Tuesday night—is the increased leverage that could be given to Trump and party with a full sweep. The Senate has now flipped red, with House seats still being decided at the time of writing this blog. With a possible Legislative branch FULLY on Donald’s Trump’s side, an IRA appeal or rollback looks stronger and more likely. However, to rebuke my own point and highlight what some energy journalists have already stated, both Trump and Congress could potentially leave the solar incentives alone if they realize the good jobs and increased prosperity it has brought to their own states and districts.
And, did you think I was going to skip the most important buzz word of all? Nope. TARIFFS. Currently Biden has set tariffs on Chinese solar cell imports to 25%, increasing it to 50% this year. Current tariff prices are already factored into the price of solar. Increased tariffs from another Trump administration would increase the cost for installers choosing Chinese solar cells and equipment. Imposing higher tariffs on imports before manufacturers are able to build plants in the US will increase costs for the consumer. However, under Biden’s IRA and the CHIPS Act, an increasing amount of solar equipment is now being made (or planning to be made very soon) in the US. I do not think increased tariffs on Chinese solar cell imports will increase the cost of solar in the US. Well, I can at least speak for my own avenues. Most reputable solar equipment is not made in China, mainly North America & Taiwan.
A Double Whammy!
Not only are the benefits of residential solar in the balance, but the price of electricity also does not look very warming, either. I think many will associate a Trump administration with a future of decreased electricity costs. Well, those people are wrong. Particularly for residents local to me (Pennsylvania), increased generation costs AND distribution costs will be coming to your electricity bill next year. Here’s how I know.
FirstEnergy (parent company to Penelec, Met-Ed, Penn Power, West Penn Power) releases wholesale energy prices for their subsidiaries to bid on twice per year. The next auction is set to take place on November 13, 2024. Preliminary auction price ranges are released before the auction. You can read more here.
ALL FOUR SUBSIDIARIES have minimum bid prices well above their 2024 prices (auctions are held a 6-months to a year in advance). The MINIMUM bid prices for this upcoming auction sit above the current price by 25%-50% for all four subsidiaries. This means that by next year, these power companies could be charging you 25-50% more for generation than they do now. Based on the historic prices listed in their website, the wholesale prices for their subsidiaries are directly reflected in the price per kwh charged to their customers. By simply scrolling further down on the FEPA auction site, you can see the historical prices for each sub. Important note: the wholesale price is expressed in mw while the residential price is in kw. So, divide the wholesale price by 100 to estimate the residential rate. Also, the residential rate can vary from these wholesale prices, depending on whether there is left over generation from a previous auction/contract.
A Triple Whammy?!
Was that even a thing on “Press Your Luck”? I can’t remember. What I do know is that along with a rate hike in generation, FirstEnergy has also approved a 5% rate hike in distribution costs.
You can thank The Almighty himself (or the PA PUC, whichever floats your boat) for reducing the proposed increase from about 10% per subsidiary to roughly 4-5% per subsidiary. This estimate—directly from First Energy—is for your entire bill, not just your distribution rate. Another words, the distribution rate will increase by more than 4-5% because distribution costs are only half of your bill.
Here’s an example- Penelec’s current generation rate is 9.5 cents. Distribution is roughly 8.4 cents. A current total of 17.9 cents per kwh. With the new generation price (based on the MINIMUM bid price) and the new distribution price- a new kwh rate for a homeowner would be: (0.125 + 0.084) x 1.04= $0.217 per kwh. Nearly a 20% increase in your monthly electricity cost in one year.
And if you live in PPL territory, you aren’t out of the fire, either. PPL just announced a 7% increase in their generation price.
There are many reasons for these increases. And no, it’s not just because these “stupid green energy” policies are driving up prices. There is large supply and demand factors in play. Without going into detail, there is just too much demand right now that is severely outpacing supply. It will continue to do so for the foreseeable future. For more information about this, you can visit my “Resources” page and read the recently linked report.
And to all of this I say…
This is a blow to your wallet. Your take home pay. Your personal finances. This should be meet with anger and frustration! Because how do you avoid these things? You can’t. Economists say that the consumer votes with their wallet; but electricity prices are just one of those things that our wallet DOESN’T give us a voice for. An educated bill-payer might say to shop for a 3rd party supplier. To get what? 6 months at the same rate you pay now? Then they flip you to a variable rate that is usually higher than the default rate you tried to hedge against! Go for an 18 month rate from a TPP and it’s just as expensive as the proposed rate hike I just talked about! And you can’t do this for your distributor. You’re stuck with them like the family you appall seeing every holiday season.
Cancel your electric bill? You know that’s not possible. It is possible with other bills like Netflix or your phone bill, but not with electricity. This is why I cannot emphasize these points and figures enough. Electricity is not a cost we can avoid, and it is not one that we vote for with our wallets.
If you are someone in strong support of caring and protecting our environment, Trump comments and actions should REALLY anger you and inspire you to take action.
Do I have a magic ball? No. Can I see the future? No. Like previously mentioned, Trump could come to his senses and realize the IRA had serious benefits for Americans, benefits that he surely supports and campaigned on. Like, supporting US manufacturing & jobs. All the while said boosting has primarily been in red states. But he has an equal chance of not doing that, and instead be the usual…Trump. What I do know is Trump’s expressed disapproval of the IRA and his ability to be determined and unpredictable. If there isn’t a full sweep, I can totally see the Solar ITC being used as a bargaining chip. And if there is a full sweep? You better be yelling, “NO WHAMMIES NO WHAMMIES NO WHAMMIES”.
Closing Comments
I honestly do not care who you voted for. You can be a MAGA supporting Republican, or a Trump-hating Conservative. You could be a Democrat that doesn’t care about the environment, a Libertarian, Independent who hates solar. Blah blah blah. I just hope that my message is clear enough to push past any political barriers facing solar right now. I think many like to put political walls around what “going solar” means and then confine everyone and everything to those bounds. SOLAR IS FOR EVERYONE. And going solar means something different to everyone.
Maybe you are strictly concerned about the current cost of solar compared to the utility—solar is for you (ESPECIALLY right now).
Maybe you are worried about the inflating price of electricity and what a permanent fixed rate—solar is for you.
Maybe you want a much greener house and are looking to offset your carbon footprint—solar is for you.
Maybe you are concerned about the planet your generation is leaving for your children & grandchildren—solar is for you.
Whatever the reason, it’s a good reason. And we are approaching a point in time where the decision to go solar is more of an ultimatum. To accept rising electricity prices and possibly miss out on the lowest cost solar will ever be? To wait and see what the next 4 years will hold?
You might just land on the “Add A One” space, but with your electric bill. You better hope you land on “Big Bucks” next!
-Noah Koppenhaver