Who Benefits from Rooftop Solar—and How Much?, with Madeline Yozwiak

Notable Quotes

• Rooftop solar panels can relieve household energy burdens: “We find that households who have rooftop solar are more likely to be able to pay their electricity bill. They’re less likely to be disconnected. They’re less likely to limit their energy consumption in order to afford their energy bills. They’re less likely to give up those needed expenses, like food or medicine, like we talked about in order to afford their utility bill. And they’re less likely to keep their home at an uncomfortable temperature.” (11:08)
• How households finance their rooftop solar influences the extent to which they reduce energy insecurity: “There may be this real mechanism where how you pay for your panels does attenuate or mediate the magnitude of the effect on energy insecurity. It’s worthwhile to do more research.” (16:52)
• Rooftop solar can help address the broader challenge of energy affordability in the United States: “The real problem here is: How do we set prices efficiently within electricity, and how do we do so in a way that allows households who need that energy and depend on it to be able to afford it? In the interim of solving that big problem, I think rooftop solar has a role to play.” (22:15)

Top of the Stack

• “The Effect of Residential Solar on Energy Insecurity Among Low- to Moderate-Income Households” by Madeline Yozwiak, Galen Barbose, Sanya Carley, Sydney P. Forrester, David M. Konisky, Trevor Memmott, Cristina Crespo Montañés, and Eric O’Shaughnessy
• “Rooftop Solar Can Reduce Energy Insecurity” by Madeline Yozwiak
• Strangers in Their Own Land by Arlie Russell Hochschild

The Full Transcript

Daniel Raimi: Hello, and welcome to Resources Radio, a weekly podcast from Resources for the Future. I’m your host, Daniel Raimi. Today, we talk with Madeline Yozwiak, a PhD candidate at Indiana University Bloomington.

Along with a group of coauthors, Madeline recently published a study called The Effect of Residential Solar on Energy Insecurity Among Low- to Moderate-Income Households. The study seeks to understand whether rooftop solar can be an effective tool in combating the widespread problem of energy affordability in the United States. We’ll talk about what the study finds and then spend a while talking about the policies that govern how much homeowners are paid when they generate power from solar on their roofs. We’ll also talk about why those policies matter, not just for solar households, but for everyone who relies on the grid. Stay with us.

All right. Madeline Yozwiak from Indiana University at Bloomington, welcome to Resources Radio.

Madeline Yozwiak: Thank you so much for having me.

Daniel Raimi: It’s really great to have you. I’m excited for our conversation. Before we start talking about energy insecurity and household solar adoption, which will be the main substance of our conversation, I’d love to ask you the same question we ask all of our guests when we start our shows, which is, how did you get interested in working on energy or environmental issues?

Madeline Yozwiak: I think that a lot of my interest in environmental topics really came from experiences I had as a little kid, particularly during the summer. I grew up in Westchester, New York, and my parents had the foresight to send my brothers and me to a camp at a local nature reserve every summer. Shout out to Teatown Lake Reservation, which I highly recommend. I started going there when I was four or five and I just really loved it. I loved being outside. I loved hiking, loved coming back plastered in mud having caught all the frogs, toads, salamanders, crawfish, and everything else. And I think as I grew up, that love of being outside stayed with me and guided where I tried to take my life, to try and help in some small way. Running regressions is a little bit different than actually being outside in a creek, but I think that same spirit is there, for sure.

Daniel Raimi: If you’ve got a good Wi-Fi connection, maybe you can take your laptop out to the local creek behind the library and catch some crawfish while you run regressions.

Madeline Yozwiak: It’s funny you say that. During the pandemic, we had a couple PhD students who invested in those heavy-duty routers you can take to remote spots, and they went camping and worked on their dissertation doing that. Maybe I should follow their lead.

Daniel Raimi: Maddy, we’re going to talk today about a paper that you recently published with a group of coauthors. The name of the paper is The Effect of Residential Solar on Energy Insecurity among Low- to Moderate-Income Households. Folks can find a link to the paper in the show notes so they can follow along. Before we dive into the details of the paper, can you remind us about the importance of this issue of energy insecurity in the United States? We’ve talked about it before with some other authors, but it’d be great if you could just remind us and give us an overview of how widespread this issue is in the United States.

Madeline Yozwiak: Absolutely. Energy insecurity is defined as having the inability to procure enough energy to meet a household’s or a person’s needs. In the US, it’s a surprisingly prevalent issue. A recent estimate from the US Energy Information Administration put the number of households that struggle with energy insecurity at around 34 million. That’s about 27 percent of the population. So, around one in four households in the United States might be defined as energy insecure. What that would look like in practice is that households might have trouble paying for their utility bills; they might be disconnected by their utility provider due to nonpayment, or they might be employing energy-limiting behaviors in order to afford their bill, like keeping their home at an unsafe temperature to reduce those costs. It can also mean forgoing expenses on other needed parts of your budget, like food and medicine, to afford your utility bill. This problem is quite widespread. About one in four is a good estimation of how many Americans we think suffer from energy insecurity.

Daniel Raimi: It’s a really widespread issue, and sometimes people refer to it as the “heat or eat” dilemma, or, with regard to medicine, the “heat or treat” dilemma. There’s a variety of catchy ways you can think about it, but it’s a huge problem. I’ll refer people to an episode we aired a few months ago with one of your coauthors, Sanya Carley, where we really dive into the ways that people cope with energy insecurity.

Now, let’s dive into this study. What is the question you’re trying to answer?

Madeline Yozwiak: If you’re a policymaker and you’re thinking about different interventions that you could use to try and alleviate or address energy insecurity, the mechanisms that have been available to date fall into one of two camps. The first is policies that provide short-term relief to households. These are things like bill assistance and energy assistance. LIHEAP would fall into this category.

Daniel Raimi: Just in case folks don’t know the acronym LIHEAP, it’s the Low-Income Home Energy Assistance Program.

Madeline Yozwiak: Another intervention is moratoria on energy disconnections. Those programs are incredibly helpful and necessary, but the risk is that they do not address the underlying structural causes of why a household might be energy insecure in the first place. The second category of interventions is policies that try to get at those structural roots. Within that area, the only policies that have been available are weatherization programs. These are programs that try to reduce the amount of energy that a household uses, permanently lowering their energy bills over a long term and hopefully reducing energy insecurity.

With our paper, we wanted to see if rooftop solar, similar to weatherization and energy-efficiency upgrades, might be able to reduce energy insecurity, because rooftop solar provides a long-term decrease in the amount of money a household needs to spend on electricity. That’s where our paper came in. There had been discussions within the literature theorizing that rooftop solar might be helpful in this area. The goal of our paper was to take that question and see if there was empirical proof that it could actually be an effective solution to energy insecurity.

Daniel Raimi: Tell us about the data and the methods. I know you have this big group of people you divided into individuals or households that have solar and those that don’t have solar, but that are also similar in many other ways. Can you tell us a little bit about that?

Madeline Yozwiak: Absolutely. If we think about the ideal way to tackle this question from a research design perspective, the gold standard would be to run an experiment where we would randomly assign households to have solar panels installed on their house, and then to have a control group of households without solar. In practice, that type of research design, in this context, is quite expensive and logistically quite difficult. So, our design is meant to approximate as best we can and experiment using the existing landscape of households that have and have not installed solar. We do this in partnership with the Lawrence Berkeley National Laboratory. They have a large database called Tracking the Sun, which I highly recommend to any of your listeners interested in this area.

We assembled a group of households who had adopted solar in 2023 and that were also, to our best estimate, low- to moderate-income households. Those households served as our treated group: the households who receive solar. Then we went through and matched a large set of households that did not have solar that were similar to the households with solar, based on a number of characteristics. We looked at things like the size of the home, the type of the home, sociodemographic characteristics, and where the house was located.

Our setup design is to say those households without solar are going to be the counterfactual for the households with solar, and we’re going to send all these households a survey. In the survey, we’re going to ask them about energy and security, and then we’re going to measure the effect of rooftop solar by taking the difference in the experience between the households with solar and the households without. If we’ve done a good job assembling that control group and have controlled for all the characteristics that might confound that estimate, we can get a pretty good estimate of the causal effect of rooftop solar on a household’s experience of energy insecurity.

Daniel Raimi: You note in the paper that it’s not a perfect experiment. Some of the respondents that have solar have slightly higher incomes, and those without solar are slightly more likely to attend graduate school. So, there are a couple of caveats here, but you try to control for as much as you can.

Madeline Yozwiak: Exactly. If we get really into the weeds of the regression, we assemble these two control groups and try to minimize those differences at the outset in the sample. But, there’s a difference between the characteristics that we can estimate before we see a household and the characteristics they self-report once we get the survey data back. So, all our estimates are conditional on the characteristics that are self-reported. Even though there are small differences among the households who responded, we do a lot of work to try and make sure that our estimates are not driven by those small differences and reflect the effect of rooftop solar.

Daniel Raimi: Right. Folks should read the paper to get a sense of how you do that.

Let’s jump over those weeds and dive into some of the results. Can you share some highlights?

Madeline Yozwiak: Absolutely. In this paper, we have three main results. The first result is that rooftop solar does lead to a reduction in energy insecurity. The effect is large, precisely estimated, and occurs across the categories of energy insecurity that we looked at. We find that households who have rooftop solar are more likely to be able to pay their electricity bill. They’re less likely to be disconnected. They’re less likely to limit their energy consumption in order to afford their energy bills. They’re less likely to give up those needed expenses, like food or medicine, like we talked about in order to afford their utility bill. And they’re less likely to keep their home at an uncomfortable temperature. The magnitude of those effects are between 15 percent and 46 percent, depending on the outcome that we study, and it’s robust across many different tests. We think that that’s a pretty sturdy result of having rooftop solar.

The second headline effect is that rooftop solar also helps households afford their other utility bills. When you install solar and you have a net metering billing system, you’re only going to be offsetting your electric utility bill. But in households with mixed utility service—meaning they have electricity and then maybe natural gas for heating or cooking—we find an improvement in households’ ability to pay their other utility bills, like their natural gas bills. We think of this as a spillover effect—the benefits are not limited to electric utility bills.

The final headline result is that we find some differences or heterogeneity based on the way that households paid for rooftop solar. We view these results as preliminary, but we think they’re quite interesting, so I wanted to highlight them, in case it sparks any ideas among listeners.

We find that households who were able to pay for their installation up front, meaning that they didn’t finance via a lease or a loan, have a slightly larger reduction in energy insecurity in two of our five outcomes. What that suggests to us is that there might be some very interesting mechanism where, because the cash flows are quite different between paying upfront for your solar system versus paying over time, the very large reduction you receive once you’ve just paid for your panels completely, and you have that very strong reduction in your electricity bill, might lead to a stronger feeling of security in your ability to afford your energy bills over time.

Those are the three big takeaways from our paper. First, rooftop solar can be an effective intervention for energy insecurity. It leads to large reductions across the board, and it’s quite robust and a precisely estimated effect. Second, it spills over to help households afford their other utility bills. And third, there might be some interesting differences based on the way you pay for your panels over time.

Daniel Raimi: I want to dig further into that payment question. I wonder about what economists might call an endogeneity issue that could affect these results. If someone’s able to afford paying for their solar system upfront with some relatively large cash payment, you might wonder whether those types of households have access to credit that’s just different from the folks who are paying on a monthly basis, or maybe they have more savings than folks who are paying on a monthly basis. Can you talk about that concern in the study and how you might address it?

Madeline Yozwiak: Absolutely. It's a great question, and I think it was something we talked about a lot in this piece of the analysis.

I’ll say a couple of things. The first is that even though it’s not quite perfect for solving a selection or endogeneity issue, the results that I mentioned are already conditional on including a household’s income and a large factor of characteristics. So, we’ve made a level-one attempt to say, “There might be some differences in these households. At least among the things we observe, we’re going to try and control for them”

The second piece that I’ll say is that the small number of households who were able to pay up front might be a little bit different than the target population of a policy intervention that’s meant to alleviate energy insecurity. We view it as more of a suggestive rather than a strongly causal result. We view our main analysis as strongly causal, but this last piece we view as more indicative, or like a little canary in the coal mine, of what might be interesting for other work. We did a number of checks to try and assess whether or not these households were significantly wealthier than other households, and we couldn’t find evidence of that within the data.

It’s a good question, whether or not that effect would hold for other populations. We did our best to control for it within the actual regression. The main policy takeaway is more about the type of intervention that you would use to encourage the adoption of rooftop solar. What this part of the paper speaks to is that there might be a difference between programs that provide for heavily subsidized installations of solar. We can think about the grid alternatives model of solar adoption versus programs that are subsidized but still lead to payments among the households.

I think the key takeaway is that even with this caveat around possible selection issues in the households, there may be this real mechanism where how you pay for your panels does attenuate or mediate the magnitude of the effect on energy insecurity. It’s worthwhile to do more research. We don’t have all the answers, but there could be some real policy relevance there for someone to tease out further in future work.

Daniel Raimi: The policy relevance is super clear, as is the need for more research, as always.

I’d love to ask now, Maddy, a couple of questions about net metering. This is a really important policy that’s governed primarily at the state level and varies from state to state. With net metering, the basic idea is that if you have full net metering in your household that has solar, then you receive a credit on your electricity bill that’s equal to the amount that you pay for electricity. So, it's like the retail electricity rate that you pay for the power you consume is the same amount that you get credited for when you generate solar on your house. That’s different from the wholesale electricity rate, which is what most electricity producers receive. The wholesale rate is typically quite a bit lower than the retail rate.

How much is this issue of net metering popping up in your study, and how much do net metering policies account for the financial benefits that solar households receive?

Madeline Yozwiak: It’s a large part of the result, and I’ll explain what I mean there. The effect that we identify includes a sample of households that are fairly national. We have representation across a number of states within the country. And the effect is measured conditional on the policies that were in place at the time that we did the survey. So, we would expect any change within those policies that would affect how much a household would save on their electricity bills going forward with solar to directly affect the magnitude of the impact to energy insecurity.

If there was a world where there wasn’t net metering and rooftop solar, the marginal benefit versus simply staying with your utility was reduced. So, a household saved, day to day, 5 percent instead of 20 to 30 percent. We wouldn’t expect to observe the same reductions in energy insecurity. So, to answer your question a bit more directly, net metering is going to be a background policy environment that we’re averaging across the country, the policies that were in place. But it’s likely to have a direct impact on the presence of an effect, as well as on the actual magnitude, if there were any changes in those policies going forward.

Daniel Raimi: Thank you for that explanation. I’m so interested in this net metering issue because it ends up having really significant distributional consequences for how different households pay for electricity. There’s been some research from California that our friend, Severin Borenstein, has done that tries to estimate the cost shifting that happens due, in part, to net metering. The simple story is that households that have solar because of net metering are benefiting to the tune of billions of dollars per year, which end up getting paid by other households that don’t have solar.

So, there’s this concern that there’s an unfair burden shifting going on, and that low-income households, particularly those that don’t have solar, are getting hit hard by the fact that net metering is in place and benefiting other households that do have solar. How do you think about this issue, about how net metering clearly incentivizes solar adoption? It’s really good for people who benefit from it, but it has real costs for everybody else who needs to get electricity.

Madeline Yozwiak: It's a really great question, and it's a difficult one within this field. Within our study, I don’t think that it would be correct to take the results of our paper and extrapolate and say that we think all households that are low- to moderate-income should have rooftop solar, where we move to this world in which everyone has solar and there’s no utility. That extreme is not an implication.

If we take a step back, one thing that’s difficult about the cost-shifting debate is that it implicitly frames the agent of the problem as rooftop solar, and it can overlook the more overarching problem, which is the escalation in retail electricity prices in the last two decades in the United States that is not well-explained by the industry, is not well-explained by quality of service, and is not well-explained by the academic literature, either.

In that framing, we would view solar as on par with interventions that lower the price of electricity, to reference other work, in places where the price might exceed the social marginal cost in a given region. So, we have reason to believe that it’s too high relative to other economic baselines. I think that the real problem here is: how do we set prices efficiently within electricity, and how do we do so in a way that allows households who need that energy and depend on it to be able to afford it? In the interim of solving that big problem, I think rooftop solar has a role to play.

We don’t want it to be an intervention that leads to meaningful cost shifting and creates more problems than it helps. But in most of the country, we’re not at that level of solar penetration. Having a policy intervention with a thousand low- to moderate-income households being able to have rooftop solar … I think that the likely social benefit, if you were to do that calculus, for those households in reduced energy insecurity, would likely exceed any marginal cost shifts. California is quite an outlier in terms of overall adoption, the severity of that problem, and the way in which prices have been set in that state.

It’s a really thorny problem. We don’t think a takeaway from this paper is everyone should have rooftop solar. I think the overarching question that we need to solve is: how do we set prices better within electricity, and how do we make sure that the costs that are being shifted are incurred prudently and minimized? This cost escalation over time is something we haven’t thought well about within the industry or within the literature.

Daniel Raimi: The scale really matters here. If we’re thinking about a policy that affects a thousand people, the effect is probably going to be pretty small. But once we start getting into the millions or tens of millions, then you really start to look at big effects.

Maddy, one last question I’d love to ask you before we go to the Top of the Stack segment is about state-level policy. You surveyed people from all around the United States, including rural areas, urban areas, Democratic-leaning states, Republican-leaning states—all sorts of different demographics and geographies. Are there states where you think policymakers are doing a good job of finding this balance between promoting solar so that it benefits people but also avoiding the cost shifts and burdens that we’ve been talking about?

Madeline Yozwiak: It’s such a good question and I think I’m going to dodge it ever so slightly and take my interviewee’s prerogative and reframe it slightly.

Daniel Raimi: No problem.

Madeline Yozwiak: I might answer this question by pointing out three states that I think have innovated on their solar policy. I think that there’s a dearth of research evaluating its effects, and there might be some really good learning to be done from what these states are doing. The three states that come to mind that I would love to see more research around are Hawaii, Texas, and Massachusetts.

There’s a specific reason for each. Hawaii, I think, is the best-case study that we have within the United States of what happens when you have a grid with high levels of renewable penetration. Hawaii is a great example because they had an early and widespread adoption of rooftop solar, in particular, due to their high retail electricity prices. Their marginal fuel is oil because they’re an island.

Very early on, they switched to policies around net metering that would encourage the adoption of battery backup systems, giving prioritization for households who had batteries to interconnect more quickly. Because they’re isolated, it allows you to evaluate and study some of the challenges that we’ve theorized about around high levels of renewable penetration, but that we haven’t always put hard empirical numbers around, the actual magnitude of the effect. I think Hawaii would be a great, great, great place to study it. And also, if you want to go to an island, that would be a great place to study.

Daniel Raimi: Totally.

Madeline Yozwiak: The second state that I think is fascinating is Texas. They have no net metering. Of the shades of deregulation and competitive reforms within the US, they are the state that has implemented the strongest and the most comprehensive level of competitive reforms. What we’ve seen within the industry is that there has been a degree of innovation in kinds of business models for rooftop solar that allow for sufficient savings for households in the absence of this more historic net metering framework that we have in the majority of US states. There have been pilot programs around virtual power plants and aggregating households, participating in demand response programs, things of that sort. I think that would be such a great state to study, to understand what the future of rooftop solar might look like or could look like in other states, since it is as close to a competitive market structure, across the board, as we’ve been able to enact within the United States.

Daniel Raimi: What about Massachusetts?

Madeline Yozwiak: Massachusetts, within their renewable portfolio standard, has a solar renewable energy carve-out, an SREC program. They’ve implemented both their SREC-II program as well as their post-SREC market solar incentives. I think it’s the Solar Massachusetts Renewable Target program. They have incorporated a number of attributes that we saw echoed in the Biden administration around the Justice40 Initiative of trying to prioritize solar projects with social attributes within the state, and it’s been an open question in my mind. I started my career as an SREC analyst and spent a lot of time actually studying Massachusetts in particular.

I think that there’s a paper to be written that asks the question of how well incorporating other social goals within renewable energy incentives, specifically rooftop solar incentives, works, and what the tradeoffs are when we think about that from a policy design perspective. Massachusetts comes to mind as being a state that has done that in multiple programs and incorporated it throughout its policy design. I think there could be lessons for other states as well,but not federal policy at the moment, though possibly federal policy in the future.

Daniel Raimi: Just in case anyone hasn’t gotten enough research ideas today, I’ll throw out one more, which is Illinois. Illinois has this Climate and Equitable Jobs Act that includes a variety of incentives to train low-income people and formerly incarcerated people to work in the solar industry installing rooftop solar. I’d be really curious to get a sense of how that program is working as well. We’ve got tons of research ideas for folks to mull on going forward.

Maddy, this has been a great conversation. I’ve learned a lot. I’m sure our listeners have, too. I’d love to ask you now the same question that we ask all of our guests, which is to recommend something. It could be a book, or a magazine article, or a TV show, or even another podcast that you think is really great and that our listeners might enjoy. So, what’s at the top of your literal or your metaphorical reading stack?

Madeline Yozwiak: Well, I only listen to the Resources for the Future podcast.

Daniel Raimi: Of course. What else would anyone need?

Madeline Yozwiak: Yes, exactly. So, unfortunately, I can’t recommend a podcast, but I would recommend a book. This was a book that came out a few years ago, but I think that it’s very well written and has a number of lessons that still resonate today: Arlie Russell Hochschild’s Strangers in Their Own Land. Arlie is a sociologist at the University of California Berkeley, and in this book, she is trying to understand more broadly the shifts in the politics within the United States and the move towards the hard right, but the connection to environmentalism is her case study. She spent about five to six years in a town in Louisiana, and it’s a town that is very dependent on resource extraction and the oil industry, oil and petroleum.

The book, I think, is beautifully written. It’s quite insightful, and it allows you to think about politics, but to also get these quite nuanced insights into the role that energy plays within our society and the very human challenges we face in trying to transition into a different energy structure. It’s a very compassionate book, it’s very rigorous, and it changed the way I look at the world. So, that would be my physical, hard-copy book recommendation.

Daniel Raimi: Yes, your literal reading stack.

Madeline Yozwiak: Yeah, my literal reading stack. Exactly.

Daniel Raimi: Just so folks know, this is Lake Charles, Louisiana, which has lots of refining and petrochemical operations, and historically lots of oil extraction close to the offshore oil industry, as well. I am really looking forward to reading this book and appreciate your recommendation.

Madeline Yozwiak: Yeah. You’ll have to follow up, because I would love to talk about it if you do read it.

Daniel Raimi: We’ll have a little private book club. Great.

One more time, Maddy Yozwiak from the University of Indiana Bloomington. Thank you so much for joining us on Resources Radio. It’s been a great conversation.

Madeline Yozwiak: Thanks so much. It’s been my pleasure.

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