A new working paper from the Massachusetts Institute of Technology's Center for Energy and Environmental Policy Research (CEEPR) finds 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.
The paper, "Renewables and Electricity Affordability: Untangling Correlation from Causation," was written by Fischer J. Espiritu Argosino and Christopher R. Knittel and published as MIT CEEPR Working Paper 2025-22. The authors built a state-utility panel covering 1998 to 2023 that links residential prices, RPS stringency, generation mixes and utility spending, drawing on data from the US Energy Information Administration, the Federal Energy Regulatory Commission and Lawrence Berkeley National Laboratory.
Using a two-way fixed effects regression model that controls for unobserved differences across years and between states, the researchers report that RPSs have virtually zero impact on residential prices, that utility-scale renewables are modestly associated with lower prices, and that utility-scale solar in particular is strongly linked with lower prices.
The regression coefficients, which measure generation shares relative to coal, indicate that a 10-percentage-point rise in utility-scale solar's share of generation is associated with residential prices just over 8% lower, while a 5-percentage-point rise in rooftop solar's share is associated with prices roughly 16% higher. The authors caution that the results are correlations and say further work will apply more rigorous econometric techniques to strengthen the causal interpretation of the estimates.
Why utility-scale solar may lower prices
The researchers suggest that large solar plants may reduce network congestion and place downward pressure on overall generation costs because they do not require fuel inputs. 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.
Rate design and distribution strain
Tariff design may partly explain the rooftop solar result. The researchers note that current rate structures in some states shift fixed costs associated with rooftop solar from the owners onto other ratepayers, meaning those without rooftop solar often fund those who have it through an additional volumetric rate.
Rooftop solar was also strongly correlated with higher distribution O&M costs. One reason, the researchers say, is that the distribution network was not designed for bidirectional power flows. CEEPR does not peer-review working papers before posting them.
Corroboration and an ongoing policy dispute
A June 2025 study from Lawrence Berkeley National Laboratory led by Ryan Wiser reached a similar conclusion on utility-scale renewables, finding 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, while 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 conclude that policymakers can secure an affordable energy future by improving the integration of low-cost renewables while implementing more equitable cost recovery strategies.