Researchers at the Massachusetts Institute of Technology's Center for Energy and Environmental Policy Research (MIT CEEPR) have concluded 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 results are set out in MIT CEEPR Working Paper 2025-22, \"Renewables and Electricity Affordability: Untangling Correlation from Causation,\" by Fischer J. Espiritu Argosino and Christopher R. Knittel.
To reach that conclusion, the authors assembled a state-utility panel spanning 1998 to 2023. The panel links residential electricity prices with RPS stringency, the mix of generating resources and utility spending, and it draws on data from the US Energy Information Administration (EIA), the Federal Energy Regulatory Commission (FERC) and Lawrence Berkeley National Laboratory (LBNL). That combination allows the analysis to compare how prices moved in step with policy stringency and with the shares of different generation sources over roughly a quarter-century.
What the model found
Using a two-way fixed effects regression model that controls for unobserved differences across years and between states, the researchers reported that RPS policies and utility-scale renewables are not associated with higher residential electricity prices. In their summary of the paper, they stated that RPSs have virtually zero impact on 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 magnitudes of the two effects
The paper's regression coefficients measure generation shares relative to coal. On that basis, the authors report two contrasting relationships:
- A 10-percentage-point increase in utility-scale solar's share of generation is associated with residential prices just over 8% lower.
- A 5-percentage-point increase in rooftop solar's share is associated with prices roughly 16% higher.
The authors were careful to describe these results as correlations. They said further work will apply \"more rigorous econometric techniques to further strengthen the causal interpretation of these estimates.\"
Why utility-scale solar may lower prices
The researchers offered one explanation for the utility-scale result: 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 to be strongly associated with lower transmission, distribution and total operation and maintenance (O&M) costs.
Why rooftop solar may raise them
For rooftop solar, the authors suggested that tariff design may partly explain the outcome. In their view, one possible reason is that current rate structures in some states shift fixed costs associated with rooftop solar from the owners onto other ratepayers. In effect, they said, this means that those without rooftop solar often fund those who do through an additional volumetric rate.
Rooftop solar was also strongly correlated with higher distribution O&M costs. One reason the researchers gave is that the distribution network was not designed for bidirectional power flows — an infrastructure constraint that becomes more relevant as distributed generation grows.
Caveats around the evidence
MIT CEEPR does not peer-review working papers before posting them, a limitation that applies to the findings as presented. In addition, the study frames its central results as associations rather than proven causes, leaving open the question of how much of the measured relationship is driven by the generation sources themselves and how much by the policy and market conditions that accompany them.
Consistent with earlier work
The utility-scale conclusion echoes a June 2025 LBNL study led by Ryan Wiser. That work found that roughly 75% of US utility-scale wind and solar built outside RPS programs had no broadly discernible upward effect on retail prices — a result that points in the same direction as the MIT panel on the question of whether large-scale renewables push retail rates higher.
A long-running dispute over cost shifting
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, by contrast, found 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 than distributed solar itself.
The two estimates therefore differ not only in magnitude but in sign, underscoring how contested the accounting of distributed solar's costs and benefits remains.
What the authors recommend
Framing the results for policymakers, the researchers said that policymakers can secure an affordable energy future by improving the integration of low-cost renewables while implementing more equitable cost recovery strategies. The pairing is notable: it treats the treatment of solar's fixed costs, rather than the presence of renewables, as the variable most likely to shape what households ultimately pay.
Taken together, the panel's estimates distinguish between the mechanism — renewable generation — and the policy vehicle used to procure it. RPS mandates showed almost no measurable relationship with residential prices, while the generation shares themselves split sharply depending on whether the solar is utility-scale or distributed. That split is the paper's central puzzle: two forms of solar power, one associated with cheaper residential electricity and the other with more expensive.