Researchers at the Massachusetts Institute of Technology (MIT) have concluded that US renewable portfolio standards (RPS) and utility-scale renewables are not associated with higher residential electricity prices, while rooftop solar is associated with higher prices.
The findings come from Fischer J. Espiritu Argosino and Christopher R. Knittel of the MIT Center for Energy and Environmental Policy Research (CEEPR), published as CEEPR Working Paper 2025-22 under the title "Renewables and Electricity Affordability: Untangling Correlation from Causation." CEEPR does not peer-review working papers before posting them.
A panel spanning a quarter century
The authors constructed a state-utility panel covering 1998 to 2023 that links residential electricity prices, RPS stringency, generation mixes and utility spending. The dataset draws on 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, the researchers found that RPSs and utility-scale renewables are not associated with higher residential prices. The panel design allows states with different levels of RPS ambition to be compared while holding nationwide trends constant.
More specifically, the researchers report that RPSs have "virtually zero impact on prices," while utility-scale renewables are "modestly associated with lower prices." Among those technologies, utility-scale solar stands out: they describe it as "strongly linked with lower prices." The distinction matters because both large and rooftop solar count as renewable generation, yet the study associates them with prices in opposite directions.
Reading the magnitudes
The paper's regression coefficients measure generation shares relative to coal. On that basis, a 10-percentage-point increase in utility-scale solar's share of generation is associated with residential prices just over 8% lower. A much smaller shift in rooftop solar tells the opposite story: a 5-percentage-point rise in its share is associated with prices roughly 16% higher. Because the coefficients are expressed relative to coal-fired generation, they describe how shifting the generation mix away from coal toward solar relates to observed prices, rather than the cost of any single plant.
The authors are explicit that these are correlations, not established causal effects. They note that further work will apply "more rigorous econometric techniques to further strengthen the causal interpretation of these estimates."
Why the two solar segments diverge
The researchers offer a physical 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, they say. A second model, which additionally controls for differences between utilities, found utility-scale solar strongly associated with lower transmission, distribution and total operation and maintenance (O&M) costs — suggesting the effect reaches beyond the cost of the energy itself into the delivery system. The paper's two models therefore converge on utility-scale solar as a source of downward pressure on both energy and delivery costs.
For rooftop solar, the explanation is more about market design than generation economics. "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," the researchers said. "In effect, this means that those without rooftop solar often fund those who do through an additional volumetric rate." Under such structures, a household that installs rooftop solar reduces its own volumetric purchases, while the grid's fixed costs remain and are recovered from the remaining ratepayers.
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 — a technical constraint that becomes more binding as more distributed generation is added at the edge of the grid.
Consistent evidence and an unresolved California dispute
The utility-scale conclusion aligns with 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. Together, the two studies point in the same direction: the presence of large-scale renewable generation, they suggest, has not been the force pushing US retail rates upward.
The rooftop solar finding lands in the middle of a long-running argument 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 reached the opposite conclusion, finding 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.
What the authors recommend
The researchers frame their conclusions around policy design rather than technology choice. "Policymakers can secure an affordable energy future by improving the integration of low-cost renewables while implementing more equitable cost recovery strategies," they said. The paper's central limitation is its own caveat: its estimates describe associations, and isolating causation in electricity pricing — separating the effect of renewables from the many other forces acting on rates — is left to further work.