In the heart of the Midwest, a quiet revolution is brewing, one that could reshape how we think about electricity prices and the transition to clean energy. Matthew Grimley, a researcher at the Humphrey School of Public Affairs at the University of Minnesota, has been delving into the intricate world of community shared solar (CSS) programs, and his findings are shedding new light on the social and economic forces that drive electric utility rates.
Grimley’s work, published in a recent issue of Environmental Research: Energy, focuses on the often-overlooked aspects of how electricity prices are determined. “We often think of utility rates as simply reflecting costs or market efficiency,” Grimley explains, “but they’re much more complex than that. They’re socially constructed, shaped by deeply held institutional logics.”
To understand this better, Grimley and his team analyzed 104 community shared solar subscription contracts across 33 utility programs in Minnesota. They developed a financial model, conducted archival research, and used ethnographic methods to dissect the rhetoric surrounding cross-subsidy and the notion of ‘paying a fair share.’ The goal? To uncover how these electricity system prices are constructed and how they might be shaped to better navigate the energy transition.
The findings are thought-provoking. Grimley’s framework of embedded, short-run incremental, and long-run incremental institutional logics reveals that the way we think about and communicate these logics can significantly impact prices and, ultimately, the deployment of clean energy. “If advocates and energy transition researchers are to take clean energy deployment, innovation, and equity seriously,” Grimley argues, “they need more education, transparency, and communication around these logics and their effect on prices.”
So, what does this mean for the energy sector? For one, it underscores the need for greater transparency and communication in how electricity prices are determined. It also highlights the potential for shaping prices to better support the transition to clean energy. This could have significant commercial impacts, from influencing policy and regulation to shaping business models and investment strategies.
Moreover, Grimley’s work suggests that a better shared understanding of how electricity prices form could help us navigate the transition’s phase-in and phase-out activities toward collective, long-term benefit. This could mean more equitable and sustainable energy systems, benefiting both consumers and the environment.
As the energy sector continues to evolve, Grimley’s research serves as a reminder that the transition to clean energy is not just about technology and infrastructure, but also about the social and economic systems that underpin them. By understanding and shaping these systems, we can create electricity prices that support a more sustainable and equitable future.
Grimley’s work is a call to action for the energy sector. It’s a call to engage more deeply with the social and economic forces that shape our energy systems, and to use this understanding to drive meaningful change. As the energy transition continues to unfold, this work could play a crucial role in shaping a more sustainable and equitable future.
