Cost of Energy and delivery charges

As of early 2026, utility costs in New York State remain some of the highest in the country, with recent rate hikes finalized in January 2026 for major providers like Con Edison.

To understand your bill, it is important to distinguish between Supply (the energy itself) and Delivery (the cost to bring it to you).

To understand why solar is becoming the "financial escape hatch" for New Yorkers in 2026, you have to look at the Delivery Charge as a hidden tax on every kilowatt-hour (kWh) you buy.

While the "Supply" cost is what you pay for the electricity itself, the "Delivery" cost is what the utility charges to maintain the wires, poles, and grid infrastructure. In NY, delivery charges have been rising faster than supply costs to pay for grid modernization and storm-proofing.

Here is how these charges impact you—and how solar flips the script:

1. The "1-to-1" Net Metering Advantage

In New York, most residential solar owners are still eligible for 1-to-1 Net Metering. This is the single biggest "lean" toward solar because of how it treats delivery charges:

• The Utility Way: When you buy 1 kWh from the grid, you pay for Supply (~10¢) PLUS Delivery (~15¢). Your total cost is 25¢.
• The Solar Way: When your panels send 1 kWh back to the grid, the utility gives you a credit for the full retail value (the 25¢).
• The Result: You aren't just offsetting the "energy"; you are effectively "deleting" the delivery charge for every kWh you produce. You are using the grid as a giant, free battery.

2. Delivery Charges as an "Inflation Tax"

Delivery rates are set by the state and are notoriously "sticky"—they almost never go down. In fact, major utilities like Con Edison and National Grid have secured multi-year rate hikes through 2026 and 2027 to fund the transition to a "green grid."

• Without Solar: Every time the state approves a delivery rate hike to fix old power lines, your bill goes up, even if you use the same amount of power.
• With Solar: You have "locked in" your cost of production. As delivery rates rise for everyone else, the value of your solar credits actually increases, making your "ROI" (return on investment) happen faster.

3. The "Avoided Cost" Factor

A common misconception is that solar only saves you money when the sun is out. In reality, the financial lean comes from avoided costs:

• Summer Peak Shaving: NY delivery charges often include "demand" or "peak" surcharges during summer months. Solar produces the most energy exactly when these charges are highest (hot, sunny afternoons), shielding you from the most expensive hours of the year.

The "Fine Print" (The Small Trade-off)

To be fair, you can’t get your bill to literally $0.00. New York has two small "anchors" for solar owners:

1. Basic Service Charge: You still pay a fixed monthly connection fee (usually $15–$25) just to stay connected to the grid. Solar cannot offset this.
2. Customer Benefit Contribution (CBC): Since 2022, NY solar owners pay a small monthly fee (roughly $0.70 to $1.30 per kW of solar installed). For a typical home system, this is about $7–$12 a month.

Summary Table: Grid vs. Solar

Electrical Demands With AI:

The rise of AI is fundamentally changing how the grid operates. In New York, we are moving from an era of "flat" energy demand to a period of "explosive" growth. This creates a "pincer effect" on your utility bill that makes solar even more attractive.

Here is how AI-driven demand will specifically hit your wallet and your grid's stability in 2026.

1. The Cost Impact: "Subsidizing the Giants"

AI data centers are not like office buildings; they are "energy hogs" that run at 100% capacity, 24/7.

• Delivery Surcharges: To power a new AI hub, utilities often have to build massive new substations and high-voltage lines. Traditionally, these infrastructure costs are rolled into the "Delivery" portion of everyone’s bill. Essentially, residential customers often end up subsidizing the massive power lines needed for Big Tech.
• Wholesale Price Spikes: In 2025 and 2026, regions with high data center density have seen wholesale "supply" prices rise up to 200% higher than neighboring areas. Because New York is a "deregulated" market, these spikes eventually trickle down to your monthly supply charge.
• The "Energize NY" Policy (Jan 2026): Governor Hochul recently launched an initiative to force data centers to "Bring Their Own Generation" or pay significantly higher premiums. However, until these rules are fully implemented, the grid remains under financial strain.

2. The Reliability Impact: "The 650 MW Gap"

The New York Independent System Operator (NYISO) has issued a "Reliability Warning" for 2026.

• Generation Deficit: New York is retiring old, "peaker" gas plants to meet climate goals. At the same time, AI demand is surging. NYISO projected a potential 650 MW shortfall in New York City by the summer of 2026.
• Grid "Volatility": AI workloads are "bursty." A massive AI model training session can suddenly pull hundreds of megawatts from the grid in seconds. This creates "frequency instability," which increases the risk of localized brownouts or voltage drops that can damage home electronics.

3. Why This Lean Towards Solar (and Batteries)

If you are a homeowner, AI demand makes the "Status Quo" of relying on the grid a financial risk. Solar becomes your "shield" in three ways:

• Defeating the "Delivery Tax": Since you produce your own power on-site, you "leapfrog" the expensive new transmission lines being built for data centers. You don't pay delivery for the power you make yourself.
• Energy Security via Storage: With the grid becoming less reliable due to AI-driven "peaking," adding a battery (like a Powerwall) to your solar system ensures your home stays online even if the neighborhood grid falters under AI load.
• Rising Incentive Value: In 2026, the value of the energy you "sell back" to the grid is likely to increase because the grid is so desperate for power. Your solar system isn't just saving you money; it’s becoming a "micro-power plant" that is more valuable to the utility.

The Bottom Line: AI is driving a "Gold Rush" for electricity. If you don't own your own generation (solar), you are a customer in a market where demand is skyrocketing and supply is struggling to keep up.

TRANSFER OF INFUSTRUCTURE COSTS: To understand why solar is a smart move in 2026, you have to look at the "ghosts" in your utility bill. When you pay a delivery charge, you aren't just paying for the electricity you use today; you are paying off the debt for equipment installed in the 1970s, 1980s, and 1990s.

In New York, this "transfer" of costs from the utility to you happens through three main financial mechanisms:

1. The "Rate Base" and Guaranteed Profits

Utilities like Con Edison or National Grid aren't just delivery companies; they are massive investment vehicles.

• The Mechanism: When a utility builds a substation or lays a gas pipe, the NY Public Service Commission (PSC) allows them to "rate base" it. This means they get to charge you for the cost of the project plus a guaranteed profit (Return on Equity), usually around 9% to 10%.
• The Consumer Hit: Because these assets are depreciated over 40–60 years, you are still paying for "outdated" 20th-century technology. Even if that technology is now inefficient or obsolete, the utility is legally entitled to recover every penny of that investment from your monthly "Delivery Charge."

2. Stranded Assets: Paying for the "Dead" Grid

As New York moves toward the Climate Act goals (70% renewable by 2030), certain fossil fuel infrastructures (like old gas peaking plants) are being shut down before they are fully paid off.

• The Transfer: When a plant is shut down early for environmental reasons, it becomes a "Stranded Asset." Utilities don't just eat that loss; they often use securitization—a fancy word for a state-authorized bond—that appears as a small, "non-bypassable" surcharge on your bill for the next 20 years.
• The Double Charge: In 2026, New Yorkers are in a "double-pay" period: you are paying to retire the old, "dirty" grid while simultaneously paying a "Grid Modernization Surcharge" to build the new, "green" one.

3. The "Socialization" of Maintenance

As climate change leads to more frequent "extreme weather events" in NY, the cost of repairing the aging, fragile grid has skyrocketed.

• The Shift: Instead of the utility taking a hit to their profits for a transformer that blew in a storm, these costs are "socialized." They are rolled into the System Benefits Charge (SBC) or Renewable Portfolio Standard (RPS) line items.
• The Result: The more "outdated" the grid is, the more often it breaks, and the more your delivery fees rise to cover the "reactive" repairs.

How Solar "Leans" Into This Problem

Solar is effectively a "Bypass Valve" for these legacy costs. Here is the financial logic:

• Avoiding the Legacy Tax: For every kWh your panels produce, you avoid the total retail rate (Supply + Delivery). By generating your own power, you are essentially "opting out" of paying for the utility's 50-year-old debt on that specific unit of energy.
• Value of the "Avoided Cost": As the state approves more rate hikes to pay for grid modernization (like the $4 billion National Grid "Upstate Upgrade" currently underway in 2026), your solar credits actually become more valuable.
• Example: If delivery charges go up by 10% to pay for new transmission lines, your solar savings automatically go up by 10% because you’re avoiding a more expensive charge.
• Energy Independence from Obsolescence: If an outdated transformer in your neighborhood fails because of high AI demand or a storm, a home with Solar + Battery Storage remains powered. You are no longer a victim of the "reliability gap" caused by the aging grid.

Summary of the "Infrastructure Transfer"

2026 Update: New York recently passed legislation (Bill S8936) that will soon require utilities to itemize exactly how much of your bill goes to "infrastructure maintenance" vs. "other investments." Once this hits your bill, the "cost of the old grid" will be much more visible.

Would you like me to calculate the "payback period" for a solar system based on your current utility’s 2026 delivery rates? :  matthew.torre@sunrun.com