In a bid to bolster renewable energy infrastructure across the nation, the Biden administration recently announced $7 billion in federal solar power grants. This move, unveiled on Earth Day, came as parts of the nation experience a surplus of solar energy. That surplus raised power bills for solar panel owners.

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The White House said its solar initiative can power nearly a million homes and substantially reduce emissions. The reduction would be equivalent to the impact of burning over 3 billion fewer gallons of gasoline. Federal officials touted the plan as a means to collectively save its recipients $350 million annually. The program is directed at low- and middle-income communities.

However, amidst this federal push for solar energy expansion, some states find themselves with an oversupply of solar power. California, Arkansas, Idaho, Indiana, Hawaii and North Carolina rolled back their financial incentives for solar power projects as a result.

California, in particular, faces the prospect of a potential 40% decline in solar installations this year. The state’s surplus of solar panels led to the wastage of millions of megawatts of energy every year. That ultimately resulted in higher electricity prices.

This occurs when residential solar panels feed excess energy back into the grid, only for it to be discarded. Consequently, homeowners miss out on potential reductions in their power bills from incentives they would normally receive for delivering solar power to the grid.

One solution to mitigate this issue involves the adoption of solar battery storage systems, which enable homeowners to store excess energy for later use. However, the cost of installing such systems ranges from $12,000-$20,000. That range poses a significant financial barrier for many.

While solar panels undoubtedly offer environmental benefits and are often cheaper than carbon-intensive energy sources, policymakers are beginning to see some downsides to their increased proliferation.