Electricity prices are out of control. This entrepreneur knows how to fix it.

Electric bills have been climbing at an alarming rate, leaving many households struggling to keep up. To understand what's driving these increases—and more importantly, what can be done about it—we sat down with Jigar Shah, former director of the Loan Programs Office at the US Department of Energy, entrepreneur, and co-host of the Open Circuit Podcast.

Our conversation revealed some surprising truths about why bills are rising, what role clean energy plays, and why Shah believes the residential solar industry holds the key to solving our electricity affordability crisis, covering topics like:

• The real reason electricity bills are skyrocketing (hint: it's not generation costs)

• Why virtual power plants are "the only solution" to keep electricity affordable

• How residential solar companies need to step up—and what they're doing wrong

• Why the industry needs to stop waiting for utilities to make the first move

Kristina Zagame: So I have a couple different topics here. The first one is on just electricity, obviously. Right now, it's through the roof. Pretty crazy. Everyone's really feeling the pinch there. You recently said on an episode of your Open Circuit podcast, we have the technology to make electricity more affordable. But you said it's more of, like, a cultural issue, I believe you called it, with utilities—like wanting to stick to the old way of doing things. Can you talk a little bit more about what you meant by that?

Jigar Shah: Yeah. First of all, it's just such a pleasure to talk about these topics. I think that we're in this very unique situation where people understand generation, right? They understand that you either get power from coal or nuclear or natural gas, or rooftop solar, or central station solar, etc. What they don't understand is that those kilowatt hours generally have to be transported via your transmission grid to your local distribution grid, and then from your distribution grid to your home. Right. And when you look at your electricity bill, which is what most people care about, right? It's not the generation part that's been going haywire. It's the distribution part that's been going haywire. Right. And so distribution used to be 20% of your bill; today it's 50% of your bill. Right. And so for all of the cost increases that we talk about on the generation side of things, those cost increases really, you know, haven't been material in terms of why your bill is higher.

Right. And so now the question is why is your distribution cost going up so much? And it's because people are buying all sorts of things that use electricity, whether it's hairdryers or electric vehicles or heat pumps or electric water heaters or whatever it is. And every time you do that, the utility says, we need to be able to upgrade the distribution grid so that you can do whatever you want. You can turn every single thing on in your house at the same time, and we have to be able to serve you. Well, that bargain is getting way too expensive, right? Can't keep upgrading the distribution grid. And so now what they need to do is to figure out how to help work with customers, to say, hey, we need you to opt in to load flexibility so that in a way that isn't noticeable to you, we can figure out a way to keep the entire load on your circuit below the rating of the circuit, so that we don't blow a transformer, right? But we still give you reliable power, and that requires cultural change.

Kristina Zagame: And with that, you know, it seems like the home electrification, you know, while being a very positive thing, definitely is putting more of a strain on things. We've also seen a lot of utilities, particularly some in California, who sort of blame the increase in electricity costs, especially for residential bills on clean energy. We've seen like the cost shift myth with people going solar. Is there any justification for utilities saying clean energy is the reason for the increase?

Jigar Shah: Well, I definitely agree that there is some cost shift. I think it's far smaller than what people are suggesting. But I think the bigger problem is that, you know, it feels bad when your bills are going up and a bunch of people that have the means to put solar on their roof are getting a good deal, and all of your neighbors are not getting a good deal. And so you can imagine part of this is just the feels or the vibes or whatever it is that we're talking about these days. And so part of what we need to do is to make sure that we are intentionally helping our neighbors. Right. And so we need the battery attachment rate for solar to be 100%. We just do, right. And we need those batteries to be actually controlled by the utility company or an aggregator, so that those batteries can help with this situation of reducing the cost of transmission and distribution system upgrades. Right. And that is something that is a cultural shift on the part of residential solar, right.

And, you know, I think that a lot of people argue that, well, but Jigar, like, we don't need to do that and the utility doesn't even use the battery. I get it, but the fact that people don't even have batteries, right. And we're generating way too much power in the middle of the day at this point from solar, just because there's so much of it. And the fact that if they did have batteries, the utility is not yet, you know, flexing it doesn't mean that we don't have a responsibility to be better neighbors, because today solar is a mature technology, right? Like it's not in the startup phase anymore. We're in the, you know, deploy it at scale phase. And so that means that we have to be a good partner to the rest of the grid so that we are solving problems for the grid and solving problems for neighbors that don't have solar.

Emily Walker: How can we encourage more utility companies to use the batteries?

Jigar Shah: Yeah, it's you know, we're in this interesting spot where we have been piloting the way in which we should do this for 30 years. Right. And, you know, when I was at the U.S. Department of Energy, we wrote a liftoff report for virtual power plants, and the latest version of it had 75 case studies in the liftoff report. So everything from what Green Mountain Power has been doing with backup batteries to Rocky Mountain Power—and PacifiCorp is generally not accused of being pro residential solar, right. But they are pro residential batteries. And they dispatch those batteries up to six times a day instead of dispatching their natural gas peaker plant. Right. And I think when you think about all of the things National Grid has been doing and others have been doing, there are lots of pilots there.

But the question becomes when you find that, you know, you have to upgrade a substation, is your first thought process, hey, we might be able to do this for one tenth the cost if we just add residential batteries on that circuit? Or is your first thought process, well, I know how we do this. We just, like, get in the waiting list and wait four years for that new transformer and then upgrade it to a level that we don't really need, but it's what we're comfortable with. And right now it's the latter. But we're getting to the point where electricity is becoming unaffordable. And so we need to shift to the former. But the thing is, is that the residential solar industry is waiting for that shift before they show enthusiasm. And right now they need to show enthusiasm first. They need to start getting trained on how to do this work. They need to start figuring out all these advanced features because they're complicated, as we all know, and they need to do that process now so that two years from now, when the utility's at their breaking point and they start moving in this direction, we're ready.

Kristina Zagame: You had a really great quote. I don't want to butcher it, but something like, you need residential solar and utilities to find a way to make one plus one equal three. Do you think there is a better way for them to start working together now?

Jigar Shah: Yeah. I mean, we see it all over the place. I mean, whether it's Spark Fund's contract with Xcel Minnesota, where Xcel Minnesota has said that we need to stop saying no to new load growth. Right. Because right now they're saying, well, sorry, it's going to be 3 or 4 years for us to be able to interconnect you. They're realizing that if they add all these batteries to the circuit, whether it's residential or commercial, that they can say yes in six months, right?

Or, it could also be like, as we've been discussing, right, that we're just at this breaking point. PSE&G in New Jersey, just announced that they have realized that they have been overly ambitious with their capital, you know, budgets and as a result, been raising rates way too fast. So they're slashing their capital budget by 75% this year, right. And so the question becomes, how do you maintain services while still slashing your budget by 75%? Well, you leverage the assets that the residential solar industry has already put into your territory, assets that you've been ignoring for the better part of 15 years. Right. And so I do think that we can make this work now. But the question is who's demanding it? Who's writing op-eds in their local newspaper? Who's going to city council meetings and saying, hey, my company's right here, and we know how to do this stuff? Not the residential solar industry. They're waiting for someone else to do that work, and then for them to get the business. And I'm saying that they're not going to get the business unless they start advocating for themselves and their employees.

Kristina Zagame: You talked a little bit about virtual power plants. Can you—do you think that that is a strong solution when it comes to reducing energy costs?

Jigar Shah: Yeah, it's the only solution. Right. We're at a point where we used to use transmission and distribution infrastructure 75% of the time. Right. Today we use that infrastructure less than 45% of the time. And for some distribution circuits it's less than 20% of the time. Right. So most of the time there's almost no electricity flowing through those circuits. And then when everyone comes home from work or comes home from picking up their kids from school, everything gets turned on at the same time. And the utility is planning for that one hour peak, right? Or after everybody takes a shower, right, their electric water heater turns on. Right? And so when you have a virtual power plant, you can shift those loads so they're not all on at the same time. Right? People don't really need their water heaters to turn on right after they finish taking a shower. They don't care as long as it's hot when they next need it.

The same thing with electric vehicles. Most people who plug in electric vehicles keep them plugged in for 13 hours, and they're only charging for less than three hours of those 13 hours, so they don't care if it charges right when they plug it in, or if they charge at one in the morning. Right. But you need some intelligence and some sensors and some communication protocols, all of which are standard, right? Every time you install an EV charger now it comes with an app. Every time you install a refrigerator, it comes with an app, right? Those apps let you communicate with your refrigerator, or your charger, or your water heater or your thermostat. Right. And so now all of those ingredients are in even the most basic models that you can buy. And so as you replace stuff which generally gets replaced every seven, every 15 years—so 7% of all appliances are being replaced every year. Right.

Kristina Zagame: That's a lot.

Jigar Shah: That's a lot. Right. And so the question becomes who is the most intelligent sector to lead this charge and educate residential consumers? It's clearly residential solar companies.

Emily Walker: Do you think part of it too, is that like when these—when people are installing new technologies, they need to come preprogrammed with the right solution? Because again, we've seen time and time again that if we do put the onus at all on residential customers, they often won't actually take the—they won't know enough or they won't take the leap to actually like program that correctly or opt in for the right solution. So it needs to be almost like an opt-out solution to start.

Jigar Shah: Yeah, I mean, so I think there's two different pieces to this. One is like when you look at Tesla for instance. Right. They always talk about how all of the upgrades to your vehicle software is provided over the air. Right. But whenever my Tesla Powerwall has a problem, they send me an email saying, here's the 14 step process to reset your Tesla Powerwall by yourself. Well, crap, why don't you, like, just send it over the air, you know, like updates and just reset it yourself, right? Why do I have to go over there for a 14 step process? Right. So those are things that everyone from Tesla to Enphase to, you know, like others, SolarEdge and others should be able to just do. I don't understand why anyone needs to ever touch their system unless there's a physical problem with it. And I would say the vast majority of the problems that I see with solar systems is some sort of software glitch, or there was a voltage spike or something occurred that actually reset the system. But then, you know, you should be able to just hit a button on your phone and say, do a full diagnostic and a reset. Thank you. This will take two hours, but we will have you up and running in two hours. Fine. Right. So that should definitely happen, right?

Then the question becomes like, if someone were to put in information around their rate tariff, right, or what utility that they're in, right. Why doesn't the software just tell you here are the rate tariffs available to you today, and here's the one that you would save the most money on. And that might change in six months. So we'll send you an email if that does. And you can click here and we'll automatically send a notice to your utility saying you're changing your rate. Right. All of this stuff can be automated, right? I feel like everyone's constantly bombarding me with AI, but they're not using AI to make my life better. Right. And so, like, I think that everyone, when they're thinking about what they're going to show me, it better have a damn solution for this problem.

Kristina Zagame: Well said.

Emily Walker: Yeah, I agree.

Kristina Zagame: I'm glad you brought up tariffs. It's a nice segue into our next sort of section. Obviously, tariffs are on everyone's mind. Lots of rumblings going around about that. How big of an impact do you think that these tariffs will have on residential solar industry in the next two years?

Jigar Shah: Well remember I think that we have two counterbalancing forces, right. One is obviously the uncertainty from the tariffs. Right. And lots of other things. But you also have persistent 10% rate increases for residential electricity costs every single year, right? I mean, 1 in 6 households are now behind on their electricity bills, which is sad. No one wants to be behind on their electricity bill. Right. And so we are in this moment where residential solar has never been more cost effective for consumers, and you have higher costs. But the other dirty little secret is that everyone in the residential solar industry knows that they're charging too much for residential solar, right? And that they could drop their cost tremendously if they just worked smarter, not harder. Right. And that means figuring out how to get everyone to use solar software, right? It means working with the utility to make interconnection easier.

Right. And so you're in this weird place right now where, you know, we know that we can get the cost of residential solar down closer to $2 a watt, but today it's closer to $3 a watt. So we have an ability to drop the cost by a third. And we have all this volatility. While the product has never been more valuable for consumers. Right. And so to me, when you think about all of the industries being disrupted by tariffs, residential solar should be able to handle them the easiest because they have so much more room to improve.

Emily Walker: What advice would you give to an installer who's struggling to get their utility, the utility company they work with, to like make the interconnection process easier and adopt things like solar plus storage?

Jigar Shah: Well, the advice I'd give them is the same advice I'm dishing out on every podcast, right, is talk more about the challenges to your business. Talk to the mayor of your town. Talk to the county commissioner in your county. Talk to the city council members who sit there and tell them, look, I would love to provide a more affordable product. Here are three ways that you can help me. One, you should run a solarize campaign in the town because I don't want to pay those salespeople either. Right? And so you should be my salesperson, and you should aggregate at least 100 orders. And then I can cut my cost because I can more efficiently serve. Right. Second, you should streamline your permitting and force the utilities to be nicer on interconnection. Here are three great examples of a streamlined interconnection process in Louisiana or in this great place. Right? And third is that there are some code issues, right? So like for instance, in California, they mandated solar software for the entire state. But guess what? The, you know, the local jurisdictions said, you know what? If you're going to do that to us, we're going to create a separate fire inspection. Right. Well bull honky—like that is not how you make it easier for people to get more affordable power. And you should be railing against all of your elected officials locally and saying you don't care about the bills for your customers, right? Be very vocal. That's it. That's how this works, right? Like, you have a solution and your local officials are making it as hard as physically possible for their constituents to get access to those things. That should be something that has political consequences.

Kristina Zagame: Well said. Is there anything else on this topic or something we might have missed that you think is important for our viewers to know?

Jigar Shah: Right now we are in an affordability crisis and the group that has the best set of solutions to meet that crisis is the residential solar industry. So like my call to action here is like, let's figure out how to solve this affordability crisis, right? I think that is where we are today. We're so big that we now have to start solving real problems for our community, for our county, for our state, and for our utilities.

Emily Walker: Very well said, and I agree.

Jigar Shah: Great.

Kristina Zagame: Awesome. Thank you so much, Jigar. We so appreciate you.

Jigar Shah: Thank you. I got to run.