Utilities Wake Up – Rooftop Solar to Rival Conventional Power
August 1, 2013
I’m shouting this wherever I go. There is a revolution in energy production technology happening right now – it will be as disruptive to the utility industry as the internet has been to the communication industry. If states, utilities, and regulators don’t develop coherent strategies very soon to cope with unprecedented change, we are going to see a major economic train wreck within the decade over much of the country.
For years, power companies have watched warily as solar panels have sprouted across the nation’s rooftops. Now, in almost panicked tones, they are fighting hard to slow the spread.
Alarmed by what they say has become an existential threat to their business, utility companies are moving to roll back government incentives aimed at promoting solar energy and other renewable sources of power. At stake, the companies say, is nothing less than the future of the American electricity industry.
According to the Energy Information Administration, rooftop solar electricity — the economics of which often depend on government incentives and mandates — accounts for less than a quarter of 1 percent of the nation’s power generation.
And yet, to hear executives tell it, such power sources could ultimately threaten traditional utilities’ ability to maintain the nation’s grid.
“We did not get in front of this disruption,” Clark Gellings, a fellow at the Electric Power Research Institute, a nonprofit arm of the industry, said during a panel discussion at the annual utility convention last month. “It may be too late.”
Advocates of renewable energy — not least solar industry executives who stand to get rich from the transformation — say such statements are wildly overblown. For now, they say, the government needs to help make the economics of renewable power work for ordinary Americans. Without incentives, the young industry might wither — and with it, their own potential profits.
The battle is playing out among energy executives, lawmakers and regulators across the country.
Rooftop solar is helping Colorado families, schools and businesses take charge of their power supply and electricity bills like never before. This private investment in rooftop solar is helping build a cleaner, safer and more resilient energy supply for all Coloradoans. But the state’s largest power provider, Xcel Energy, is apparently not too happy about it.
The Colorado arm of Xcel just proposed a plan that could soon make solar a bad deal for customers in its service territory. Xcel is attempting to try to roll back the state’s successful net metering policy, which allows solar customers to get credit on their energy bills for power they deliver to the grid. If you live in Colorado, help us speak out against this utility power grab!
This is becoming a familiar story: utilities are using rate design proposals to downgrade the customer economics of going solar in an attempt to prevent more of their customers from being able to generate their own power. Instead of engaging in a thoughtful conversation about how the solar industry and Xcel can work together to make rooftop solar an important and a more valuable part of their power supply mix, Xcel is simply trying to get rid of what they see as competition – customer generated solar power. We hope that they will change their tune and sit down at the table for a real conversation.
NYT reports that from 2010 to 2012, the amount of solar installed each year has increased by 160 percent.
At present, 43 states, the District of Columbia and four territories offer incentives for renewable energy in some form or another.
Solar proponents add that solar customers deserve payment and incentives for their efforts because making more power closer to where it is used (when resold to local utility companies) can alleviate stress on the grid — making it reliable. It also helps utilities by relieving them from having to build infrastructure and sizable generators.
However, utility companies feel differently. Their argument is that solar customers, at some point, may stop paying for electricity, which means they also stop paying for the grid. This shifts the costs to other non-solar customers.
According to California’s three major utility companies, they could lose as much as $1.4 billion in annual revenue to solar customers when the state’s subsidy program fills up to full capacity. This means that about 7.6 million non-soalr customers would have to make up for that, paying as much as $185 per year each.
This leads to something utility companies call the “death spiral.” This refers to the costs being shifted to non-solar customers, and because of this burden, they switch to solar-powered rooftops — making utility companies’ troubles even worse.
For that reason, utilities have requested that lawmakers limit those who can participate in such programs, including net metering.
Some utility companies are adding rooftop solar to their services, such as Dominion in Virginia. But not all are willing to adapt, and while solar still only amounts to a small percentage of power generation in the U.S., it seems utilities are looking to prevent the renewable energy emergence from spreading.