Utility Companies Fight against Solar
The increased installation of residential and commercial solar power systems is causing concern among the nation’s utilities. Utilities fear solar power may upset the traditional centralized model that has existed since the commercialization of electricity. Through net metering, utility customers are able to drastically reduce or even entirely offset their electric bills using increasingly affordable solar power systems. As more customers choose to install solar power systems, utility revenue may decrease. Utilities believe fewer customers will share the divided costs of grid operation and maintenance. However, solar power benefits are not considered by some utilities:
- Relieves strain on transmission lines especially during heavy usage in hot summer months or very cold winters eliminating black outs and power outages
- Reduces transmission & distribution costs for maintenance
- Avoids cost by delaying construction of conventional generation plants
- Improves reliability by increasing generation diversity
As the cost of a solar power system plummets, the number of solar power installations increase. Since 2008 the cost of a PV module has decreased by 80%. In 2013, 30 percent more solar power systems were installed than in 2012. A 2010 World Energy Council report predicts that in 2100, 70 percent of world energy production may come from solar energy (World Energy Council, 2010). The rapid increase in solar energy deployment threatens electric utilities’ reliance on centralized fossil fuel power plants; Graph shows utilities install more solar than commercial or residential customers.
In grid-connected solar power systems, excess power is provided to the grid in a process known as net metering. In net-metered systems, utilities credit the solar system owner for surplus electric generation the solar power system feeds into the grid. The credit is applied against the power the customer consumes from the grid when the PV system is unable to meet the customer’s electrical demand. Utility customers pay only for the “net” power they consume from the utility. As a result of net metering, it is possible for a utility customer to consume grid power while paying the utility little to nothing. Under the Energy Policy Act of 2005, all public utilities are required by law to provide net metering to customers upon request (SEIA, 2013). Currently net metering policies are active in 43 states.
As utility power rates continue to increase and the cost of solar power systems continues to decrease, the cost of solar power will eventually equal the cost of grid power, and even become less expensive. Utilities rely on a top-down business model where power is produced at few, large, centralized power plants and dispersed to grid customers. This traditional model is under threat as the feasibility of power production from numerous solar power systems increases and awareness of the fragility and outdated nature of our existing distribution network is exposed by natural disasters like hurricane Sandy, Richard Caperton of the Center for American Progress outlines a worst-case scenario he calls the “Utility Death Spiral” in which a feedback loop is established where as more customers install solar power, the cost of being grid connected increases, encouraging more ratepayers to leave the grid (Caperton, 2013). At Sun City Solar Energy, installations of off grid and grid tie with battery backup increase substantially each year.
The writing is on the wall for US electric companies and they are well aware of the deep penetration solar has had on some other grids (see: Germany). It is not that utilities are ‘evil’ – in fact if you were to ask any one employee of almost any utility what they thought of solar, their response would almost certainly be positive; Sun City Solar has installed several systems on employees of utility companies. The utilities whose company culture can keep pace with the ideals of their individuals (and match the expansion of distributed generation) are well suited to participate in the evolving grid through transmission and distribution management. The organizations which can’t respond will most likely suffer the same fate as the record labels that ignored the growth of the Web.