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For Utilities, Is It A Case Of Embracing Solar Power Or Fading Away?

New Solyndras

Appearing to be threatened by the rise of solar power, some power utilities in the United States are moving to try and end rooftop solar power subsidies and incentives, Yale e360 reports. The issue is already starting to create some fierce public relations battles, even though the solar industry is still small.

In Arizona, the rooftop solar industry and certain power utilities have been engaged in a pubic relations battle involving TV attack ads and websites. A power utility video attacks new solar companies as “the new Solyndras” that are burning taxpayers’ hard-earned dollars and subsidizing their wealthy customers. In turn, the solar companies say the state’s largest power utility, Arizona Public Service, is attempting to kill Arizona’s independent rooftop solar market before it really gets going, to protect itself and its old monopoly. This kind of battle is not unique to Arizona; similar fights exist in California, Colorado, Idaho, and Louisiana. It’s a clear sign of the early 21st century times in the energy sector.

Yale e360 reports that several power utilities, which mostly burn fossil fuels to generate electricity, have asked state regulators to lower solar incentives, and even charge people to install rooftop solar systems. These tactics have so far been unsuccessful, but the attempts are ongoing.

However, rather than resisting the growth of solar power, some utilities have instead “joined forces with solar interests”. In New Jersey, NRG Energy has developed a solar power unit to begin selling solar systems to businesses, and plans to move into residential as well. Additionally, PSE&G, again in New Jersey, is engaging in solar financing, making loans to solar customers. Edison International and Duke Energy have also invested in Clean Power Finance, a company that has raised funds to finance solar projects.

At this early stage, many utilities are seeing the still small (but fast growing) solar industry as a threat, while some are starting to see how they can work with it and profit from it. It’s easy to see why utilities might at first see the emerging industry as a threat, as it’s a big change for them to have to move from the old and established model of centralized power generation to a more distributed model. Further, even though it’s a small industry, they will be seeing solar’s exponential growth curve, and may be realising where that could be leading.

It’s fair to say that the threat does exist, and could be seriously disruptive in the energy sector. As we’ve noted in an earlier post, over in Germany where solar power generation is strong and getting stronger by the year, 51% of renewable energy is owned by citizens. It may be the case that big, centralized power utilities need to wake up quickly and join in on the distributed solar power revolution and it gets going, rather than fighting it and sticking mainly with fossil fuels. Fighting it may well be a losing battle, one that sees them slowly (or perhaps quickly) fade into history as a relic of an unsustainable era.

Image: screen shapshot from video
Via Yale e360

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  • Ray Boggs

    You can’t go solar for $0 down with a lease or PPA. A requirement of both of these rental programs is that you agree upfront to forfeit these incentives to the lease or PPA company. The 30% federal tax credit on a typical 6kW leased system is about $10,000.00. So since when is handing over a $10,000.00 tax credit equal to zero down ?

    A much better way to finance a solar system is with a $0 down solar loan. You’ll get to keep the 30% federal tax credit and any cash rebate. And at today’s much lower cost, your system will be priced at about half the price that the leasing companies are charging. The best part is that you’ll own your system instead of renting it for a much better return on your investment.

    And if you do decide to lease, good luck if you ever want to sell your home. What homebuyer will want to assume your remaining lease payments on an underwater solar lease on a used system, when they can buy a brand new solar system and keep their incentives for thousands less? Don’t take my word for it. Search the Internet for the keywords “solar lease sell home” and you’ll find many complaints from homesellers and real estate professionals who are experiencing difficulties when trying to sell homes with solar leases attached to them.