OPINION: Rooftop PV rules change
Conventional wisdom in the US electricity utility sector used to hold that distributed PV would never be cost-competitive.
Conventional wisdom in the US solar industry used to hold that the utilities were too blinkered and ossified to grasp the potential of distributed PV, and would be left on the sidelines when it inevitably became cost-competitive.
It turns out everybody was wrong.
Most utilities still fear distributed PV, and rightly so; some will fight the sector until their dying breath. But the days when it could be said that the utilities simply don’t “get” solar are gone forever, and a growing number are coming to like it very much indeed.
There have been several face-slap moments in this awakening.
The first came last year, when the Edison Electric Institute (EEI) referred to distributed PV as a “disruptive challenge” for utilities. Far from being some greenish think-tank, the EEI exists to lobby for investor-owned electricity utilities, many of which are pushing for measures that would greatly slow the spread of rooftop solar in their geographies.
Then came this spring’s warning from Barclays, when it downgraded its outlook for corporate bonds from the whole of the US electricity utility sector. The bank believes that “solar plus storage could reconfigure the organisation and regulation of the electric power business over the coming decade”.
It’s hard to hit snooze on a wake-up call like that. Yet speaking louder than any report is the flood of money that has poured into distributed solar from big energy companies, many of them with large retail operations in addition to their own utility-scale generation fleets.
In the past year, we’ve seen Duke Energy, the largest US power holding company, taking an equity stake in San Francisco solar financier Clean Power Finance; Edison International acquiring Chicago-based SoCore Energy, a commercial rooftop specialist that counts Ikea among its clients; GDF Suez buying a minority position in Maryland’s OneRoof Energy; and NRG Energy buying New Jersey’s Roof Diagnostics Solar (since renamed NRG Home Solar).
Many fear that the incredible dynamism of the solar industry over the past few years would be hampered or even undermined by the utilities, were they to get in on the action. Others fear that the utilities, with their millions of existing customers and their monopolistic inclinations, would have an advantage over smaller solar companies — perhaps an unfair one.
“I guarantee that utilities would not be able to compete” head-on with more nimble solar firms, says Vadim Polikov, chief executive of Maryland residential installer Astrum Solar. “What I’m afraid of is that, with their market power, they can stack the deck.”
Such sentiments are understandable, perhaps deserved. Yet there is an interesting tension between the criticism solar companies have lobbed at the utilities in the past for not embracing solar, and the rising tide of concern as utilities finally begin wading into the sector.
EEI vice-president Richard McMahon dismisses the notion that solar plus storage will allow consumers to “cut the cord” with their utility any time soon, as many have done with their home telephone lines and are increasingly doing with their cable TV providers.
While criticising the “random deployment” of rooftop PV systems at present, based in large part on consumer credit scores, McMahon describes distributed PV as “something that can be integrated very well into the grid, into the current system”.
“The huge opportunity is going to come when you get greater co-ordination and integration between distributed generation providers and utilities,” he adds.
The PV sector has every reason to be suspicious of such talk. But with enormous, industry-defining regulatory battles looming for distributed PV over the next year or two, it will not hurt to have some big energy companies helping to fight the sector’s corner. Even if it means they will one day share in the spoils.
Karl-Erik Stromsta is Recharge’s North America managing editor