Solar and utilities: on the rise, here to stay
Twenty years of education and research for utilities has put the Solar Electric Power Association or SEPA, as it's known, as close to the solar energy-utility nexus as possible.
A few factoids:
- More than half SEPA's membership are electric utilities
- More than 90 percent of the nation's solar capacity is grid-connected
- About 20 percent or less of that capacity is owned by utilities
- In 2011, solar power was the fastest growing utility power source. Less than 350 non-solar power plants were commissioned, versus more than 62,500 photovoltaic "power plants" (as defined by a metered customer), among utilities, residences and businesses.
- For the fourth straight year, while residences accounted for 89 percent of the installations, commercial rooftop installations accounted for more than 53 percent of capacity.
The upshot? The amount of solar power being produced in the United States is on a tear, whether that's utility-owned and run or private, according to SEPA. And that's mainstreaming the technology from the utility point of view, SEPA executives told us recently.
So, what's changed over the past 20 years to bring us to this point?
"We're really in an era now where solar is on the radar," said Julia Hamm, SEPA's president and CEO. "Utilities are truly, on a regular basis, at the CEO level, at the board of directors' level, at the city council level, thinking solar.
"For me, that's one of the biggest changes of the past two to three years," Hamm continued. "It used to be a far more niche option. But now that prices have come down so drastically that utilities are realizing, whether it's their own choice or their commission's choice or their customers' choice, they need to figure out how to be ready to accept more solar onto their grid going into the future. That's changing the dynamics of the conversation within the utility."
Today, we're in an era of "mainstreaming," said Eran Mahrer, vice president for utility strategy at SEPA. What once were renewable energy divisions within utilities are now being integrated into the overall business and solar power is considered another generation source, along with traditional baseload.
That certainly speaks to the mindset among utilities, according to solar power advocates at SEPA.
So, what's driving the trend?
"In the past five or so years, one of the biggest drivers isn't policy so much as financing innovations," Hamm said. "The proliferation of rooftop leasing [has been a factor]. Solar service companies that will own, operate and maintain a system on a commercial or residential rooftop has really created a drastic increase in the number of customers going solar. That's creating an interesting dynamic for utilities. That model isn't necessarily available in every state, but it is available in a growing number of states, quite quickly. When that first happened, years ago in the commercial space, it began to take off. The solar industry had doubts it would `pencil out' for the residential market, but that model worked out for the residential market rather quickly. Now, the majority of solar systems being installed today actually aren't owned by the customer but by the solar services company. That's one piece of the puzzle.
"Net metering, from the customers' side of the equation, has resulted in more customer-side of the meter solar installations," Hamm continued. "And that creates another challenging dynamic for the utilities."
The speed of success may, indeed, prove to be its own challenge, given the pace of change in the utility industry, I interjected.
"What we're observing is that the distributed energy model is producing significant challenges to the traditional utility business model," Mahrer said. "Most people take that to mean that the utility is challenged to evolve. The utilities are lumbering along, having trouble adopting this new solar technology. In fact, in my opinion, it's anything but that. As distributed energy grows, the regulatory structures and the relationships utilities have with customers will need to evolve. It's a multi-partner partnership."
The conversation continued, but it's clear from the proffered stats that the premature cries that a single, national solar investment gone awry somehow spelled doom for an industry are just that. The trend is undeniable. The "mix" (my term) is alive and well and becoming more diverse.
A raft of issues remain and are well-known. Anyone who whines excessively about challenges doesn't belong in the arena. Maintaining the status quo has its share of challenges. But that's not news.
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