[Graeme]

Great, precisely my point. You still have to rely on the grid. On the other hand, you could keep on a constant lookout for better "batteries". Do you sell any of your excess solar power back to your utility?

[Graeme]

Here is one type of battery you could do further research on yourself. This was reported by Kublikhan in the Future Tech News thread. A flow battery could be used for either grid scale or home.

$this->bbcode_second_pass_quote('', 'T')he same technology could also have applications at the consumer level, Marshak said. “Imagine a device the size of a home heating oil tank sitting in your basement. It would store a day’s worth of sunshine from the solar panels on the roof of your house, potentially providing enough to power your household from late afternoon, through the night, into the next morning, without burning any fossil fuels.”

[Graeme]

3 Models That Could Help Utilities Make Money From Solar Energy

$this->bbcode_second_pass_quote('', 'K')ristian Hanelt, senior vice president for renewable capital markets at Clean Power Finance, laid out three possible business models for utilities to profit from distributed solar.

1. Utilities invest in residential solar outside of their regulated territory. Much like a utility invests in centralized power plants or wind farms, it can invest in many rooftop solar installations. The advantage is that the utility now has a relationship with a new customer to whom it can sell additional services.

2. A utility owns distributed solar assets in its own territory and earns a return as it would on other investments. The utility could purchase solar from an independent power producer and resell it to the consumer at a profit in some cases, according to Clean Power Finance. The utility has a low cost of capital and is a trusted and known brand compared to solar installers or financiers, Hanelt said. This could also help meet renewable portfolio standards.

3. The third model is one where the utility offers solar as part of a “value-added service model,” in which solar is a “gateway” via which to upsell other technologies, such as EV charging stations or smart thermostats.

The utilities that actively explore new business models in distributed solar, rather than fight them, will benefit the most because they’ll have a lead on others, Hanelt argued.

There are already a handful of examples of utilities getting their feet wet in distributed solar. This summer, Edison International announced plans to buy solar installer SoCore, and NextEra Energy Resources bought Smart Energy Capital, which offers solar financing. Also, Duke Energy invested in Clean Power Finance this summer.

[Graeme]

America’s Largest Grid System Could Reach 30% Renewable Energy By 2026

$this->bbcode_second_pass_quote('', 'A') new study reveals America’s largest grid operator could exponentially increase the amount of solar and wind electricity on its system, while lowering consumer costs and emissions, without negative effects on reliability.

The PJM Renewable Integration Study, prepared for PJM Interconnection by General Electric Energy Consulting, concludes renewables could provide up to 30% of the electricity across PJM’s 13-state footprint by 2026.

While PJM’s report is great news for the rapid power section decarbonization needed to slow climate change and could outline a path forward for other grids, it’s not without any negative outlook – in every modeled scenario, revenue for conventional generation sources like coal, natural gas, nuclear, or hydropower falls.

[Graeme]

SolarCity's Networked, Grid-Ready Energy Storage Fleet

$this->bbcode_second_pass_quote('', 'S')olarCity, the country’s biggest solar PV installer, and Tesla Motors, the country’s biggest electric vehicle maker (and soon to be the country’s biggest advanced battery manufacturer), could be the utility industry’s worst nightmare.

Consider the threat represented by two fast-growing companies, combining forces to bring energy independence to utility customers via mass-market battery-backed solar systems. It’s a transformation that strikes at the heart of the “we make it, you buy it” electric utility business model that has kept the grid humming and modern industrial society running for the past century.

But looked at another way, the SolarCity/Tesla solar-energy storage push could be seen as a solution to a host of utility and grid challenges. That’s because SolarCity’s small but growing number of energy storage installations aren’t just a lot of relatively tiny batteries, backing up lots of relatively tiny solar PV systems, in isolation from the grid.

Instead, they’re more like a “fleet” of energy assets, complete with the on-site digital controls and real-time communications systems required to enlist them into a host of grid needs -- if, that is, the regulatory and business models to make it worthwhile for customers and utilities alike can be put into place.

That’s how Eric Carlson, SolarCity’s senior director of grid integration, described the company’s approach to solar-storage integration in a recent interview. Right now, the company’s residential battery installations are meant for emergency backup, while its commercial installations are for demand peak shaving -- functions that aren’t directly tied to grid or utility imperatives.

“What we’ve built, though, is really a general purpose energy storage system,” he said, consisting of a set of lithium-ion batteries provided by Tesla, with both high power and deep-cycling capabilities. That could be a valuable resource for a whole host of grid functions, if it’s connected to the IT infrastructure to make use of it -- and SolarCity just happens to have that infrastructure in place.

[Graeme]

The Next Wave Of Utility Innovation

$this->bbcode_second_pass_quote('', 'T')he next energy storage breakthrough will be in efficiency, rather than time. During high-peak-demand times, utilities charge commercial customers a premium (per kW) called “demand charges.” These charges often make up 40% of the total electricity bill and have, on occasion even been as much as 70%. Green Charge Networks developed a demand charge reduction system called GreenStationTM that uses a sophisticated combination of energy storage and software algorithms to predict and counteract power peaks second-by-second. It can shave 15% or more off the average building’s energy bill. Now Tip Capital has partnered with Green Change Networks and set up a $10 million fund dedicated to financing GCN’s retail, municipal and industrial customers. Customers can receive GCN’s GreenStationTMbattery-plus-power-management system without some upfront cost and pay it off through what they save on their utility bill savings.

“The next wave of innovation will come from power efficiency solutions, and Green Charge Networks is pioneering this Marketplace,” said Vic Shao, CEO of GCN.

This was made possible because of a $12 million stimulus grant and three years of research and development with the Department of Energy and leading utilities throughout the country.

“The biggest challenge to our grid isn’t the amount of energy consumed (kWh), it is the peak electricity use during a given time period (kW),” Shao explained.

“Think of it this way: the grid has to be capable of handling the maximum demand. If a factory never ran all year except for one day when it did a highly electricity intensive process, we would still have to build the grid to accommodate that level of use. Extrapolate this idea across America and you have an electric grid that is built for a small number of high-use moments.”

[Graeme]

Could Minnesota’s “Value of Solar” Make Everyone a Winner?

$this->bbcode_second_pass_quote('', 'O')n Wednesday, Minnesota became the first state to allow utilities a new method of contracting with distributed solar producers, called the market-based “value of solar.” If adopted by utilities, it will fundamentally change the relationship between solar-producing customers and their electric utility.

Until now, producing on-site energy from a solar panel has been treated much like any other activity reducing electricity use. Energy produced from solar is subtracted from the amount of energy used each month, and the customer pays for the net amount of energy consumed. This “net metering” policy has guided the growth of distributed solar power in the United States to an astonishing 13 gigawatts GW by the end of 2013.

But net metering has been the focal point for the utility war on the democratization of the grid, a phenomenon made possible by enormous reductions in the cost of on-site power generation from solar. The following map illustrates the many states where utilities have sought to undermine policies and/or incentives supporting distributed renewable energy generation.

The transformation of the grid has utilities crying foul (or fowl) because lots of customers using net metering reduces their balance sheet revenue. However, increasing evidence suggests that the overall economic benefits to the utility’s electric grid may outweigh the loss of revenue.

Value of solar creates a market price for distributed solar energy in an effort to answer the utility’s cry. And Minnesota’s rigorous formula suggests that in crying “foul,” utilities may have been crying “wolf.” That’s because the initial estimates of the market value of solar peg it at more than the retail electricity price. In other words, utilities have been getting a sweet deal on solar power.

Will the value of solar market price be sufficient to maintain growth in distributed solar generation?

Yes, according to preliminary calculations.

Xcel Energy, the state’s largest electric utility, shared estimations for the value of solar in its comments (to reduce the value) to the Public Utilities Commission in mid-February. Their calculations follow:


The solar market price includes eight separate factors, but the largest four account for the lion’s share of the value: 25 years of avoided natural gas purchases, avoided new power plant purchases, avoided transmission capacity, and avoided environmental costs.

The value of avoided fuel cost recognizes that utilities cannot buy natural gas on long-term contracts the way they can buy fixed-price solar energy, and it internalizes the risk of fuel variability that utilities have previously laid on ratepayers.

The avoided power plant generation capacity value recognizes that sufficient solar capacity allows utilities to defer peak energy investments (like Xcel’s recently requested 3 natural gas peaking power plants that an administrative law judge discarded in favor of distributed solar).

Avoided transmission capacity costs rewards solar for on-site energy production, saving on the cost of infrastructure and energy losses associated with long-range imports.

The environmental value may be the most precedent setting, because it means that when buying solar power under Minnesota’s value of solar tariff, a utility is for the first time paying for the environmental harm it had previously been socializing onto everyone else. This value is based on the federal “social cost of carbon” as well as non-carbon externality values adopted by the Minnesota Public Utilities Commission.

All told, the preliminary market value of solar estimate by Xcel Energy (14.5¢ per kilowatt-hour) for Minnesota comes fairly close to the levelized cost of energy from solar projects in Minnesota using the federal 30% Investment Tax Credit (ITC). Residential projects installed at $4/Watt will cost 17.2¢ per kWh over 25 years (and be eligible for state incentives). Commercial projects installed at $3/Watt will cost 12.9¢ per kWh over 25 years.

The solar market price includes eight separate factors, but the largest four account for the lion’s share of the value: 25 years of avoided natural gas purchases, avoided new power plant purchases, avoided transmission capacity, and avoided environmental costs.

The value of avoided fuel cost recognizes that utilities cannot buy natural gas on long-term contracts the way they can buy fixed-price solar energy, and it internalizes the risk of fuel variability that utilities have previously laid on ratepayers.

The avoided power plant generation capacity value recognizes that sufficient solar capacity allows utilities to defer peak energy investments (like Xcel’s recently requested 3 natural gas peaking power plants that an administrative law judge discarded in favor of distributed solar).

Avoided transmission capacity costs rewards solar for on-site energy production, saving on the cost of infrastructure and energy losses associated with long-range imports.

The environmental value may be the most precedent setting, because it means that when buying solar power under Minnesota’s value of solar tariff, a utility is for the first time paying for the environmental harm it had previously been socializing onto everyone else. This value is based on the federal “social cost of carbon” as well as non-carbon externality values adopted by the Minnesota Public Utilities Commission.

All told, the preliminary market value of solar estimate by Xcel Energy (14.5¢ per kilowatt-hour) for Minnesota comes fairly close to the levelized cost of energy from solar projects in Minnesota using the federal 30% Investment Tax Credit (ITC). Residential projects installed at $4/Watt will cost 17.2¢ per kWh over 25 years (and be eligible for state incentives). Commercial projects installed at $3/Watt will cost 12.9¢ per kWh over 25 years.


In theory, everyone is a winner if utilities adopt Minnesota’s market value of solar. In the near term, solar energy producers will get a better price than they have under net metering. In the long term, the cost of solar will fall (perhaps significantly) below the market value (accelerating the development of solar energy), and the 25-year, fixed price contract will help small-scale producers secure financing.

Utilities should also come out ahead. Over the 25-year life of solar projects, they will pay less for solar energy than under net metering. Furthermore, greater amounts of solar on the grid will (over time) erode the market price for solar energy since much of its value is based on low (zero) fuel costs and environmental advantage over fossil fuel generation.

The market value of solar should also be a victory for ratepayers. First, it’s transparent and without subsidy. In fact, it removes hidden subsidies for polluting fossil fuel generation. Ratepayers also get to purchase this renewable resource based on its value to the grid and not an awkward and obscure retail price proxy.

Is the market value of solar the best thing to come out of Minnesota in 2014? If nothing else, it beats the polar vortex.

[Graeme]

A hurdle for Tesla and SolarCity’s grid batteries: Utilities

$this->bbcode_second_pass_quote('', 'T')he biggest hurdle to hooking up more batteries to the power grid (to store energy) has long been cost — batteries are just too expensive. But another real-world challenge is quietly emerging for solar installer SolarCity as it’s been trying to ramp up sales of batteries, made by electric car maker Tesla, combined with solar panels: The utilities themselves.

SolarCity says that its solar battery pilot program — which it has been working on since early 2012 — has managed to get around 500 customers in California (including Walmart) interested. But to date only a dozen of those customers have battery systems connected to the grid. That’s because California’s three large utilities are slowing down the connection process, requiring a series of applications, charging high fees for connecting batteries (in some cases close to $4,000 per customer), and just taking a very long time to connect the batteries to the grid, says SolarCity.



SolarCity claims the fees that utilities are charging customers for applications are illegal. PG&E tells the San Francisco Chronicle that it’s not delaying the process, but is taking some eight to ten weeks to inspect the systems before connecting them to the grid. The utility also says it won’t be rushed.

Grid batteries won’t be going away any time soon. The market is just emerging and Tesla plans to build a massive battery factory in the U.S. that could cut the cost of making batteries by 30 percent. Tesla has said some of those batteries will be used for grid sales.

[Graeme]

Steven Chu Solves Utility Companies' Death Spiral

$this->bbcode_second_pass_quote('', 'U')tility companies have been looking for new regulations and higher connection charges to save them from a “death spiral” spurred by a surge in rooftop solar installations. Instead, says former Energy Secretary Steven Chu, they should get into the rooftop solar business.


In Chu’s business model, utilities will borrow money—because “utility companies get to borrow money as inexpensively as just about anyone in the United States”—to buy rooftop solar modules and batteries. Then they’ll partner with private rooftop-solar installation firms—”because I don’t expect a utility company to figure out how to do that”—to install rooftop panels and batteries at customer homes.

The utility will own the panels and batteries and sell electricity to the customers at a much lower rate.

Customers would not only get lower rates, they would get solar power without having to pay for installation, Chu said, and they would get a battery backup that can keep the lights on and the refrigerator running for up to a week in a power outage.

Utility companies, meanwhile, would benefit from a distributed network of panels and batteries “where they need it the most, at the end of the distribution system, for grid stability.”

Chu’s idea allows utility companies to expand without installing new transmission lines, completing environmental impact reports, “and all of that stuff,” he said.

[Graeme]

How One State’s Net Metering Expansion Offers a Model to the Nation

$this->bbcode_second_pass_quote('', 'W')hile battles rage with utilities taking on both solar customers and businesses around the country, Vermont has quietly expanded its net metering program by nearly four-times without so much as a skirmish.

Net metering gives renewable energy customers full, fair credit on their utility bills for the excess clean power they deliver to the grid. Vermont’s legislation, H.702, raised the state’s net metering cap from 4 percent of a utility’s peak load to 15 percent, significantly expanding participation in this critical program. The bill also notably expands the state’s nation-leading 10-day solar registration program from 10 kW to 15 kW. It passed the Vermont House nearly unanimously and then the Vermont Senate 28-0. Governor Peter Shumlin quickly signed the bill into law on April 1.

Unlike net metering fights in Arizona, California, and Colorado, to name just a few, this major expansion of customer-owned distributed generation sailed through with broad support not only from the legislature but also from the state’s utilities.

Some will be tempted to dismiss this solar win simply because it’s Vermont, a small state known for its progressive policies. And yet, it’s a state that also retains many more conservative energy characteristics including being the only state in the region without a Renewable Portfolio Standard and also a state with a whopping 17 utilities, including many highly-cherished, small municipal utilities and coops.

So what made Vermont’s process so different from what has transpired elsewhere around the country?

First, there was a broad recognition of the economic benefits of distributed solar generation. A 2013 study commission by the Public Service Department found no significant cost shift produced by net metering solar. This provided the foundation of an economic argument for the many benefits — from transmission savings to peak shaving — the state could expect from expanding its net metering program. Bolstering that report, in the Vermont Governor’s Budget Address earlier this year, he cited a newly-released $400 million figure in savings from transmission line deferments from distributed generation, noting that “our strategy of building local, renewable energy projects while maximizing our energy efficiency is working, already helping us defer nearly $400 million of transmission costs which our region’s ratepayers would otherwise have to pay.” The numerous economic benefits are right in line with studies and reports from around the country, from California to Texas to New York, on the benefits to ratepayers of distributed solar.

[Graeme]

Grid stabilising batteries edge closer to standardisation

$this->bbcode_second_pass_quote('', 'T')he International Electrochemical Commission (IEC) will begin a programme of standardisation for redox flow batteries – which can be used for large scale energy storage applications – following discussions which were initiated in Japan in October 2013.

The Japanese Ministry of Economy, Trade and Industry (METI) announced on its website that the country’s Industrial Standards Committee (JISC) had proposed the setting of international standards for the batteries. Redox Flow batteries, often known as simply ‘flow batteries’, can be used to adjust electricity supply-demand balance in case of demand decreases, as well as frequency variations.

Unlike lithium-ion based batteries or other commonly used battery types, flow batteries contain a liquid electrolyte solution which is charged and discharged as required, instead of solid materials. Due to the use of liquid solution, it is thought that flow batteries could be scaled-up in size more easily than solid battery types, as more or less electrolyte solution can be added to the cell accordingly. Japan is trialling the largest such system in the world, a 60MWh battery on the island of Hokkaido.

Japan was not alone in proposing standardisation; government representatives of China and Spain have also recently submitted similar suggestions to the IEC.

At a recent energy storage conference event held in London, several speakers including representatives of major battery manufacturers referred to the importance of standardisation in the growing energy storage industry.

[Graeme]

California to Utilities: Connect Battery-Solar Energy Systems to the Grid

$this->bbcode_second_pass_quote('', 'C')alifornia regulators have just issued a rebuke to utilities, and a thumbs-up to customers and companies that want to connect hundreds of now-stalled battery-backed solar PV projects across the state.

LastTuesday, the California Public Utilities Commission issued a proposed decision that would exempt most storage-solar projects from extra utility fees and interconnection studies (PDF). Instead, it would require utilities to treat them as regular old net-metered solar systems, as long as they meet certain requirements.

For the past twelve months or so, California’s big three investor-owned utilities -- Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric -- have been demanding these systems undergo extensive reviews that come with between $1,400 and $3,700 in extra fees. Utilities have said they need to do this for safety reasons, as well as to make sure that batteries don’t store grid power, then feed it back under the guise of green, net-metered power.

Solar and storage system installers say these unnecessary fees and studies have brought new battery-solar projects to a screeching halt, and slowed to a crawl grid interconnections for those that have been approved. SolarCity, for example, says that of the more than 500 customers that have signed up for its solar battery systems, only twelve have been connected to the grid.

Tuesday’s proposed decision makes it clear that CPUC agrees with SolarCity and its customers, not the utilities. “We disagree with IOUs’ conclusions and would have preferred that the IOUs had taken a more proactive and collaborative approach to avoid creating barriers,” it states. In an October assigned commissioners ruling, CPUC President Michael Peevey noted that more than 10 megawatts of solar-storage projects have been put on hold in the state because of the utilities' stance.

Indeed, storage and solar advocates have been anticipating a ruling that supports a more streamlined, no-cost solution. This proposed decision doesn’t give them everything they want, but it would certainly remove the main obstacles.

“I think it’s going to streamline it quite a bit. There were customers who weren’t able to pay these interconnection fees who we can now move forward,” Peter Rive, SolarCity co-founder and CTO, said in a Tuesday interview. UDPATE: Bloomberg reported Wednesday that SolarCity has resumed submitting applications for projects in light of the proposed decision.

SolarCity has been installing batteries from Tesla Motors in homes since 2010 as part of the California Solar Initiative program. In December it announced it was entering the commercial building market as well, competing with companies such as Stem, Green Charge Networks and Coda Energy to provide low-cost battery systems to mitigate demand charges.

[Graeme]

New York Seeks to Reform the Energy Vision: Shift from Monopoly Model to "Utility 2.0"

$this->bbcode_second_pass_quote('', 'N')ew York State is pushing its utility industry to shift away from a century-old business model into a system that can accommodate more power from solar and wind.

With the fourth-highest electricity prices in the U.S. and a grid increasingly susceptible to storm-related failures, the current system isn’t working, said Richard Kauffman, the former chairman of Levi Strauss & Co. who is now the state’s first energy czar.

Regulators and power-industry executives are meeting today in Albany to discuss his proposal for a new model, “Utility 2.0.” The program recasts the industry as something akin to traffic cops, coordinating the flow of electricity instead of functioning as a monopoly distributor of power coming from a few large plants. The move would spur generation from thousands of smaller systems owned by individuals and other companies -- notably rooftop solar panels.

“The way we structured utilities 100 years ago, with cost recovery plus a return on their capital, doesn’t work today,” Kauffman said in an interview in New York.

This is no small shift. The power grid was built for a world when producing and providing electricity was complicated and expensive, something best left to the utilities. That world is no more, Kauffman said.

[Graeme]

Utilities Get a Five-Point Roadmap to Prepare for a Home Solar Future

$this->bbcode_second_pass_quote('', 'I')t’s a race against time, as our distributed energy future catches up with the exponential climate change predicted in the White House’s recently released 2014 National Climate Assessment. But these days, even the bean counters at Big Four accounting firms like Ernst & Young are throwing down the renewables gauntlet. Specifically, to utilities hanging on to last century’s dirty business.

“For the electric power sector, the question is not if or even when the change will come, but rather, how fast,” warned Ernst & Young’s competitively named “From Defense to Offense: Distributed Energy and the Challenge of Transformation in the Utilities Sector” (PDF). “Distributed energy is on a trajectory to become a cheaper source of power than bundled utility service offerings that are based on today’s power supply portfolio.”

[Graeme]

Is This the Electric Utility “Apocalypse”?

$this->bbcode_second_pass_quote('', 'T')he utility industry is under attack. Right now it's just minnows nibbling at the feet of giants, but the giants have taken notice and, believe it or not, they're scared. At least that's David Crane's opinion. He's the CEO of NRG Energy (NYSE: NRG ) , a key player in the merchant power market, so it's worth listening to his argument.

Unprotecting the protected
Regulated utilities benefit from regional monopolies. That's why they are regulated -- so they don't just keep jacking up their rates. However, this model also protects them from competition. It would be virtually impossible to build out redundant power systems.

But what if all you did was supply power to just one customer in a cost effective way? That's exactly what SolarCity (NASDAQ: SCTY ) and SunPower (NASDAQ: SPWR ) are doing today. This duo installs solar panels on homeowners' and businesses' rooftops. That may not allow customers to cut the cord, but it certainly cuts down on the amount of energy they buy from their local utilities.



What if you got off the grid entirely?
But NRG Energy isn't sitting back and watching. It's getting ready for a huge industry shift with its own disruptive technology. The big problem with solar is that it only works when the sun shines. While batteries can store some of that energy for nighttime consumption, most consumers still use more power than they generate. NRG is working with Dean Kamen, the creator of the Segway, on a natural gas electric generator that would allow consumers to completely sever ties with their electric utility.

When the sun wasn't shining, the natural gas generator would kick in. NRG's hope is to lease these devices. That would allow it to both benefit from the shift that CEO Crane sees on the horizon and protect it from falling demand for its power with a replacement, annuity-like revenue stream.

[Graeme]

Solar and Storage Are Pushing the Market for Distributed Resource Management Tools

$this->bbcode_second_pass_quote('', 'C')onsolidated Edison is one of the distribution utilities that will be acutely affected if New York’s Reforming the Energy Vision, or REV, proposal becomes a reality in the coming years.

The utility is not necessarily fighting the changes happening at the grid edge. It already has a "utility of the future" group, explained Andrew Reid, a senior engineer at Consolidated Edison. However, Reid and his fellow engineers know that developing an entirely new system for operating the grid won't be simple.

“They call for plug-and-play distributed energy, but you need a distributed architecture for that,” said Reid, speaking at a Clean Energy Connections panel in New York City last week. That means utilities will need to make additional investments in the software and control systems to manage all that distributed energy.

[Graeme]

Regarding the Grid and Solar PV, US Utilities Are Asking ‘What Would Germany Do?’

$this->bbcode_second_pass_quote('', 'A')s the world's largest solar energy market, Germany sets an example for the do's and don'ts of integrating solar into its power supply. And it has indeed put in place policy and technology mandates in recent years to help it maintain the health of the grid.

"Grid stability is not a problem for solar," said Bruno Burger, professor of power electronics at the Fraunhofer Institute of Solar Energy Systems.

Germany's cumulative solar energy generation capacity has reached around 37 gigawatts as of April 2014, or about 21 percent of the country's total power generation capacity, according to data compiled by Burger.

But in terms of the actual energy produced, solar occupies a smaller slice of the market. During the first quarter of this year, the country produced 5.7 terawatt-hours of solar electricity, making up about 4 percent of the total electricity generation during that period, according to a Fraunhofer report. Overall, solar on average accounts for about 5 percent of Germany's annual electricity production, Burger said.

That amount isn't considered significant enough to warrant major changes to rules for operating the grid and managing the conventional electricity supplies to ensure a smooth integration, according to the International Energy Agency. That is, until the saturation rates hover between 20 and 40 percent, the agency said in a report.

[Graeme]

Barclays Just Threw Gasoline on the Fire that is the Battle Between Utilities and the Solar Industry

$this->bbcode_second_pass_quote('', 'T')his week Barclays downgraded the high-grade bond market for the entire electric utility sector because “we believe that a confluence of declining cost trends in distributed solar photovoltaic (PV) power generation and residential-scale power storage is likely to disrupt the status quo.” While this is not the first statement about vulnerability of electric utilities to competition from new technology it is the most important to date.
Electric Utilities vs. Solar

There has been growing tension between the electric utility industry and the solar industry – specifically the part of solar industry that is focused on distributed, or point of use, solar installations. This friction has really been a proxy for what is developing as a larger challenge to the utilities. New technologies are making generating, storing and managing electricity at the point of use much easier and much more economical. This technical evolution is occurring at the same time that overall electric demand growth has been stagnant for several years and rising infrastructure requirements are putting upward pressure on the price of delivered electricity. Those factors together mean that electric utilities are struggling with eroding demand and eroding profitability, and the best available option is to increase the price per unit of electricity, which only accelerates the economic competitiveness of the competing technology – and thus starting the “spiral”.

This dynamic is extremely complex and opinions range from the view that point of use technology can never threaten utilities to the utility industry must begin a slow transition to the utility industry is plunging into a death spiral.

[Graeme]

The Golden Sharing-Economy Effect: Why Electric Utilities Will Change More In Next 10 Years Than In Previous 100

$this->bbcode_second_pass_quote('', 'S')eeing vehicles from Uber and Lyft, the car-sharing services, cruising the streets of major American cities gets me excited about what could happen to the industry I serve – electric utilities – in this new sharing economy. Sharing has already disrupted – to the point of destruction – music, newspapers, and book-publishing. Now taxis and airport limos, among many other industries, are undergoing wrenching change. Due to Uber and Lyft, many old-line taxi companies can’t find enough drivers to fill their cabs.

So what does this have to do with energy and electric utilities? Everything. More is going to change in the utility industry in the next 10 years than in the last 100. That change will be for the better as shrewd utilities and government regulators innovate and advance the utility business model like the economy as a whole.

The way utilities make money today is straightforward, but profoundly constrained: regulators determine allowable profits and utilities sell energy priced accordingly. Most utilities score solid marks for promoting green behavior with their energy conservation programs, but every kilowatt-hour that consumers conserve or generate themselves with renewables is a kilowatt-hour that the utility is not selling – a loss of revenue under our current model.