Georgia Power, the largest subsidiary of utility giant Southern Company, just launched a solar sales and installation service for its customers -- and it begins operations today.
Consumers seem to trust their utilities with providing the solar devices and service, but issues of rate-basing, regulated-versus-unregulated bodies, and unfair competitive advantage make for tricky regulatory terrain.
GTM spoke with Norrie Mckenzie, VP of renewables at Georgia Power. He said that the utility would advise the consumer on home residential solar installation, "making it more user-friendly.” The process would allow an energy expert at a Georgia Power call center (or online) to assess factors such as home ownership, shade and sun, and house size and then provide an estimated monthly savings and payback time.
It's the unregulated arm of the utility that is doing the solar sales and consultation and then outsourcing the job to a set of installers or administering the install in-house. That's basically Sungevity's business plan, except the utility has a potentially much lower cost of customer acquisition compared to the thousands of dollars spent by SolarCity or Sunrun on each transaction. And that's one of the things that chafes some solar industry advocates.
Customers electing to install solar can use an installer of their choice or use the unregulated Georgia Power Energy Services to manage the PV installation, according to Mckenzie.
He stressed that Energy Services is “an unregulated entity within Georgia Power -- they are not paid for by the rates when people pay their electric bill. This business unit stands on its own. And this product offering will have to stand on its own also.”
"What we are offering today -- and this may evolve -- is sales and installation. Georgia Power is not financing the customer nor leasing the systems [from] day one.” However, he added, “I wouldn’t rule out leasing for us in the future.”
Mckenzie suggested that Georgia Power is "a great brand, and we’re going to stick our brand on the system we sell our customers, and I think that provides a great benefit to customers."
He added that residential solar around the country is driven by various things -- sometimes high rates -- "ours are low," sometimes state tax incentives -- which "we don't have." He suggested that consumers don't always make decisions on a purely economic basis.
Last July, Tucson Electric Power proposed one of the first utility-owned residential solar programs in the country. The Arizona Corporation Commission approved TEP’s program, limiting it to 600 customers and 3.5 megawatts with a $10 million spending cap. Under the program, participants are charged an initial $250 processing fee, then locked into a set rate for up to 25 years based on their average historic energy usage. Roughly 3,300 people have signed up on the interest list, and about 50 percent of those people are moving forward, according to Carmine Tilghman, senior director of energy supply at UNS Energy, TEP’s parent company.
TEP and fellow Arizona utility Arizona Public Service have insisted that the solar programs they offer are purely about increasing customer choice, while working toward meeting their distributed generation requirements under the state’s RPS.
National installers have opposed investor-owned utilities’ residential solar programs, viewing them as an attempt by government-backed monopolies to quash third-party competition in the booming solar market.
Tyson Grinstead, senior manager of public policy at Sunrun, said in a comment to GTM, "Georgia Power's announcement comes the same day that the Solar Power Free-Market Financing Act goes into effect. Ironically, solar financing, which would allow homeowners to affordably install solar, is noticeably absent from Georgia Power's plans."
In the case of Georgia Power, the utility is not rate-basing the distributed solar but is acting as an originator, potentially an installer, and eventually perhaps a financier. Increasing customer choice, a common theme voiced by solar advocates and utilities alike, should, arguably, include the option of buying solar from the utility rather than a third party. As Tom Fanning, CEO of Southern Company, told GTM, "We know our customers better than anyone else” does.