Many in the rooftop solar industry believe utilities should not be allowed to launch their own programs to own and operate residential or commercial solar. But is this hard line justified?
There are valid concerns that shouldn’t be dismissed -- most importantly that rate-basing gives utilities an unfair competitive advantage. However, we should be encouraging more utility involvement. The solar industry is not properly taking into account how utility-led programs can fundamentally change the growth trajectory of solar for the better, benefiting all stakeholders in the process.
There has been pushback whenever and wherever a utility has proposed owning rooftop solar, exacerbating the conflict between utilities and third-party solar companies. Some of this pushback is justifiable, as there are examples of utilities actively attempting to stall solar.
However, we’ve created an environment in which utility executives will be hesitant to launch any new type of solar promotion program. To change this, it’s time the industry cut them some slack and back bold and well-designed projects as they pop up.
Let's consider some of the benefits (or potential benefits) of utility-led programs:
- Utilities are uniquely positioned to expand the size of the market by serving customers who cannot afford solar. They can achieve this with on-bill financing schemes, even when the systems are not rate-based. Since the likelihood of people defaulting on their utility bill is very low, this increases the number of eligible customers.
- Utility-led (or sponsored) programs are likely to increase adoption rates, because people will feel more comfortable committing to a 20-year contract with their utility than with a local installer or solar “major” navigating stock-market volatility.
- With greater oversight over the process and centralized control of these distributed systems, we can more quickly test and push the technical boundaries of grid absorption. In today’s paradigm, there remains a cap on how much solar can be deployed on each circuit.
If the goal of policymakers and regulators is to maximize the amount of distributed energy installed at the lowest cost, then utilities should be invited to take on a more prominent role.
Admittedly, we lack sufficient data points on cost and performance since this is such a new space. But there are scattered results.
CPS San Antonio reportedly had more people sign up for its SolarHost pilot in 72 hours than the cumulative number of customers who had signed up for solar incentive programs in the previous seven years.
Working with the Rocky Mountain Institute, the City of Fort Collins developed an implementation plan that demonstrated it could add additional value by providing a broader suite of integrated utility services (such as efficiency retrofits) alongside solar. In the process, Fort Collins would actually experience an increase in net income.
New Jersey Natural Gas has an unregulated subsidiary offering residential solar leases in its territory, leveraging the power of its brand. It would be worthwhile to study customer uptake in comparison to alternative solar providers in the area. One benefit is clear: solar provides a new growth avenue for New Jersey Natural Gas and an opportunity to better serve customers.
Utilities are not going to take over the whole process -- they know they're not exactly the most agile of organizations. Utilities will partner with solar installers and other companies to develop and run these programs. Ultimately, this is a win-win-win proposition: good for customers, good for the industry, and good for the utility.
At Soligent, we've been actively studying how to support this trend and are in discussions with utilities, regulators and other solar companies regarding the design of pilots.
The advent of utility-led distributed energy resources will start with pilots. Several have recently been announced: Con Edison will test a virtual power plant together with Sunverge; National Grid will deploy rooftop assets in a lower-income community; and Green Mountain Power will control the charge and discharge cycles of customer-sited batteries.
The outcome of these pilots will define the role utilities play in distributed energy, starting with solar. The solar industry would be wise to play a proactive role, helping ensure these programs are beneficial to all.
Interested in learning both sides of the issue? Listen to this debate organized by GTM on utility ownership of solar:
Jonathan Doochin is the CEO of Soligent; Diogo Castro Freire is head of utility solutions at Soligent.