Regardless of what drives the action — state regulation, federal policy, economic reality — collaboration between utilities and the solar industry is now becoming prevalent. Expanding definitions...
Buying Into Solar
Rewards, challenges and options for rate-based investments.
Initiative. As part of this clarification, the legislature ordered the New Jersey Board of Public Utilities to allow public utilities like PSE&G to invest in, and own, renewable generation.
Besides regulated investment, utilities can employ other strategies in an attempt to benefit from increased market penetration of solar generation. For example, the smart-grid and smart-metering investments that utilities must make to accommodate large amounts of distributed PV solar will be enormous and will offer opportunities to earn a return. The transmission required to carry power from central solar plants also will present investment opportunities. The delivery of value-added services to customers who own their own generation—for example, to help them take advantage of time-of-use rates or to sell the power they generate on the spot market—offers potential profits as well.
And finally, there are legislative approaches to be considered. While the utility exclusion from the ITC is now a thing of the past, normalization requirements still put utilities at a competitive disadvantage. Certain utilities might wish to co-ordinate an effort to modify normalization accounting rules.
The benefits of the ITC are spurring support for regulated investment by several utilities and their respective commissions. Utilities interested in solar-generation investment needn’t wait for renewable energy standards to act, nor must they abandon all of the solar resources in their portfolio to IPPs. With a little planning, regulatory and legislative education and creativity, and perhaps further federal tax rule improvements, IOUs can benefit ratepayers, shareholders, and society by making regulated investments in solar generation. Utility investment in solar generation can represent a solid and potentially profitable step in a sustainable direction.