Managing the transition to a solar-powered future.
Julia Hamm is president and CEO of SEPA, the Solar Electric Power Association.
The explosive growth of solar over the past few years caught many in the electric utility industry by surprise. The sheer amount of solar is impressive, though the 8 GW of solar installed in the U.S. today is still less than 1 percent of U.S. electricity production. What’s grabbing the attention of utilities is the potentially cascading impact of solar in decentralizing the generation of electric power delivered to the customer.
The single most significant development in this trend has been the proliferation of solar companies leasing customer rooftop power systems. Leveraging a combination of cheaper solar panels, tax credits, and local incentives, these companies have built a profitable business model while offering the utility customer a “no money down” means to reduce monthly utility bills. The leasing companies now compete directly with utilities for energy sales to retail customers, a relationship that the utility once owned completely.
The revenue erosion and possible negative impact on the utility industry is addressed in the report Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business released in January 2013 by the Edison Electric Institute. Some observers believe that the logical reaction of utilities to solar is to see it as a threat that will demand amassing their considerable power to stop.