Will home solar kill the electric utilities?

Coal smoke stack

Coal smoke stack

During the last Presidential election, when the failure of Solyndra was a hot issue, a poll found that 92% of likely voters considered development  and  use of solar power important or very important  for the U.S.

That’s a higher approval rating even than chocolate of apple pie!

Environmental sustainability depends of ceasing to burn fossil fuels—for generating electricity or anything else. Petroleum, coal, and natural gas companies are understandably fighting hard to discredit this view.

Some giant electric companies object, too. They claim that encouraging home solar installations unfairly harms their business.

Does an increase of solar homes and businesses really threaten the viability of electric utilities? It depends. 

The threat of solar power to the utilities

For the past century, electric companies have enjoyed a monopoly in return for maintaining the power grid. A house that uses solar power is either off the grid or uses it only as a backup.

People are using less electricity anyway as they switch to Energy Star appliances and otherwise seek to use it more efficiently. Meanwhile, the costs of installing solar power have plunged dramatically. In 2008, solar panels cost $3.80 per watt of output. By 2012, it was only 86¢ and could easily keep dropping.

Batteries for storing electricity have likewise gotten better and cheaper. So far, it is not possible for an installation of solar panels to provide 24/7 electric power to the home. As technology improves, the day will come sooner rather than later.

If people can generate their own electricity round the clock, they won’t buy it from the local utility. Today, solar power accounts for about 1% of the energy used in the U.S., but its predicted growth rate is 22%.

Imagine the difficulty of taking care of the grid for a rapidly shrinking number of customers! As the cost of solar plummets, the utilities will have to keep increasing their rates. It’s not sustainable.

It’s also not worth preserving.

Utilities have long generated electricity at large facilities that operate on a single energy source, be it a fossil fuel, hydropower, or nuclear reactor. More and more, federal and state regulations have required that they generate an increased proportion of their output from renewable sources like solar.

Even a Tea Party group in Georgia joined with the Sierra Club and other lobbyists to force Southern Co., and particularly Georgia Power, one of its subsidiaries, to expand its use of solar power.

Needless to say, the Tea Party is not motivated by concern over global warming. But there are, after all, multiple reasons to support any important environmental initiative.

The Tea Party objects to monopolies, and the Georgia group wants Georgia Power not only to build more solar installations of its own, but also be more willing to purchase excess solar power from private residences and businesses.

And that appears to be the wave of the future. Meanwhile, state regulators appear to be mandating that the sinking ship get new deck furniture.

EnergySagae_ad1Generation vs distribution

House with both solar panels and wind turbine

House with both solar panels and wind turbine

According to a study by Arizona State University, Georgia is one of the top five states in terms of potential benefits from expanded solar power, but only 38th in actually deploying it.

Many states have a longer history of requiring utilities to use solar power, and most of the existing demand for solar results from state mandates.

Here are the leading states from the third quarter of 2012 through the second quarter of 2013:

  • California (42% of demand)
  • Arizona (12%)
  • New Jersey (7s%)
  • Nevada (6%)
  • North Carolina (6%)
  • Massachusetts (4%)
  • Hawaii (4%)
  • Texas (3%)
  • New York (3%)
  • Maryland (2%)
  • The other 40 states combined (11%)

There are many reasons to favor the development of solar power, quite apart from whatever mitigating effect it may have on climate change. It is a matter of some concern that such a high proportion of solar projects are underway in so few states. Regulatory changes in those states could halt the momentum.

What’s more, it seems short sighted simply to add solar power to the mix that the utilities provide. There are two reasons:

  • Other renewable energy sources, especially wind and geothermal, ought to be part of all the same conversations.
  • Continued reliance on a single company to generate electricity from whatever mix of energy sources is rapidly becoming economically unsustainable because of the growing ability for homes and businesses to generate electricity their own.

Companies that try to hang on to the electricity generating business face a threat from grid-tied home and business solar projects that will eventually put them out of business. And I say the sooner the better.

On the other hand, utilities that reinvent themselves as electricity distribution businesses will find a way to welcome homeowners as partners. They will have the resources and equipment to distribute electricity whether they generate it themselves or buy it from customers.

Part of their function will still be to take care of a grid so that not everyone will be required to generate electricity. Those who do generate will not have to store the excess for later use. A professionally managed grid will be available to them at times when their electricity use outstrips their generation.

Electric utilities have developed expertise that the various renewable energy businesses lack. For example, the photovoltaic industry has become expert in installing panels on the outside of buildings. But neither it nor its wind and geothermal counterparts has knowledge or concern about how the electricity is used inside.

There are plenty of other reasons why society can benefit from electric utilities that successfully transition from a business model based on generation to distribution.

Meanwhile, homes and businesses will be able to generate electricity from whatever mix of renewable sources make sense for their particular property. And the utility can be their partner instead of adversary.

Will solar power kill utility companies? They think so / Richard Read (Christian  Science Monitor)
Are solar utilites obsolete? / Tildy Bayar (Renewable Energy World)
Solar Photovoltaic Demand in the US to Grow by 20% in 2013 to 4.3 Gigawatts, Reports NPD Solarbuzz / Solarbuzz
Tea Party Takes On Georgia Power Over Lack Of Solar Energy / Kiley Kroh (Think Progress)

Photo credits:
Coal smokestack. Some rights reserved by Señor Codo.
House with solar and wind generators. Some rights reserved by Richard Masoner

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