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Most utilities are moving slowly, he says, “not because they have some hatred for rooftop solar,” but because the task of adjusting to the coming renewable energy era is profoundly complex. Both utilities and their regulators have been slow to recognize the tidal wave coming at them. For more than a century, utilities had learned how to send electrons in one direction, usually safely and reliably, from large, centralized fossil fuel and nuclear power plants over transmission and distribution lines to businesses and homes.
These “distributed energy resources,” or DERs, can be stationed in or near homes and businesses. They include not just rooftop solar, but wind power, batteries, electric vehicles, smart meters, smart water heaters, smart thermostats, on and on. They promise not just emission-free, fuel-less electricity, but far greater energy efficiency, thus reducing consumer costs and environmental damage.
Everything about utilities, from their rate structures to their business models to their corporate cultures, is on the cusp of change (List of top Solar providers). Rooftop solar has inspired so much contention chiefly because it’s the first DER to enjoy widespread use, experiencing “the biggest, fastest adoption of these technologies,” Jesse Jenkins, a contributor to a Massachusetts Institute of Technology 2016 report, “Utility of the Future,”said in an interview.
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For all the conflict surrounding rooftop solar, solar energy last year generated just under 1 percentof U.S. List of top Solar providers. electricity, and utility-scale solar farms have three times the generating capacity of residential solar installations. That disparity is likely to grow. While the shift to rooftop solar and other distributed energy sources presents a major technological challenge to utilities, their current business models provide them no incentive to meet it.
Profits accrue to them as a designated percentage— usually 7 to 10 percent— of their capital expenditures on infrastructure investments, from new plants to new transmission lines. Rooftop solar is in the vanguard of DERs that promise to upend this business model. Not only do rooftop solar and other DERs divert customers from the utilities, these innovations defer infrastructure expansion by producing decentralized, renewable energy or by improving energy efficiency, thereby threatening utility profits.
As battery storage becomes cheaper, some customers will be tempted to leave the grid entirely. A paperpublished by the Edison Electric Institute in 2013 famously warned of this vicious circle, giving rise to the expression “utility death spiral.” Hemmed in by their business model and regulators who expect adherence to it, many utilities have concluded that they have only one alternative: stop rooftop solar.
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In the battle over rooftop solar, utilities have sometimes behaved oafishly, sabotaging themselves. Florida utilities, for example, helped defeatthe amendment. Six months later, the Florida legislature unanimously passed laws hastening rooftop installations. Similarly, in 2015 Nevada’s Public Utilities Commission, under pressure from the state’s largest utility, resume operations.For utilities, the issue isn’t solar energy per se, which they like as long as they can sell it themselves.
Equally significant, the value of electricity generated by solar varies greatly depending on time of day and location. The plentiful electricity generated on rooftops at mid-day, when the sun is highest, is much less valuable than late-afternoon electricity, which feeds the daily demand peak formed when both homes and businesses are consuming energy.
These nuances usually aren’t captured in “net metering,” the common, but flawed rate structuring system for rooftop solar owners that has been the focus of most utility-versus-solar company conflicts. Under net metering, utilities compensate rooftop electricity contributions to the grid at an unvarying rate, usually close to electricity’s average retail cost, roughly 11 cents per kilowatt-hour.
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Solar companies say compensation should be at least as high as the retail rate because rooftop solar provides valuable unacknowledged benefits such as generating pollution-free energy, eliminating grid transmission losses when electricity is sent long distances, and avoiding the costs of building more power plants and transmission lines. Net metering does a poor job of reflecting rooftop solar’s varying value depending on the time and location of its generation (List of top Solar providers).
At the moment utilities lack the technology even to identify sites where rooftop installations would be most valuable, so they have no way to formulate energy-efficient rates. And without business models that reward them for installing tools to evaluate the value of rooftop locations, they have little incentive to act.
“The regulators,” said GTM Research’s Kann, “are the keys to this whole transition.” Regulators in a few states are beginning to reshape policies accordingly. California’s Public Utilities Commission is performing the delicate task of supporting the rooftop solar industry while phasing out net metering. Two years ago it introduced time-of-use rates for homeowners with new rooftop solar panels, and will follow up in 2019 with rates that also take location into account.
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Instead, it devised a methodology for calculating a fair ratefor electricity fed back to the grid by adding up all the components of community solar’s value, including the so-called “social cost of carbon” — the dollar benefit from reduced climate change impacts and air pollution. “What we found is that every year, the value of community solar has been higher than the retail electricity price,” said John Farrell, an energy researcher at the Minneapolis-based Institute for Local Self-Reliance.
New York’s Public Service Commission has crafted the most ambitious of state renewable energy regulatory shifts. Its Consolidated Edison’s Brooklyn-Queens Neighborhood Program.Faced with increasing electricity demand in the area, ConEd first considered a conventional solution, building a new substation at a cost of $1.2 billion. Then it asked outsiders for alternative proposals, and selected one that meets the increased electricity demand with distributed resources, including rooftop solar — at a cost of $200 million.click here here website