Utility Companies See Rooftop Solar Energy as Business, Grid Threat
July 31, 2013 4:18 PM
comment(s) - last by
They're trying to slow the adoption of solar energy through lawmakers
Utility companies around the U.S. fear that solar companies and renewable energy incentives will replace traditional electricity.
According to a report from
The New York Times
, utility companies view
rooftop solar energy
as a threat to their traditional business model of providing electricity maintaining the grid.
In fact, some utilities have said that they should've fought the solar "disrupt" and are currently working to push back against government incentives for the renewable energy.
The utility companies' worries may seem a little ridiculous at present, considering rooftop solar energy alone accounts for less than a quarter of 1 percent of the nation’s power generation.
However, incentives around the country aim to expand the use of solar power in a big way. For instance,
California has a system
called net metering, which pays both commercial and residential customers for their excess renewable energy that they sell back to utilities. California pays customers very well through this credit system because the payments are bound to daytime retail rates that customers pay for electricity -- such as utility costs to maintain the grid.
reports that from 2010 to 2012, the amount of solar installed each year has increased by 160 percent.
At present, 43 states, the District of Columbia and four territories offer incentives for renewable energy in some form or another.
Solar proponents add that solar customers deserve payment and incentives for their efforts because making more power closer to where it is used (when resold to local utility companies) can alleviate stress on the grid -- making it reliable. It also helps utilities by relieving them from having to build infrastructure and sizable generators.
However, utility companies feel differently. Their argument is that
, at some point, may stop paying for electricity, which means they also stop paying for the grid. This shifts the costs to other non-solar customers.
According to California's three major utility companies, they could lose as much as $1.4 billion in annual revenue to solar customers when the state's subsidy program fills up to full capacity. This means that about 7.6 million non-soalr customers would have to make up for that, paying as much as $185 per year each.
This leads to something utility companies call the "death spiral." This refers to the costs being shifted to non-solar customers, and because of this burden, they switch to solar-powered rooftops -- making utility companies' troubles even worse.
For that reason, utilities have requested that lawmakers limit those who can participate in such programs, including net metering.
Some utility companies are adding rooftop solar to their services, such as Dominion in Virginia. But not all are willing to adapt, and while solar still only amounts to a small percentage of power generation in the U.S., it seems utilities are looking to prevent the renewable energy emergence from spreading.
The New York Times
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RE: Survival of the Fittest
7/31/2013 8:03:24 PM
How is it a fair marketplace? Customers are getting tax dollars to pay for their power installations while utility companies cannot write off the costs of maintaining or upgrading their electrical grid.
RE: Survival of the Fittest
8/2/2013 8:49:33 AM
Fossil fuel companies get subsidies too. Why aren't you complaining about those?
RE: Survival of the Fittest
8/3/2013 10:53:16 PM
"Public" utility rates are set by a state board. The utility company may be a 'private' corporation, but the state tells them what they can charge based on their costs.
The cost of delivery, the cost of production, the cost of maintenance and a guaranteed profit are all a part of the rate set by the state rate setting authority. If the utility company feels they are not earning enough profit, then they simply file a rate change request. When the state thinks the utility is earning too much profit, the utility is notified that a rate change request is being filed for them.
The great thing about being in the public utility business is that the government guarantees your profits. It is possible to set up a totally private utility, but the laws make it extremely difficult to avoid the PUC's (Public Utility Commission) regulations that are designed to "protect" the utility customers and guarantee public utility company profits.
If everybody starts generating their power at home, the utility company will simply bill for maintaining the grid and likely get a law passed requiring all properties to pay regardless of power usage or connection to the grid. After all the public power grid is an essential community service.
Some places this is already done with one corporation generating power, one 'distributing' power and another maintaining and renting out the physical grid. (Enron was in the electricity distribution business when they went under due to fraud and market manipulation)
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