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What the Spike in Solar Users Means for You and Utility Companies

4/7/2014 11:45:00 AM

Tags: solar power, energy policy, Utah, David Glenn

Solar vs Utilities: The Ongoing Debate between Industries

As the price of solar panels drops and homeowners take advantage of government incentives to use solar power, utility companies are taking a stance against the rise of distributed solar energy. The difference between power generation and distributed solar power is that distributed solar produces electricity off the grid, giving homeowners substantially lower energy costs. Under current regulations, utility companies pay retail prices for distributed solar power fed into the grid during peak hours.

Not everyone has the means or access to take advantage of distributed solar energy. Apartment renters, for example, must pay utility prices for electricity unless their landlords install panels on their rooftops. The current situation creates a two-tier system, separating moderately wealthy homeowners from people with more modest means. Solar companies are doing their part by making solar panel installations accessible to average homeowners the option to rent solar panels. Solar power use is increasing. So how will that affect you?

Utility Companies Fighting Back

Utility companies argue that they should pay wholesale prices for solar power generated during peak hours. Even though distributed solar only accounts for about 0.11 percent of electricity, current regulations forcing power companies to pay retail prices for solar energy hurt established utility companies. The regulation applies to the concept of net metering, which allows homeowners to sell the generated solar energy they don't use to power companies. This practice reduces energy costs for homeowners even further than simply installing solar panels.

Utility companies are lobbying lawmakers in response. So far, their efforts haven't been all that effective, but they hope to add government-mandated fees to solar power users in the amount of $5 to $120 per month. According to a survey conducted by CNBC, solar installations have increased nearly tenfold over the last four years. In 2010, installations numbered in the hundreds, but by 2012, they had reached thousands of installations per quarter. In 2013, 90,000 homeowners installed solar panels, bringing the total number of solar users in the country to 300,000. The trend is predicted to continue as the previously unaffordable investment continues to receive support from entrepreneurs and lawmakers.

What Opposition to Net Metering Means to Consumers

Over the last six years, solar panels have become 75 percent more affordable, leading to more mainstream commercial and residential use. Wall Street investors spent approximately $13 billion on the technology in 2013, up from just $1.3 billion in 2007. Even though utility companies feel threatened by the growth, many of them are also investing in distributed solar power for residential users and businesses. However, not all utility companies are joining the trend, and some remain opposed to renewable solar energy.

In California, Arizona and Colorado, utility providers succeeded in lobbying state governments to reduce subsidies and credits to homeowners who generate their own solar electricity. As more people install photovoltaic panels on their rooftops, the dramatic reduction in energy costs are being normalized. California's Public Utility Commission reasoned that homeowners who aren't using solar power will be forced to pay higher rates to utility companies to offset the imbalance created by distributed solar energy. By 2017, the state will have regulations in place to prevent this two-tier energy structure.

As more customers turn to solar panels in Arizona, lawmakers are supporting an additional charge of $5 per month to even out the competition. While this amount could dissuade some people from investing in solar power, it's far less than the $600 per year initially sought by utility companies.

Net metering in Colorado is under threat as well since utility companies have lobbied the state government to reduce payments by 50 percent. This regulation would mean that solar power users in Colorado would receive half as much money from utility companies for the solar energy they feed into the grid.

Solar Energy Prices Continue to Fall

Through improved technology, solar companies like Vivint and SolarCity are now leasing new home packages that include photovoltaic panels at significantly reduced prices. Solar use has continued to increase throughout 2013 and is expected to continue. Eventually, the price difference could mean everyone has the option to choose distributed solar energy over non-renewable fossil fuels. Lease agreements, in particular, make solar power an immediate option for people who otherwise couldn't afford an installation. With solar prices falling, there is likely to be more heated debates between solar and utility companies.



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Post a comment below.

 

Ray Boggs
4/8/2014 12:25:28 PM
"Lease agreements, in particular, make solar power an immediate option for people who otherwise couldn't afford an installation" If you can't afford an installation then a lease is the worst possible option to consider. A solar lease or PPA will typically cost the homeowner triple the amount that they would have paid, had they purchased their system instead. A much better option than a solar lease or PPA is a $0 down solar loan with tax deductible interest. solar leases and PPAs do not offer tax deductible interest. Use an easier to qualify for, $0 down solar loan to shop for the best deal at the much lower pricing that's available today and save many thousands of dollars when compared to an expensive lease or PPA.







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