Utilities ramp up fight against solar. BRING IT ON!

In case you haven't noticed, there has been a significant ramp up recently in new stories with a common theme:  "Utilities are working to limit the growth of solar."  Here are a few excerpts from several news channels along the theme.

On March 25, 2015, former Representative Barry Goldwater Jr. (a republican?!) wrote this piece for the website The Hill in which he calls a spade a spade.  The piece is titled, "Slandering solar is not about protecting taxpayers, but protecting the utility's monopoly status."  He references recent actions in Arizon at SRP and APS to slander and charge customers utilizing solar with additional fees.

On March 27, 2015, the site ecowatch.com released a piece detailing recent activity by the notorious Koch brothers on moving to limit the growth of solar energy in at least four states.  The Koch brothers are also notorious for political spending and many have surmised their solar smear campaign  has deeper roots into the upcoming presidential election cycle.

Last is an interactive piece released today on green tech blog GreenTechMedia.com which asks the question if utilitiy companies should even be allowed to own rate-based (meaning the price of electricity can change) residential solar (meaning the panels on your roof).

At the surface, this all looks pretty scary for those who look towards a solar future.  For years the utilities have dismissed solar as nothing more than an annoying feature for some hobbyists, but with the continued strong growth in the industry and the momentum that federal incentives for solar are likely here to stay, utilities are now starting to sweat.  They know more than anyone that they are not ready for a solar future.  They are waaay to fat, dumb and happy to have to actually compete in business.

Unfortunately for utilities the powers of economics do not appear to be on their side.  If they move to "penalize" solar adopters with fees, whether substantiated or not, they are simply adding value to that most mythical of energy consumer:  The Grid Defector

Here is the conundrum for utilities. They have a massive infrastructure set they have to maintain through revenue from rate payers.  As infrastructure ages and inflation increase, the cost of maintaining such large physical infrastructure will only go up.  It ages, needs to be serviced, replaced, all the while the cost of labor in the US increases.  So, expenses are pretty much always going up, year over year.  Meanwhile, some of their customers have decided to start generating their own power through solar.  This means they are sending less money to the power company and the end of every month.  Therefore, if electricity prices were to stay the same, the amount of revenue headed to the power company is going down.  So, expenses are going up, revenue is going down.  That is not good for business.

So, to counter the rise in expenses and fall in revenue, utilities have to raise the price for electricity.  But, this further increases the value of having solar to manage some of your generation, so even more people are encouraged to go solar.  Revenue continues to fall, prices have to go up, so forth and so on.

Right now solar is very affordable, with solar panels costing about $1/W, inverters about $0.5/W and installation from $1-$2/W.  So, for a 2kW system on a house, you are looking at $4k-6k, of which many companies are willing to finance for the life of the system.  However, there is another part of the solar future which is also getting very affordable, very fast.  This is the storage component.  Many manufacturing companies are racing to develop storage which can work directly with solar to provide a total power solution.  As this gets cheaper, the mythical Grid Defector is more and more empowered to defect and go 100% solar for their needs.  Partner this with increasing fees from a utility company and the Grid Defector only becomes more powerful!

Overall, the battle over residential electricity primarily will likely end in a mix of storage, micro-grids, electric cars but most certainly solar.  What is interesting today is that utilities have many choices in front of them.  If they choose to try and stop the economics of solar, they will undoubtedly lose much like land lines lost to cellphones.  If they wise up and look for ways to include (or even reward) solar adoption while shifting their business plans, they will be rewarded.

The choice is theirs, and it seems to be starting right now.