Published on October 21st, 2011 | by Zachary Shahan5
Utility CEOs Talk Solar
A really interesting part of this year’s Solar Power International conference was a roundtable of 7 utility company CEOs (starts about 18 and a half minutes into the video). I watched most of the discussion 3 times (while doing other things, of course). These are not just solar industry cheerleaders, but they know our electricity system about as well as anybody and are leaders in their arena. So, it was really interesting to watch them speak for over an hour on solar power.
The executives included:
- Doyle Beneby (President & CEO of CPS Energy)
- Randy Mehrberg (President & CEO of PSEG Energy Holdings & Executive Vice President of Strategy & Development at PSEG Services Corp)
- Armando Olivera (President & CEO of Florida Power & Light)
- Robert Powers (President of AEP Utilities)
- James Rogers (Chairman, President, & CEO of Duke Energy)
- Larry Weis (General Manager of Austin Energy)
These are some points (good and bad) that stood out to me:
- Most of these guys seem to think a price on CO2 is inevitable, but it’s not here in the U.S. yet (despite basically every other major industrialized country in the world moving forward with such policies). And, even some of these solar “leaders” in the utility arena don’t seem to be taking a price on CO2 into account in their long-term modelling and planning (though, no one said so specifically). Some were clearly doing so, however. Overall, it seemed to me that this was perhaps the most critical piece needed to make solar power more cost-competitive.
- Clear federal or state policies are critical for utility companies to get behind solar (renewable energy standards, cap-and-trade, a tax on CO2, tax credits, and/or good net metering policies, for example). With renewable energy versus traditional energy being the subject of political cat fighting (i.e. in various states, in Congress, and in presidential debates), these policies are, unfortunately, being held up most places. (I think even deeper than that, though, money’s power over U.S. politics is what’s holding up the progress — traditional, rich companies can, essentially, buy many politicians’ votes on this matter, and they do.)
- Deployment will bring the cost of solar down. Utility companies can help bring the cost down (their need and request) simply by deploying more solar.
- Everyone is hopeful/expectant that the costs of solar will continue to fall, that efficiency of solar panels will continue to improve.
- The CEO of Duke Energy, James Rogers, made the point that electricity is going to get more expensive, because old power plants are going to retire in the coming years and the grid needs to and is going to get upgraded. So, no matter what, the price of electricity is going to go up, and citizens need to be aware of that. Whether it’s solar power or any other source of power, the cost of electricity is going to go up after 40 years of relatively flat prices.
- Several of the CEOs talked about solar being expensive (while the social and environmental costs are still not taken into account) and routinely mentioned it being 14 to 20 cents per kilowatt-hour. But, two of the CEOs (starting with Doyle Beneby) then made the point that long-term power purchase agreements with fixed costs can already be quite competitive, since the price is going to go up anyway (due to the issues mentioned in point #5 and an inevitable price on CO2) and that a fixed price for solar today could be better than it looks to those who don’t take these factors into account. (Additionally, as Greentech Media pointed out back in July, we are starting to see 20-year solar power purchase agreements (PPAs) that put the price of solar at about 10 cents per kilowatt-hour in some areas).
- Individuals support solar and are willing to pay more on their electricity bill for solar energy rather than dirty energy. Tapping that willingness is important (though, it is a somewhat unacknowledged factor).
- The cost of water in some areas (i.e. in the increasingly drought-stricken the South and West) is also something that should be taken into account when in engaging in long-term power planning (and calculating costs). Solar PV (and wind) are clear leaders when it comes to water use.
- Home area networks (HANs) can make solar less intermittent and quasi-baseload. Demand-side technologies available today can already solve a lot of the intermittency or reliability “issues” of solar.
- Consumers, at this point, need to be willing to pay a little more for clean electricity (instead of healthcare needed to address — adequately or inadequately — the health effects of environmental destruction and dirty energy, I would add), and more mass-marketing of solar and wind needs to occur.
- Again, Duke Energy’s CEO pointed out that utilities can “roll solar in” and let it increase the price of electricity as a whole a little bit, but, in doing so, put a hedge in against the likely cost of dirty energy in the future when we price it better — this is a smart thing for utilities to do. And doing so is critical to help scale solar and decrease its costs.
- Utilities need to not cause mischief on interconnection issues — need to be clear and fair about interconnection policies.
- Utilities can and should help push for better federal and state policies on energy and climate change legislation.
- While one CEO, Larry Weis, brought up the issue of the “need” for backup resources for solar (baseload power), three others responded that we already have the demand-side technologies needed to address that and it’s actually not an issue for the amount of solar we can put on the grid today (even if we go full steam ahead). And, in the long term, as the grid develops and more EVs are rolled out, it seems like even less of an issue.
- Furthermore, solar power helps to protect against potential cyber attacks or strong storms and actually could improve reliability. Even the U.S. Department of Defense and former head of the CIA backs this statement up.
At the end of the discussion, the moderator gave them all an opportunity to say the one thing they would like to have that would help them put more solar up. Answers were:
- Better knowing what their electricity consumers wanted. (With current demand-side technologies, power companies could then help them to reach their targets and include renewable energy into the mix more at the same time.)
- Solar being cost-competitive with traditional sources.
- A price on carbon.
- A national energy policy. A target to shoot at.
- A national energy policy.
- All of the above.
Image Credit: Solar Power International 2011