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Clean Power Solar rooftops via Shutterstock

Published on December 10th, 2012 | by John Farrell

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Get Ready, Utilities: Solar Is Coming

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December 10th, 2012 by
 
 
Quick question. Your state has good sunshine, lots of open rooftops, and the cost of solar energy has been falling by 10% per year. Do you think it will take 13 years to double the 10 megawatts (MW) of installed solar power?

Yes, if you’re the largest corporate utility in my state, and willfully ignoring the economic trend. But ‘no’ if you make decisions based on data, because the price of unsubsidized solar electricity will undercut most utility retail electricity prices within a decade, enabling 200 times more solar (4,400 MW) than found in this utility’s plans.

Solar rooftops via Shutterstock

That’s just one utility’s wake-up call in a new report from the Institute for Local Self-Reliance (ILSR), Commercial Rooftop Revolution, and it’s far from the only one. By 2016, over 100,000 MW of unsubsidized rooftop solar will able to match grid electricity on price. Within 10 years, it will be 300,000 MW, enough to provide 10% of the nation’s electricity. This affordable solar future presents a stark challenge to traditional utility planning and a clarion call for better electricity policy.

Some utilities have responded by clinging to the 20th century paradigm of centralized control. Virginia’s Dominion Power, for example, expressed satisfaction at a recent conference at introducing standby charges on solar producers, ostensibly to help them recover the cost of “backing up” solar power.

On the other hand, many utilities and state regulatory commissions are finding the value in solar and realizing that perceived barriers aren’t as large as they had feared. Austin Energy, a Texas municipal utility, now pays a non-subsidy premium for solar because it helps them offset expensive peak power purchases.  In Hawaii, utilities who two years ago argued that the distribution grid was at its limit have been managing to accommodate thousands more solar projects on their grid systems.

Regardless of their predisposition toward solar power, utilities, regulators, and policy makers need to recognize that there’s a revolution in electricity systems coming soon. Solar will become so affordable in the next 5-10 years that as many as 38 million homes and businesses will elect to produce their own power more cheaply from unsubsidized solar rather than buy it from their utility. That means policies that limit distributed generation will have to change: net metering limits must rise, permitting must be simplified, archaic “15% rules” will have to be driven by data not speculation.

Ultimately, as one Hawaii public utility commissioner has said, the paradigm for the electricity system will flip. Utilities will need to transition from being inflexible to being flexible. They’ll switch from primarily running slow-response coal and nuclear power plants to finding the right mix of flexible natural gas or energy storage systems that can partner with low-cost wind and solar and advanced demand response to supply reliable electricity.

The forthcoming revolution in solar power promises more change in the next 10 years than utilities have faced in the last 100. And they had best get ready.

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About the Author

directs the Democratic Energy program at ILSR and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. His seminal paper, Democratizing the Electricity System, describes how to blast the roadblocks to distributed renewable energy generation, and how such small-scale renewable energy projects are the key to the biggest strides in renewable energy development.   Farrell also authored the landmark report Energy Self-Reliant States, which serves as the definitive energy atlas for the United States, detailing the state-by-state renewable electricity generation potential. Farrell regularly provides discussion and analysis of distributed renewable energy policy on his blog, Energy Self-Reliant States (energyselfreliantstates.org), and articles are regularly syndicated on Grist and Renewable Energy World.   John Farrell can also be found on Twitter @johnffarrell, or at jfarrell@ilsr.org.



  • http://www.facebook.com/daniel.ferra1 Daniel Ferra

    We don’t even take into account the tremendous health cost to us and our planet, when we burn oil, coal, and natural gas, which would make them more expensive than Solar or Wind. We need a National Feed in Tariff, for Solar and Wind, with laws that level the playing field, this petition starts with homeowners in California. Japan, Germany, and our state of Hawaii, will pay residents between 21- 54 cents per kilowatt hour, here in California they will pay us 5 cents per kilowatt hour, and they wont let us oversize our Solar systems, want to change our Feed in Tariff? Campaign to allow Californian residents to sell electricity obtained by renewable energy for a fair pro-business market price. Will you read, sign, and share this petition?

    http://signon.org/sign/let-california-home-owners

  • http://www.facebook.com/matthew.t.peffly Matthew Todd Peffly

    Yes as PV gets cheaper/more efficient you’ll see homes/business installing. Then as and storage gets cheap you’ll see people slipping off the grid. And a bigger push for community power. Its coming it just a question of time and can we make it happen before too much damage to the Earth.

    • Bob_Wallace

      As someone who has lived off the grid for over 20 years, I don’t see
      a significant number of people disconnecting from the grid. Even if solar and storage get cheap.

      Solar just does not carry one 24/365 without a massive amount of storage. Providing your own backup system would probably not work for most people.
      Staying hooked together seems best to me. Then everyone gets the advantage of the cheapest available electricity.

      I expect we may see some home-installed storage. For a while. But if cheap storage comes to market like it seems will happen then time of day pricing will fade away. Utilities will simply hang on to electricity when demand is low rather than selling it at a discount. We’ll drift toward a flat 24 hour rate.

      Home storage will likely be EVs for grid outage times.

      • Ronald Brak

        I don’t think we’ll see many people dropping off the grid. I’m pretty sure electricity distributors will drop their monthy connection fees so that people won’t have an incentive to go off grid. But I’m not confident that we won’t end up with a considerable amount of home and business energy storage in Australia. This is because today in the Australian state of Queensland the wholesale price of electricity per kilowatt-hour is expected to vary from about 5 cents in the late afternoon to about 3 cents early in the early morning. This means that grid energy storage could only sell electricity for 2 cents more than it paid for it. But as the feed in tariff for new point of use solar is 8 cents a kilowatt-hour and the retail price of electricity is about 25 cents there is a huge 17 cent difference what a household can sell a kilowatt-hour for and what it pays for a kilowatt-hour. This means that reasonably efficient home energy storage that costs about 15 cents or less per kilowatt-hour would be a money saver.

        • Bob_Wallace

          I don’t think we should include subsidies and FiTs when making long term predictions. Those are artificial market forces used to create lower prices/momentum and not permanent features.

          How is the utility getting away with selling electricity for 25 cents when their costs are 3 to 5? The US average is around 12 cents with similar and higher costs.

          • Ronald Brak

            It would be nice if new solar wasn’t subsidising the rest of the grid in large parts of Australia, but I don’t think we can expect the use of solar to subsidise fossil fuel use to stop any time soon. But we might get lucky. Or unlucky when a 50 degrees celcius heat wave kills hundreds in Sydney.

            How are the distributers getting away with charging 25 cents a kilowatt-hour when they currently pay an average of about 4.7 cents per kilowatt-hour? Well, it’s partly tryanny of distance, and it’s partly the expansion of air conditioner use, but it’s mostly because they can. As you approach Australia you may see a gleaming in its direction. That’s the gold plating on our transmission infrastructure.

  • douglas prince

    Perhaps we can all look toward the day when more homes are built off-grid and the monopolies that have been sucking the public dry finally become an “after thought” in regards to home electricity.

  • diodermod

    I’m reminded of the impact of another technology shift and how that industry reacted to its detriment. When Napster came out, the music industry sought to cling to its antiquated physical copy-based model for controlling distribution. Ultimately, threats of lawsuits by the RIAA could not stop hundreds of millions of users from downloading any media files they wanted. Record labels were gutted. Filesharing is ubiquitous. People now expect their music to be free. Who makes money nowadays? iTunes was one of the first to adopt a progressive model that worked with the new filesharing technology.

    Ultimately, you can’t control change. If you are forward looking, you can lean into the change and have the opportunity to benefit from it.

    • http://zacharyshahan.com/ Zachary Shahan

      definitely. some folks are about to be hit upside the face by solar cracking through what they thought would last forever.

      • Ronald Brak

        And then it will be like in Australia where the powers that be have make helpful suggestions such as reducing our 20% renewable energy target because it makes coal sad, introducing gross metering where people with rooftop solar would be forced to sell all the electricity their systems make to the grid and then buy it back at three times the sale price, and a recent suggestion is to place standing charges on rooftop solar systems because apparently the owners have to pay for pay for improving grid stability and reducing transmission infrastructure costs. You know, sometimes I think those running our electricity sector may not actually be humble servants of the people interested in only what’s best for Australia.

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