California’s PG&E has just invested $100 million in SunRun, which offers solar power purchase agreements, (in addition to its earlier $61 million investment in Solar City‘s solar lease), through its investment arm, Pacific Energy Capital. Some of the California utility investment will help homeowners in other states, like Texas, get $0 down solar.
PG&E’s profits are “decoupled” from electricity sales, in accordance with California state mandates. As a decoupled utility, it earns more by saving electricity than by selling more. When a utility’s profits depend on its customers buying less energy, not more, the motivation is created to help customers shed electrons, or even better, actually send power to the grid. Then PG&E doesn’t have to build as many new gas-fired electric power plants.
Despite the ranting on the Right against decoupling utility profits, it is quite possible for a utility to make very decent money as a decoupled utility. PG&E brings in $13 billion a year, and even the lowliest customer service call center person on their solar line not only has been afforded the training needed to answer solar questions competently, but also makes $25 an hour.
Because it is a decoupled utility, PG&E is highly motivated to get more people off the grid, so it offers professional solar courses for free, it manages the state solar rebate program with checks and balances that ensure the professionalism and solar productivity of installations, it offers more efficient commercial lighting replacements, and it now is directly investing in the two main drivers of residential solar adoptions in the state, leases and power purchase agreements (PPAs).
Earlier this year, PG&E invested $61 million in Solar City, which offers solar leases in California (and also in Texas, Oregon, Arizona, and Colorado). Now it has also invested $100 million in SunRun, which offers solar power PPAs in California (and also in Arizona, Colorado, Massachusetts and New Jersey).
Both leases and PPAs have driven increasing adoptions commercially, and are now rapidly changing the adoption rate of residential solar, in those states that allow them. SolarCity is vertically integrated, with its own installation crew, while SunRun partners with the top installers in each region.
Both leases and PPAs remove the upfront cost of solar. But power purchase agreements, which sell you the power by the kilowatt hour, also remove any worries about the real world productivity of your solar, as the company fully guarantees the electrical output by reimbursing you with cash if your system does not produce every kilowatt hour that you signed up for.
With high bills, both can save you money from the very first month, and more over time. Both types of arrangement offer monitoring and maintenance, but as you can imagine, with their own skin in the game, a PPA company has more incentive to keep systems performing than a panel leasing company has.
In some states in the South, there are laws preventing any entity other than a utility from selling electricity, so residents in those states will never get the chance to make their own clean solar power and pay less than utility rates for it, but some states don’t forbid companies like Solar City and SunRun from coming in and competing. In states like Texas, even though they do not decouple utilities, they don’t prevent electricity competition from outside companies.
Then homeowners like these happy Texans get to benefit from California’s progressive legislation… like AB32, that Texas Oil companies are blocking. You’re welcome, Texas.
Susan Kraemer @Twitter
Image: Ross Electric Company, Texas
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