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Solar Starts Giving Utilities A Bargain Fuel Option

SEPA report cover In its latest Utility Solar Market Snapshot (2014, published last month), the US Solar Electric Power Association offers renewable energy interests some welcome news: solar energy is becoming increasingly attractive to utilities. Since the shale gas boom, solar has become the fastest-growing power source in the nation, and the Solar Energy Industries Association is forecasting 25-50% solar market growth in 2016.

This free SEPA briefing can help you pursue some or all of the following actionable items:

  • Visualize the growth of the utility-scale market and what is being planned,
  • Examine key utility solar business issues for the next 2-3 years,
  • See how net metering is affecting the utility business model,
  • Understand why residential- and utility-scale markets are growing while the commercial sector is not,
  • Compare market segment portfolios of utilities for cumulative solar capacity, and
  • Explore how solar is stacking up to more traditional resources such as natural gas. .

The report points out that solar markets continued significant growth in 2014. SEPA estimates that last year the US added a total 5.3 GW (AC) of solar: residential systems, 36%; nonresidential, 12% and utility-scale (over five MW), 23%. Overall, the top ten utilities produced 72% of all new installations in 2014.

As we’ve pointed out previously in CleanTechnica, solar costs are now declining thanks to an industry-wide drive to lower nonhardware “soft” costs in areas like financing and customer acquisition. Policy support—in the form of renewable portfolio standards, state tax credits, and tradable solar renewable energy credits—and retail rate levels also contribute to the trend. New US markets are opening up for solar as power purchase agreement prices fall—sometimes even to levels under those of natural gas.

As has been the case consistently, the solar market concentrates in particular utilities and states. States with higher insolation are experiencing gas-competitive prices now. The utility solar rankings indicate that Pacific Gas and Electric installed the most solar power in 2014, at 1.68 GW. Southern California Edison followed, at 1.04 GW. These utilities installed 48% of total capacity added last year by the power industry.

New strategies for grid integration (

New strategies for grid integration (

SEPA indicates several key business issues for the next two to three years:

  • Rate restructuring,
  • Evolving customer demand,
  • Grid integration of distributed energy resources, and
  • An increasing trend toward community solar.

Utility-scale projects occupy the highest number of installations, but residential projects are not far behind. SEPA cites falling technology costs, federal and state incentives, and third-party development as boosting solar energy. Utilities should expect this growth to continue over the next two years but to decline very sharply at the expiration of the federal investment tax credit in 2017.

SEPA finds rate restructuring “a point of friction between utilities and distributed solar.” Net energy metering—applied to 99% of all U.S. solar installations—has caused dissension, with some protesting it as “a subsidy for customers with solar generators by those without.” Utilities respond by considering restructuring rates, including fixed customer charges or higher rates for solar customers, especially where feed-in tariffs cut into their “share.” State policies like those in New York and California have effectively decoupled revenues from volumetric energy sales.

Utilities in Hawaii, California, New Jersey, and other locations with high levels of distributed solar are considering new grid integration strategies. On the supply side, these include advanced inverter functionality, energy storage, and solar energy forecasting. The customer side sees demand response and locational deployment as providing some solutions.

Innovation is also becoming important in the utility approach to solar. SEPA cites four utilities that have launched pilot rooftop solar ownership programs targeted for the residential market. In these programs, homeowners will host solar on their rooftops, and the utility will take on financing, maintenance, and risk management.

Community solar advanced last year. SEPA reports that 15 utilities not considering community programs before 2014 are now doing so. Six have actually implemented them. Overall, at least 93 community solar programs are active in the U.S., 77 of which are utility-managed.

For more information, access the report here.

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Written By

covers environmental, health, renewable and conventional energy, and climate change news. She's currently on the climate beat for Important Media, having attended last year's COP20 in Lima Peru. Sandy has also worked for groundbreaking environmental consultants and a Fortune 100 health care firm. She writes for several weblogs and attributes her modest success to an "indelible habit of poking around to satisfy my own curiosity."


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