Clean Power

Published on May 2nd, 2016 | by John Farrell

21

Instead of Lobbying, Top 25 Utilities Could Have Doubled US Solar Capacity

May 2nd, 2016 by  

Originally published at ilsr.org.

The Investor Responsibility Research Center Institute just released a report analyzing the top 25 US investor-owned electric utilities, and one of the highlights is that these 25 largest utilities collectively spent over $400 million of money (from their ratepayers) lobbying in the past four years. In many cases, this involved lobbying against net metering, renewable energy standards, or incentives for solar energy.

What could that money have bought if instead spent on the things that most electric customers want, such as solar energy?

$400 Million Buys a Bit of Solar

If utilities spent the $400 million directly, they could purchase about 133 megawatts of distributed solar. Against the more than 25,000 megawatts already installed, that’s a paltry amount. Even if the utilities bought utility-scale solar, at about half the upfront cost (and ignoring any need for transmission infrastructure), the money would still get just 266 megawatts.

But getting solar installed hasn’t just been a story of using utility money, but rather more than half the installed capacity has come by motivating private capital (e.g. customers installing with their own money). If the utilities instead offered a $1.00 per watt rebate for customer-owned solar installations, the $400 million would instead support 400 megawatts of solar. At 50¢ per watt, it would support 800 megawatts. That’s a goodly amount more.

But as California has shown with its now-expired Solar Initiative program, people there and in many other jurisdictions don’t require additional solar incentives to go solar. Instead, customers need attractive low-interest financing or “zero money down” options such as those provided by solar leasing companies. There’s a particularly potent tool that could get us more solar for our money, called on-bill repayment or on-bill financing. Several utilities have offered on-bill financing for energy efficiency or on-site renewable energy (see map below). Many more could  offer this tool to repay a loan to install solar via the utility bill.

Trnsprt On Bill Financing Map

How much solar could be installed if the $400 million spent on lobbying were instead spent on creating a solar financing opportunity?

$400 Million Backstops a Helluva a Lot of Solar Financing

Let’s say a utility offers an on-bill repayment program with the money used to secure lenders in the event of customer’s failing to pay the bill. The best design of such a program would not credit screen applicants (nor should it, since the default risk to the lender is zero), and would require zero money down. If we withhold 1% of the money to cover administrative costs, we still have $396 million to backstop solar loans. Since the default rate of on-bill repayment programs is a tenth that of consumer loans (0.3%, although we’ll use 0.5% to be conservative), the $396 million in loss reserve covers $79.2 billion in solar financing.

At zero money down, and installed costs of $3 per watt, our $400 million would finance 26.4 GIGAWATTS of solar, or more than the entire installed capacity in the entire US through 2015.

It’s worth repeating: if the top 25 electric utilities have spent their $400 million lobbying budget on solar loans through on-bill repayment programs, they could have doubled the installed solar capacity in the US.

The question isn’t whether utilities could have spent the money better. Of course they could. The question is why we let these monopoly companies make these choices with our money.

If you care to share, we made this post into an infographic, as well:

lobbying or solar from us utilities ilsr

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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.



  • Bryan

    There’s nothing attractive about a solar lease. A solar lease is one of the most expensive ways to have solar on your roof. Simply add up the 20 years worth of escalating lease payments on a solar lease and you’ll typically find that you’ll pay up to three times what it costs to purchase a system outright.

    Today a name brand grid tie solar system with American made solar panels can be purchased and installed for less than $1.90 per Watt after applying the 30% federal tax credit. That’s less than 7 cents per kWh in many parts of the country. So why on Earth would you want to rent a solar system from a solar leasing company ?

    And good luck ever selling your home with a solar lease or PPA attached to it. Search the Internet for the term “solar lease scaring home buyers” and you’ll find many reports from homeowners and real estate professionals that are having great difficulties selling homes with solar leases and PPAs attached to them.

  • NRG4All

    My two cents are that what needs to change is the charter of electric companies. They should consider focusing on how they can adapt so that their main purpose is to provide power for the base load at night. Yes, they may have to downsize, but that doesn’t mean that they still won’t make a profit. They should also look at other outlets for their product. How about creating Hydrogen? How about setting up utility “gas” stations that dispense electricity for EVs? How about investing in battery technology? How about lobbying for support to get these renewable technologies started until they can stand on their own? How about having a certain amount of electricity to be generated from renewable sources instead of paying for lobbyists? If they don’t change, technology may make them obsolete. Of course at that point it wouldn’t surprise me if they bought enough politicians so they could tax people on the use of the sun.

  • Larry

    Utility Company managers are like the tobacco company CEOs. They are more than willing to go down with the sinking ship rather than try to right it

  • JamesWimberley

    Ingenious. But the return from buying legislators is so much higher!

    Citizens’ United is the Dred Scott decision of the modern American era: democracy requires muzzling corporate political predation, not unleashing it.

    BTW, the young and telegenic Julian Castro is being touted as a possible VP running mate to HRC. He’s been HUD Secretary for 22 months, and still has not fixed the blocking of residential PACE solar loans by the FHFA for dinosaur-brain reasons. In fact PACE loans probably reduce mortgage default risk, because the borrowers are spending less on energy. If not, it’s a cheap insurance problem. HRC can do better. Tom Perez at Labor is another Latino with more experience and credibility.

  • Steve

    Amount: 1 gigawatt hour (GWh) of energy
    Equals: 588.24 barrels of oil equivalent (BOE) in energy

    Utility companies just don’t get it. By deploying renewable energy solutions, it keeps the downward pricing pressure on fossil fuels which is good for everybody.
    1. Renewables little to none: hazard waste disposal, safety, insurance, compliance
    2. Solar spills versus oil spills
    3. Renewable energy is distributed through lines/wires. Fossil fuels are distributed by tankers, land and sea.
    4. Economic impact from reneawbles versus fossil fuels

  • Frank

    I thought NV Energy’s Warren Buffett just said the only crooks were in NYC? Keep thinking the wider US public will wake to this theft, but they seem disinterested.

  • Steve

    I would love to see all these billionaires come together and do something evil to a large utility player, something that would bring them to their knees and to the table.

  • J.H.

    Dumb and Dumber

  • Eric Lukac-Kuruc

    I find the image quite shy.
    To me lobbying is more like a hand giving money to another one.

    Isn’t lobbying the politically correct term for bribing?

    • Brent Jatko

      Not according to the Supreme Court, since the Citizens’United decision….

      • Calamity_Jean

        The Supreme Court is perfectly capable of being wrong, and they were wrong IMHO when they made the Citizens United decision.

        • Bob_Wallace

          And their Second Amendment decision. And some others….

          Korematsu vs. United States, the 1944 case in which the justices upheld the evacuation order against Japanese Americans after the bombing of Pearl Harbor.

          Dred Scott vs. Sandford, the 1857 ruling by the Court that no one who is a descendant of a slave can be considered citizens who are protected by the Constitution.

          Plessy vs. Ferguson, the 1896 ruling by the Court upholding a Louisiana law requiring the racial segregation of railway passengers. The professors noted that bad rulings beget bad rulings: Plessy relied on Dred Scott as precedent, and Korematsu, in turn, relied on Plessy.

          Buck v. Bell, the 1927 ruling that a Virginia law allowing the sexual sterilization of institutionalized people was constitutional. In that ruling, Justice Oliver Wendell Holmes famously stated that ”three generations of imbeciles are enough.”

          Erie Railroad Co. v. Tompkins, a 1938 decision holding that federal judges can apply state substantive law, overturning longstanding precedent.

          http://www.legalnews.com/washtenaw/947577

          • Calamity_Jean

            Yeah, they have made more than just one wrong ruling. I mentioned Citizens United specifically because the article’s subject was lobbying.

            Amusing outcome: even the Citizens United organization doesn’t like the results of the Citizens United decision. The old saying “Be careful what you wish for, you might get it” clearly applies in this instance.

    • Dragon

      If enough money is handed out, it’s not bribery, it’s good business!

    • Ian Oxenham

      To be fair, most lobbying money probably goes into paying the lobbyists, and lobbying does not necessarily mean they are paying politicians off, via campaign financing or otherwise. It’s mostly about getting access to the politicians, repeating hounding them with the narrative the utilities want them to hear, and thus set the terms of the debate or what the “facts” are.

      That said, they probably also get influence through campaign donations, and they might even include such expenses under the heading of “lobbying.” And lobbyists are known to give politicians gift-baskets, but I strongly suspect the vast majority of that $400 million ended up in the pockets of professional lobbyists, not politicians.

  • Jan Veselý

    As Hunter Lovins says: “To solve your problem, you should spend money on engineers, not lawyers.”

  • Brent Jatko

    Similar to domestic automakers in the 1970s and 1980s who channeled resources into political lobbying and fighting safety and fuel economy regulations, rather than into engineering to meet them as the Japanese makers did.

    • jamesdawson

      Even more ridiculous is that most Utilities have yet to seize the opportunity of providing EV charging. Shows you how stupidly managed most of the utility’s leadership are.

      • Brent Jatko

        IMO a lot of the lethargy comes from being a historically regulated monopoly.

      • bwollsch

        Well, PG&E tried it, but they tried to get homeowners to pay for it instead of EV owners.

        http://techcrunch.com/2016/03/31/dont-hand-over-ev-charging-in-northern-california-to-pge/

        It’s a good idea, but all utilities should do this and split the cost between themselves and business owners. The utilities can make money selling the electricity, the business owners get new/more business with a charger in their parking lot.

    • jeffhre

      Good analogy – that resulted in what, a 45% loss off market share for US automakers?

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