Util­i­ties say they’ll fol­low the sun

Shift is away from coal to shared so­lar in­stal­la­tions

Orlando Sentinel - - WALL STREET REPORT - By Emery P. Dale­sio

RALEIGH, N.C. — The plung­ing cost of so­lar power is lead­ing U.S. elec­tric com­pa­nies to cap­ture more of the sun just when Pres­i­dent Don­ald Trump is mov­ing to boost coal and other fos­sil fu­els.

So­lar power rep­re­sents just about 1 per­cent of the elec­tric­ity U.S. util­i­ties gen­er­ate to­day, but that could grow sub­stan­tially as ma­jor elec­tric util­i­ties move into smaller-scale so­lar farm­ing, a niche de­vel­oped by lo­cal co­op­er­a­tives and non-prof­its.

It’s both an op­por­tu­nity and a de­fen­sive ma­neu­ver: Sun­shine-capturing tech­nol­ogy has be­come so cheap so quickly that util­i­ties are mov­ing to pre­serve their core busi­ness against com­pe­ti­tion from house­hold so­lar pan­els.

“So­lar growth is so ex­ten­sive and has so much mo­men­tum be­hind it that we’re at the point where you can’t put the ge­nie back in the bot­tle,” said Jeffrey R.S. Brown­son, a Penn State Univer­sity pro­fes­sor who stud­ies so­lar adop­tion. “You ei­ther learn how to work with this new medium, so­lar en­ergy, or you’re go­ing to face in­creas­ing con­flicts.”

The tran­si­tion away from coal-burn­ing power plants now seems un­stop­pable, even if Trump scraps rules re­quir­ing util­i­ties to re­duce green­house gas emis­sions. The av­er­age life­time cost for util­ity-scale wind and so­lar gen­er­a­tion in the U.S. is now cheaper than coal or nu­clear and com­pa­ra­ble to nat­u­ral gas, ac­cord­ing to fi­nan­cial ad­vi­sory firm Lazard, which com­pared the fuel costs with­out their fed­eral tax sub­si­dies.

Wind and so­lar were ex­pected to ac­count for about two-thirds of the new elec­tric­ity gen­er­a­tion ca­pac­ity added to the na­tion’s power grid in 2016, out­pac­ing fos­sil fuel ex­pan­sion for a third straight year, the En­ergy De­part­ment said.

And even though big in­vestor-owned util­i­ties op­er­ate as le­gal mo­nop­o­lies in many states, the bill-low­er­ing ap­peal of rooftop so­lar for many home­own­ers could even­tu­ally threaten their abil­ity to fi­nance and man­age the power grids.

These trends help ex­plain why util­i­ties are in­creas­ingly adopt­ing a model called “com­mu­nity so­lar,” or “shared so­lar,” which in­volves cus­tomers agree­ing to buy or lease so­lar pan­els on large ar­rays built for the util­ity, or to buy the power they pro­duce. That elec­tric­ity is then cred­ited off util­ity bills.

Util­ity-run shared so­lar also can ad­dress com­pe­ti­tion from in­de­pen­dent so­lar com­pa­nies that in­stall and op­er­ate rooftop so­lar pan­els, har­vest­ing and pro­vid­ing the en­ergy at a fixed cost to the in­di­vid­ual con­sumer or some other buyer.

These projects also could ap­peal to the roughly half of Amer­i­can house­holds that can’t in­stall so­lar pan­els be­cause they don’t own their homes, lack the good credit needed to fi­nance an in­stal­la­tion, or lack suf­fi­cient roof space where the sun shines con­sis­tently, the En­ergy De­part­ment’s Na­tional Re­new­able En­ergy Lab­o­ra­tory re­ported.

Like the much larger so­lar op­er­a­tions cov­er­ing large ru­ral tracts with dark pho­tovoltaic pan­els slanted to­ward the sky, elec­tric­ity from the util­i­ties’ small­er­scale ar­rays feed into the lo­cal power grid, not di­rectly to in­di­vid­ual homes or busi­nesses

Mem­ber­ship-based elec­tric co­op­er­a­tives, mu­nic­i­pal util­i­ties and even non-profit groups run most of these “so­lar gar­dens” around the coun­try, but util­i­ties are mov­ing in. In Cal­i­for­nia, Colorado, Mas­sachusetts and Min­nesota, they’ve been pushed into the space by state law.

In­vestor-owned util­i­ties now back about 20 per­cent of the coun­try’s com­mu­nity so­lar pro­grams across 32 states, and rep­re­sent about 70 per­cent of the po­ten­tial out­put, said Dan Ch­wastyk of the Smart Elec­tric Power Al­liance, a group pro­vid­ing util­i­ties in­for­ma­tion about shift­ing into clean-en­ergy tech­nolo­gies.

Char­lotte-based Duke En­ergy Corp., the largest elec­tric­ity com­pany in the United States, this year plans to launch a com­mu­nity so­lar pro­gram in South Carolina and seek reg­u­la­tory per­mis­sion to do the same in North Carolina, Florida, Ken­tucky, Ohio and Indiana, util­ity vice pres­i­dent Melisa Johns said.

Min­neapo­lis-based Xcel En­ergy Inc., Topeka, Kansas,-based Wes­tar En­ergy and Cal­i­for­nia’s three largest in­vestor-owned util­i­ties are among other power com­pa­nies mov­ing into com­mu­nity so­lar.

Duke En­ergy’s plan “just opens it up for a lot more peo­ple to go so­lar,” said Sara Hum­mel Ra­jca, chair­woman of the South Carolina So­lar Coun­cil, which brings lo­cal co­op­er­a­tives, so­lar in­stall­ers and aca­demics to­gether with the state’s three ma­jor util­i­ties.

Duke En­ergy’s South Carolina res­i­den­tial cus­tomers would pay $70 up­front for each sub­scribed kilo­watt slice of power po­ten­tial from a so­lar ar­ray and get credit for their share of what’s pro­duced, an in­vest­ment that should pay for it­self three years into the 10-year pro­gram.

These house­holds would con­tinue pay­ing con­ven­tional power prices for any elec­tric­ity they con­sume be­yond what their share gen­er­ates, spend­ing to keep the trans­mis­sion lines and backup plants work­ing when the sun doesn’t shine.

“We do have cus­tomers that want (com­mu­nity so­lar) and cus­tomers who are will­ing to pay for it, but it’s not like we have ev­ery sin­gle cus­tomer that wants that,” Johns said.

At the mo­ment, switch­ing from coal-fired power plants to nat­u­ral gas is a cheaper way to re­duce green­house gas emis­sions, said Stan­ford Univer­sity econ­o­mist Frank Wo­lak.

But util­i­ties also need to hold onto their cus­tomers as so­lar power be­comes more pop­u­lar, said Wo­lak, who di­rects Stan­ford’s Pro­gram on En­ergy and Sus­tain­able Devel­op­ment.

Util­i­ties think: “If a cus­tomer signs up for com­mu­nity so­lar, we get the money. With rooftop so­lar, that money is go­ing to the so­lar installer,” he said.

“So­lar growth is so ex­ten­sive and has so much mo­men­tum be­hind it that we’re at the point where you can’t put the ge­nie back in the bot­tle.” — Jeffrey R.S. Brown­son, pro­fes­sor, Penn State Univer­sity


Util­i­ties are adopt­ing com­mu­nity or shared so­lar in­stal­la­tions as cheaper equip­ment makes so­lar cheaper than coal.

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