Don’t look now, but a battle line is being drawn in the sand. On one side, the solar power industry and their consumers face off against the big electric utilities on the other side. Rather than name specific companies, let’s just call the two opposing forces Solar Power and Big Electric.
Big Electric is very worried that solar generated electricity will surpass conventionally generated electricity, and they want to reduce or eliminate the federal and state tax credits that Solar Power has enjoyed for as long as two decades. The more customers that convert to solar, the less revenue Big Power receives. However, their fixed overhead and maintenance costs do not decrease proportionally.
For the most part, electric utility companies are monopolies that are supposed to be regulated by a state public utilities commission (PUC). A person does not have a choice of electric power companies. Residents must become customers of the company that has the franchise (monopoly) in that particular geographic area. Big Electric sets rates according to a complex formula that is approved or rejected by the PUC. In addition to having power generating facilities (or buying power from ones that do), Big Electric has a long term interest in what is know as the grid. The grid is that series of towers, transformers, substations and wires that spans America. The grid allows power companies to interconnect and buy or sell electricity depending upon demand.
Alternate forms of clean power generation, such as hydroelectric and wind turbines, still require a transmission grid. So Big Electric is in a comfort zone on those two forms. On the other hand, Solar Power offers the homeowner or office owner an opportunity to produce their own electricity, and thumb their nose at Big Electric. True, solar power is generated in the daytime, but add a battery array to the system and you have 24/7 independence.
However, Solar Power has a few drawbacks that are not fully understood by prospective purchasers: it doesn’t operate at night; the small size and solar orientation of the roof; the number of overcast days in the geographic area; the drop in efficiency when the air temperature is hot and the solar panels are dirty; and zero net metering. This last drawback, zero net metering, bears further comment. When purchasing their solar system, many consumers are told “Big Electric is required to purchase any excess electricity your system generates.” Not so fast. The “Ah Ha” moment comes at the end of the year, when Big Electric tallies up your annual power generation and compares it to your consumption. This number determines whether you pay Big Electric or they pay you. If they pay you, it will likely be at the wholesale price of $.03 or $.04 a kilowatt. If you owe Big Electric, you will likely be charged the retail rate of $.11 to $.35 per kilowatt.
Although solar power today constitutes less than one percent of electricity generated, the market is predicted to grow by 22% annually according to Bloomberg Energy Finance. If this prediction comes to pass, Big Electric will lose more customers. Hence, those non-solar customers will pay higher rates to make up the difference. Then solar power becomes more attractive to the non-users, and the incentive to go to solar (with or without tax credits) becomes a “no brainer”.
Big Electric needs to be less adversarial, and should make significant investments in the solar and other sustainable energy industries. If they don’t, well…look what happened to telephone land lines when everybody got a cell phone.