Could Solar Kill PG&E?
A blog on the Energy Collective quotes Lyndon Rive, CEO of SolarCity: “We’re an energy company. We install solar systems for free, and we sell the electricity at a lower rate than you can buy it from the utility. So given the option of paying more for dirty power or paying less for clean power, what would you take?”
The blog goes on the postulate that Pacific Gas and Electric (PG&E), which serves most of northern California, is being threatened by solar installations because of price competition and the utility’s inability to respond to a changed competitive landscape.
PG&E residential customers pay 31 cents-35 cents per kWh, and the top residential rate could reach 54 cents by 2022, with residential customers representing about 40 percent of PG&E’s retail electric revenue, according to the Energy Collective.
And solar offers an even better business model for commercial customers who can more easily take advantage of accelerated depreciation. Commercial customers represent about 46 percent of PG&E’s retail electric revenue.
Besides price competition, PG&E in California is required to allow net metering where customers with onsite solar can get credits from the utility for excess power they send to the grid.
Douglas Short, author of the Energy Collective blog post, explains that PG&E is limited in its ability to solve its pricing problems because of state laws, some of which hark back to the days when utilities were regulated monopolies. Basically, as more customers install solar, PG&E’s pricing model will cause it to raise its rates on remaining customers, which will drive even more customers to solar.
Meanwhile, some solar vendors are drawing battle lines for a possible future fight with utilities. SolarCity, Sungevity, Sunrun and Verengo have formed The Alliance for Solar Choice (TASC) to ensure the continuation of net metering, which is in place in 43 states. TASC says that utilities are trying to eliminate net metering because it doesn’t advance their business.
A new report from Lux Research finds that record low prices for solar modules has been a nightmare for manufacturers but a boon for solar developers and installers, and the lower prices for PV are driving more consumer demand.
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