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Rooftop solar owners vs utilities – the battle begins

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You don’t have to go too far into a document prepared by the US-based Edison Electric Institute (EEI) to realise what is at stake for centralised utilities from the threat of rooftop solar.

The EEI, a trade group that represents most investor owned utilities in the US, said solar PV and battery storage were two technologies (along with fuel cells and storage from electric vehicles) that could “directly threaten the centralised utility model” that has prevailed for a century or more.

How worried should they be? A lot, said the EEI.  The ability of rooftop solar, battery storage and energy efficiency programs to reduce demand from the grid would likely translate into lower prices for wholesale power and reduced profits. Worse still, customers were just as likely to “leave the system entirely” if a more cost-competitive alternative is available.

“While tariff restructuring can be used to mitigate lost revenues, the longer-term threat of fully exiting from the grid (or customers solely using the electric grid for backup purposes) raises the potential for irreparable damages to revenues and growth prospects.”

In the US, utilities are now seeking to protect their business models by pushing hard against net metering and seeking to influence the pace and manner of deployment of other technologies and new energy market concept that don’t fit the decades old model.

In Australia, much the same has been happening. RenewEconomy reported on the concerns of utilities in this article last month. Feed-in-tariffs have been wound back, as they were supposed to have been as technology costs fell, but now the pendulum is swinging the other way, and utilities – with the apparent complicity of state-based pricing regulators – are now trying to extract as much revenue from solar customers as they can.

It is a dangerous game. Leading electricity executives and market analysts suggest the rollout of rooftop solar is inevitable and “unstoppable” – unless, of course, by regulation and changing tariffs.

Little wonder then, that solar consumers and rooftop solar providers are starting to organise themselves to protect the interests of individual consumers, and the industry as a whole.

In Australia, a new solar campaign initative known as “Solar Citizens” is being launched this week to ensure the interests of solar owners are protected from changes to laws and policies by power companies and governments.

Solar Citizens sees its mandate as helping existing and would-be solar owners to advocate for their rights as energy investors and aims to push for panels on every Australian rooftop.

Solar Citizens Manager Dr Geoff Evans says 2.5 million Australians now live under a solar roof (one million homes have rooftop solar PV systems), and have invested about $8 billion. Some forecasts expect those numbers to triple by 2020.

“That’s an amazing show of support for solar,” Evans said.  “But to date, when the interests of solar owners have come under threat, there has been no way for them to come together and protect their interests. With Solar Citizens that will change.”

One of Solar Citizens initial targets will be Queensland, there the local competition authority has canvassed a range of controversial tariff structures that appear to favour government owned utilities over consumers, as RenewEconomy highlighted in March in this article, and again two days later. In other states such as NSW, individual homeowners have to negotiate with retailers to get a price for the power that retailer then sells to their neighbours.

“There’s a real power imbalance in those negotiations” said Evans. “The situations in NSW and Queensland highlights the trend we have seen across the country,” said Dr Evans. “We will soon be working on campaigns with solar owners in every state to make sure all Australian solar owners are ensured a fair go.”

“Network operators and energy retailers don’t want to see Australian’s take back control of the grid. They are making it harder for Aussies to go solar in order to protect their profits.

The Solar Citizens campaign is emerging in Australia just as solar companies in the US are organising themselves to counter the same potential threats to their business.

Last week, Bloomberg reported, SolarCity, Sungevity, Sunrun and Verengo, which accounted for the majority of US rooftop solar installations (most of which are financed by leasing arrangements)) formed a lobbying group called the Alliance for Solar Choice to combat efforts by “monopoly utilities” to quash programs that support renewable energy in 43 states.

The alliance is seeking initially to preserve net metering policies that require utilities to purchase surplus electricity at retail rates from customers with rooftop solar systems, and says it is responding to “the coordinated utility attack on net metering throughout the country.”

Bloomberg said the effort underscores the growing conflict between rooftop solar providers and power companies that disagree about the long-term sustainability of industry support mechanisms such as net energy metering.

Utilities say that as more people install solar panels at home and are compensated for the power they generate, it shifts the costs of operating their grids to non-solar users. A similar argument is trotted out in Australia. But as the QCA report acknowledges, the benefits of solar PV are not documented or even brought into consideration for the setting of tariffs.

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  • Warwick

    Many of the existing energy businesses may well be slow to change and adapt but they are not necessarily the evil monopolistic villains as portrayed in this article. Suggesting that these businesses are only screwing over the little guy (and that the regulators are all somehow in on this anti solar conspiracy) is no better than suggesting that the carbon price or renewable energy target will send people broke. Ultimately, when it comes to network infrastructure it is the capacity that determines the cost to serve consumers, so if everyone installed solar, their energy use would fall but until storage becomes economic they will require connection to the grid so there would be no net saving. So what we have at the moment is a charging system for small consumers based on energy consumption and a daily charge rather than a cost reflective one which inlude a capacity charge(which is normal for consumers >100/MWh pa). The changes in charging need to adapt to more accurately reflect costs even if does reduce the benefit PV owners were getting from network charges otherwise it is simply inequitable to those who don’t have PV…This is pretty clear.
    I appreciate that the target audience is mainly PV owners and the retailers of solar panels but you should balance these articles by approaching a network operator for an interview. This way your readers can possibly see whether it is really a “battle” or simple hyperbole about the fact that network charges will need to change due to increased embedded generation.

    • Derek Bolton

      Warwick makes a valid point about the need for a balanced assessment. Nothing I’ve seen so far, from either camp, manages that.

      In NSW, IPART dismissed most benefits of domestic PV to the retailers as ‘too hard to calculate’, while taking every argument form the incumbents as gospel. The result was a recommended paltry 6-8c/kWh net and no mandatory level. It’s pretty easy to see that grossly undervalues domestic PV generation.
      The current arguments from the utilities point to the mismatch between demand peak and PV output, nicely overlooking the fact that the demand peak now seen is lower and later than it used to be precisely because of domestic PV. Thus, the argument may be valid for additional PV, but quite wrong for domestic PV as a whole.

    • Sean

      yeah nah. when you frame everything as being to your detriment, claim it is hurting others, and then still keep all economic benefit to yourself by excluding others from the supply market, you deserve no sympathy.

      The only entity getting squeezed is the energy retailer, because they are stupidly clinging to a business model that is simple, but makes them absorb all the risks of the market and (little to) none of the reward. Energy retailers absorb the risk of high generation cost spikes, with no ability to reduce demand, so they run an insurance policy for consumers – which they don’t want – yet are forced to buy as a result of increased energy tariffs.

      slowly we have seen some sense being brought into the business model, as peak usage charges, and time of use metering has been brought in.

      Too Little, Too Late. TOU metering is still far too blunt. it does not reflect the market at the time, and as a result still has the consumer buying insurance against huge generation price spikes. Lacking the political will to bring in the changes necessary to better reflect the costs of providing the service, energy retailers have been stuck pumping up the cost of energy, making off grid generation more economical, and encouraging reduction in demand, and thus the increasing liability of fixed costs.

      politicians are largely to blame, as they believe that while people can on one hand, cope with buying groceries with rules of supply and demand, cannot fathom how electricity has the same pressures.

  • Dave

    And so, a new group of rent-seekers emerges.

  • http://www.facebook.com/people/Christina-Macpherson/100001582350337 Christina Macpherson

    One very obvious issue for solar rooftop owners in Melbourne is the lack of regulation of sunlight availability. It is at present quite easy for a homeowner to install solar panels – only to discover soon afterwards, that a neighbour or developer is building a 2 or 3 storey building nearby – completely cutting out the sunlight that had been reaching those solar panels.

    • Miles Harding

      I see seeking on-going compensation from the builder and/or owner to be perfectly reasonable in this circumstance. It is also reasonable that the same should occur when that neighbor plants a tree that grows to cause the same effect.

      We need legislation that recognises access to sunlight as a right.

      This sort of behavior by developers is an illustration of what happens when externalities are ignored, expecting somebody else, or the environment to carry the costs of their actions. This sort of self-centered, greedy, behavior has brought the human race into direct conflict with the natural world.

      One thing is sure: Nature will prevail, like it or not!

  • MrMauricio

    They need to get with the trend or risk their investments being marginalized and finally trashed
    what could be easier than having a neighbour generates the electricity for you then charge 3 times what you paid for it 8c fed in at #17 becomes 34c peak at #18!!!!
    Is this a glass half full or what??
    We solar owners are keenly involved-many of us being screwed are already looking around for ways to get out of their clutches-off the grid.Until they or one of them wakes up and joins the solar rush that is the way it will go.Organization of solar owners is a disaster for them-but they have brought it on to themselves by taking the easy route-trying to use their lobbyists to maintain a 100 year old outdated and inappropriate industry structure. All Australians will lose out eventually as the death spiral of coal based generation sets in-and without any forward looking government planning.

  • http://twitter.com/lunarecl1pse ☀Brett Bidwell☀

    It is becoming increasingly difficult to gain approval for connection of larger Solar PV systems (in NSW). Just this morning, after months of jumping through hoops set by the local distributor including investing an obscene amount of money to upgrade the consumer mains, the Level 2 ASP refused to complete the meter upgrade because the supply voltage exceeded the mandated maximum by 3 volts on ‘B’ phase. An inspector was dispatched (and arrived within the hour – I nearly fell over) just to declare that there “might” be a issue on the network and it will need to be investigated. They will get back to us in a couple of weeks or so……….
    As a hardened career PV installer I struggled to keep my mouth shut when the “Distributor Inspector” was continually muttering and cursing the rise of Solar PV as it was giving them no end of work to do, making it difficult to “Sell” the distributor and is the sole cause of tariff increases. I was tempted to head butt this guy but I already have a headache……..Lies, Lies & Biased Policy Lies…..

  • http://www.facebook.com/hal.slater Hal Slater

    This topic suffers from very sloppy thinking. First, utilities are not forced to buy anything. they DO NOT PAY for excess electricity produced by a solar system. The electricity is fed back to the grid for the utility to SELL TO THE NEIGHBOR and the solar owners meter goes backward. The electricity is then used at night when the meter spins forward. The utility gets peak power for off-peak power an extremely good deal.

    Not only that, feeding electricity into the grid at various points instead of one source reduces wear and tear on the lines, thus saving all utility customers money. Not having to build dirty peak power generators saves all utility customers money. In all, based upon many studies by universities, the utility actually should pay the solar owner 8¢ per kWh for the power they supply OVER AND ABOVE THE NET METERING for the added value of the energy they create.

    I don’t know where most people gets their information but solar and wind were the only new generation capacity added to the US grid in March. The disinformation campaign from the dirty energy folks is still at full tilt in spite of the obvious damage they are doing to the planet.