Utilities vs Rooftop Solar Advocates: Why are the two sides fighting?

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It's a battle as old as time, between good and evil, light and dark, yin and yang. It is the battle between utility companies and the rooftop solar industry. The cuase of the strife is simple: everytime a new solar system gets turned on in the territory of a particular utilty, like Con Ed, not only does Con Ed lose a customer, according to net metering rules, they now must become a client, a client that pays retail, not wholesale, for whatever excess electricity the array produces.

From the Brookings Insitution:

"Specifically, the proliferation of rooftop solar installations is challenging the traditional utility business model by altering the relationship of household and utility—and not just by reducing electricity sales."

For their entire history, utilities have been providers, not customers of the residences and businesses in their territory. Now, with the advent of distributed renewable energy, the tables are beginning to turn. So how does the utility continue to make enough to pay for its operations? Either utilities will have to scale down, or fight back.

And here the stage of the battle has been set, and the utility, being the political and economic golaith that it is, will not be easiliy cowed. The utility already has a relationship with commission that regulates it.

Utlities come in three different forms: publically owned, cooperatives, and investor owned. According to an Energy Information Administration (EIA) survey, investor-owned utilities served 72% of U.S. electricity customers in 2017. For these utilites, there is an incentive to push the bottom line as far as it will go, or as far as the respective regulatory commission will allow.

Utilmately, how utilities are governed and run is very much inside baseball. They public neither knows nor cares. Some utilty commissions are stacked with democrats, some with republicans, some with businessmen, some with lifelong public servants, or an eclectic mix of some kind. They're relationship is ostensibly to manage the competing financial interests of the utilty and the public; however, they utility's representatives may have more frequent and ready access to the regulators than the public.

More solar may be good for the public and the planet, but unless the utilties are benefitting financially, then it's not good for them. At first, they didn't fight policies like net metering because too few customers were taking advantage of them for there to be any kind of financial impact. The solar industry was too insignificant to pose a threat. Utilitiy companies hadn't yet felt the pain that comes with distributed energy deployed en masse. Slowly, however, that began to change.

Have a look at current solar adoption rates by state here.

Today, utilities are pushing commissions to treat private generators, or distrbuted generators (like solar rooftop residences) just as they would any other independent power producer. That is, the electricity they produce should be valued according to where and when it's produced, similar to the way the electricity spot market works. They argue that the industry has matured and no longer needs special assistance and that the special assistance being provided in the form of net metering is effectively a tax on non-solar customers.

There are many players coming at this issue from many angles, well outlined in an LA Times article concerning a proposal to eliminate net metering here, each with their own principles and politics. Of course, being a solar installer, we very much benefit from net metering and hope it remains in place for many years to come.