“Great Solar Compromise” Creates Innovative Deal between New Solar Power Companies and Traditional Utilities - Energy Minute for October 31, 2013
The rapid growth in solar power in the U.S. is a good news story for the renewable energy sector. Solar installations increased 15 percent in the second quarter alone this year, due to the popularity of leasing programs for rooftop panels. But this success story has a down side for traditional utility companies. They’re losing customers—and revenue—to the solar power business. Utilities have large investments in their conventional power plants and in the build out of the electrical grid. They count on a complex network of government regulations and market monopolies to make their profits. And it’s not just the revenues. While solar installations cut into the amount of electricity sold by a big utility, they also use its grid and depend on conventional generating plants for back up power. Now, California has passed a law that allows utilities to bill solar customers an additional $10 a month to help PG&E maintain that grid and back up power. In addition, if more PG&E customers install solar panels, the utility can ask for a rate hike to make up for lost revenue. The solar industry got something in this deal, too: the new law lifts the limit on the amount of electricity solar customers can sell to a utility. This “great solar compromise” creates an innovative model for how traditional electricity providers and the renewable energy sector can work together to give consumers a future of sustainable power and sustainable economics.
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