California faces Utility-Solar dispute

Utilities have been fighting hard to stop the onslaught of solar rooftop installations in various parts of the world. In countries like Germany where the green movement is extremely strong and governments are supportive, utilities have seen their business models getting wiped out with billions of dollars in losses. Australia too has seen utilities retrench their employees as revenues and profits declined, thanks to the rapid ramp up of residential solar energy. Australia currently has over 15% of its households using rooftop solar energy, thanks to the favorable policies and high solar radiation.

Utilities in USA are fighting hard to reduce the growth of solar energy. While some utilities such as NRG have embraced solar energy by getting into direct competition with the likes of SolarCity and SunRun, most utilities have resorted to their traditional business models. They have built some solar farms and procured some rooftop solar energy without really embracing change that is taking place. Utilities have fought the solar companies in different states such as New Jersey and Arizona to implement a fixed charge on solar installations. The utilities have a compliant that solar residential owners do not pay money for the usage and maintenance of the grid, which has to borne by other non-solar users. This was not a problem when solar systems were a niche with small penetration, however with the usage going up and a massive amount of people putting up solar energy these days, it has become a major issue.

Solar proponents do not want to pay this charge seeing this as a method to stop the growth of solar energy. These charges raises the cost for solar systems and makes them less viable, as compared to just using the grid electricity. The fight is now on in the largest solar market in USA. California has always been at the forefront in the usage of green energy and has already installed massive amounts of solar power. Its utilities have also developed large solar farms to increase their usage of green power and meet their renewable energy targets. But now these utilities want solar system owners to pay for using the gird. This has caused consternation amongst both existing home owners using solar systems, as well as solar installers who see their market going down because of these moves.

Whatever be the outcome, solar energy has come to stay and its growth will continue as prices keep going down. By 2020 solar + storage should start competing with grid prices, leading customers to entirely switch off the grid which will cause a huge headache to utilities. Paying for the power grid will become a huge issue then, with users going independent of the utilities. The government must proactively develop a plan instead of ad hoc measures that it keeps doing in reaction to the changed circumstances.