Archives for posts with tag: utilities

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Are utilities missing an opportunity?  No doubt, the landscape of how electricity is sourced is shifting – and it’s about time.  For decades electricity customers in industrialized nations have focused on renting electricity from the local utility. With stronger growth in residential and commercial PV deployment – than was previously envisioned – and with PV systems sized to serve a customer’s complete electricity needs, as well as the (still remote) possibility that storage will allow energy consumers to truly be independent of the grid, utilities are concerned about losing a reliable monthly revenue stream. Though there has certainly been decades of time to plan for a paradigm shift in utility business models, it is not too late for utilities to get ahead of the curve and build the distributed generation model of the future.  Instead of installing PV in remote areas miles away from the customer base and requiring expensive transmission builds and upgrades, why not lease customer rooftops? Put another way, why not partner with local neighborhoods and install the energy generating asset where it will do the most good.  It’s not that farfetched to envision a future where utilities partner with their residential and commercial customers to harness customer owned PV and sell the true commodity – electricity.  This model, which is essentially a version of the community solar idea, is common in the developing world where connection to the grid is not an option.  In off grid communities values such as cooperation and conservation are part of daily life and not considered sacrifices. 

Utilities should be encouraged to get ahead of the curve in this regard and test the viability of this model by choosing test neighborhoods, installing PV systems on cooperating customer roofs, arriving at a reasonable lease rate for the customer and then taking advantage of the fact that the PV generated electricity once fed into the grid is available to everyone in the utility’s territory. Result: utility ownership of a long term, DG, low maintenance energy generating asset, a closer relationship with electricity customers as well as participation in change – much better than playing catch up as change rushes by.

Ideally, this would take the solar lease model one step further, that is, involving utilities in changes that may happen with or without their involvement.  As long as the agreement between the utility concerning the monthly lease/rent is fair to both parties, and the costs relate directly to the true costs of managing a photovoltaic installation and do not have an arbitrary escalation cost built into the contract this is, as the business cliché goes, a win-win.  In Japan, Panasonic and energy management firm EPCO are launching a business at the end of January to sell aggregated (PV generated) electricity from residential roofs in advance of the potential liberalization of that country’s retail electricity market in 2016. It is too early to announce a successful result to this announcement, but it points to a forward direction for utilities, their customers and stakeholders everywhere – after all, these often disparate groups are partners whether they like it or not. 


            Call it the copycat syndrome or marketing burnout wherein a company has a success with one product at which point every company in the space copies the effort leaving a market dotted with me-too products with little differentiation other than price.  Eventually through this process value is suctioned out of the product or service, demand wanes, and consumers move on.  It is almost impossible to satisfy consumer desire for the cheapest or most innovative product/technology/service/oh-heck-anything, particularly as in the end the equilibrium price may well be zero while innovation may be defined as simply announcing that something is innovative.  Sometimes, particularly with software or the internet (which move much faster than PV technology development), ennui with the copycat syndrome drives innovators to ask new questions and these questions lead to new directions and products – for example, something will replace apps and disrupt not only software but the tablets, cell phones and computers that are now set up as app delivery devices.  

            Caution:  A PV system and its components cannot and should not be confused with the world of software, computers, the internet, tablets or apps. PV is, however, a disruptive technology and one of the things it disrupts is the utility business model.  This is why net metering and interconnection are hard fought gains for the PV industry and should not be discarded or compromised away.  Given the dire state of the global environment, eventually energy efficiency measures will be standard, accepted behavior and control of an individual’s energy future, which DG PV is a perfect fit for, will become an accepted energy choice.

            The lust for the next breakthrough has led to a disregard for the innovative process – which is at once lonely and interactive.  One good idea may come from many bad notions.  In solar, a technological or scientific breakthrough almost always comes after years of dedicated research with much iterative progress (and regression) along the way – good research of any kind is repetitive, exhaustive and often exhausting. Most good research is practiced for the love of the process, which involves asking the appropriate questions and establishing the appropriate systems to arrive at, perhaps, more questions.  The point is that innovation is symbiotic: that is, it is the living, breathing result of all the magical thinking (which is innovation) and hard work that went before and it lives to serve the ideas of the future.

            In the decades-young terrestrial PV industry there are daily announcements of breakthroughs and innovations all of which are based on work that began decades ago and will continue decades from now.  There really is no end game to increasing efficiency and decreasing manufacturing cost – these goals, along with myriad of research into materials et al will continue. The hunt for a big bang discovery that will change the face of the PV industry ignores the years-long timeline from lab-to-commercialization while unintentionally trivializing the hard scientific work that the industry is founded on. It just ain’t that easy – nor should developing an energy generating technology that will sit in the sun for 30+ years and reliably generate electricity be easy or quick.  

            Developing innovative business models in an industry driven by incentives and challenged with downward price pressure and low margins is also not a walk in the solar park.  To date, an innovative method of selling PV installations or the electricity from these installations that is specific to the true costs of the system while building in margin and value for all participants has not been developed.  Even solar leases are more about conventional energy and utility costs than the costs attributable to a solar electric system.  After all, there should not be an escalation charge on the sun’s fuel because though the equipment to convert the fuel has a cost, the fuel from the sun does not. Educating energy consumers about the value of owning the means of energy production (independence from volatile utility-rented electricity) is both difficult and worthwhile. 

            The PV industry remains beset by challenges (many self-developed and self-propagated). Challenges include competing energy substitutes as well as the daunting task of overcoming entrenched electricity renting habits, not to mention continuing to deliver high quality products while struggling to prop up negative margins.  In the end … did you hear the one about carbon dioxide levels passing 400 parts per million?  — That’s reason enough to continue with the solar challenge.