Monday, May 13, 2013

Rooftop solar owners vs utilities – the battle begins

By Giles Parkinson
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.