What Al Gore got wrong about utilities and solar

By K Kaufmann

It is a rare occasion indeed when a liberal icon such as former Vice President Al Gore and conservative leader Debbie Dooley, founder of the Green Tea Party, find themselves in almost perfect agreement.

Yet both came to the stage at the Bloomberg New Energy Finance (BNEF) Summit in New York City on April 13 with nearly identical messages.

Solar energy is the future. American business and free market economics are leading the way in the adoption of solar and other renewables, and electric utilities can either get on board or get out of the way.

Gore decried utilities for “waging a war on solar,” while Dooley characterized utilities as monopolies that deprived Americans of free choice in energy.

See Al Gore’s keynote address at the BNEF Summit here.

It was good theater and made for eye-catching headlines and media pronouncements on the emerging consensus in support of the United States’ booming solar market.

But the transformation of the energy sector in the U.S. — and the role of utilities in putting solar on the grid — is a more complex story than oversimplifications from the left or right can capture. In fact, changing utility business models and grid transformation emerged as major themes at several sessions during the three days of the BNEF summit, more so than any other issues related to the solar market.

Julia Hamm, President and CEO of the Solar Electric Power Association, kicked off a workshop on utilities’ participation in the residential solar market by noting that Pacific Gas & Electric (PG&E) in California connected more than 40,000 rooftop systems to the grid in 2014.

“We’re not standing in the way, we’re doing,” said Cris Eugster, Executive Vice President and Chief Generation and Strategy Officer at CPS Energy of San Antonio, the country’s largest municipal utility.

CPS has 134 megawatts (MW) of solar already online, including 20 MW of rooftop solar, and could hit 440 MW by 2016, he said. Eugster expects CPS to go into rooftop solar leasing within the next three to five years, but he said the utility favors a partnership model.

“Partners bring different things to the table,” he said, such as the potential to combine the grid reliability of utilities with the technical innovation of solar and high-tech companies.

The challenge ahead for utilities and policy makers is creating a sustainable solar market, said Jeff Guldner, Senior Vice President for Public Policy at Arizona Public Service, one of two Arizona utilities rolling out rooftop solar leasing programs later this year. One example, he said is that current pricing structures and solar incentives, such as net energy metering — which are often volume-based or flat rates — don’t take into account the different value of power produced at different times of the day.

“What’s really important is that we tackle this early,” he said. “We have to fix pricing and move into the 21st century so we can unlock all this great potential with technology.”

The need to somehow synchronize fast-changing solar and grid technologies with new business models and regulatory frameworks was another theme repeated at different workshops and panels.

“We’re beyond showing the technology works,” said Ken Munson, CEO of Sunverge, an energy storage firm. “We’re now at a place of financing things and getting the right regulations.”

Munson was one of four speakers at a panel on storage and grid defection, all of whom talked about the need for policy to catch up with technology. On grid defection, views were more mixed but most said that while a small number of consumers might disconnect from the grid, most would not.

“It’s not defection from the grid, it’s defection from the business model,” said John Carrington, CEO of Stem, another storage firm. The most successful companies in the emerging storage space are the ones with the most innovative business models, he said.

Michael Liebreich, founder and Chairman of the Advisory Board of BNEF, made the definitive statement on grid defection during his State of the Industry presentation.

After renovating a home in London with every energy-efficient and renewable technology possible, Liebreich said, he found he could not disconnect from the grid.

Having solar without being connected to the grid would be like having a computer without being connected to the Internet, he said — a quote borrowed from PG&E spokeswoman Ellen Hayes.

Download the slides from Michael Liebreich’s presentation here.

In her speech at the summit, Debbie Dooley spoke of the key role communication has played in her efforts to build support for solar among conservatives. It’s all about having the right message delivered by the right messenger, she said.

Utilities today are grappling with the same issues — finding new ways to communicate with their customers and the public in general about the active role they are playing in the solar market and grid transformation and the complexity of the issues involved.

Are some utilities still ignoring the dramatic changes driven by the fast growth of solar and other renewables — or is solar not yet a pressing issue for many? Hamm cited a recent SEPA survey showing that of the roughly three thousand utilities in the U.S., only 44 reported connecting at least one rooftop solar system a day in 2014.

But that number will continue to rise, as utilities respond to consumer demand for solar and other new energy services. And efforts underway across the country — by utilities, regulators, consumer advocates and solar industry representatives — will find new pricing structures and incentives for solar that will result in a clean, sustainable grid and, perhaps, new views of utilities on both the left and right.

K Kaufmann is the Communications Manager at SEPA. She can be reached at [email protected].