A transitioning electric utility industry: embracing solar electricity

Climate change concerns, economic development interests, electricity price volatility and resulting political actions around the world are changing the future of many businesses. One industry that is being significantly impacted is the US electric utility industry, which must come to grips with the fact that ‘business as usual’ is changing. In the short-term, these utilities must quickly find ways to acquire and integrate a large percentage of their electricity from clean renewable electricity sources in order to meet existing and anticipated state and federal requirements; in the medium and long term, many of these resources are expected to become least cost options.

Electric utilities

Historically, electric utilities have not taken a lead in solar deployment, but have instead taken a variety of positions ranging from minor interest to avoidance and hostility. While a handful of utilities have actively been supporting solar development in the past two decades, their engagement has largely been limited to facilitating customer systems at relatively small volumes, and these companies have been the exception rather than the rule. Largely due to cost, utilities themselves were not directly involved in solar electric procurement. Of the approximately 1 GW of solar electricity installed in the US by the end of 2008, only about 5% is on the utility side of the meter. But utility involvement is beginning to change rapidly.

Increasing solar electricity in the mix

Examples are popping up around the US, from California to New York. California utilities remain the leaders, with the grandest solar plans in the works. Both Pacific Gas and Electric and Southern California Edison have announced gigawatts of solar electricity deployment in the next three to six years. These plans include small distributed photovoltaic systems owned both by the utility and its customers, large photovoltaic central power plants, and large concentrating solar thermal central station plants. These two utilities alone are poised to exponentially increase the amount of solar electricity in the US energy mix.

US solar activity

But California isn’t the only place we are seeing substantial growth in utility integration of solar electricity. Arizona Public Service has announced two concentrating solar thermal plants that are more than 250 MW each, Austin Energy is building a 30 MW photovoltaic plant, Long Island Power Authority is building 2 photovoltaic plants totaling 50 MW, and Florida Power & Light has three photovoltaic plants in construction totaling 110 MW. These are just a handful of many utility-driven large scale solar electric projects underway.

Utility industry shifting

Other utilities are focusing on ways to increase their customers’ use of solar electricity. As one example, both Gainesville Regional Utilities and Sacramento Municipal Utility District are implementing ‘feed-in tariffs’, whereby the utility will pay customers a set rate for all solar electricity fed into the grid through a long-term contract, thus guaranteeing customers a rate of return on their investment. All signs indicate that the current increase in utility integration of solar electricity is just the beginning of a major shift within the utility industry and much more is to come.

Author: Julia Hamm, Executive Director, Solar Electric Power Association. www.solarelectricpower.org

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