Nationwide, utilities have been wary of the expansion of residential solar (termed Distributed Generation in the energy industry), as we discussed in a previous post. The contentions between utility executives and DG providers came to head an announcement from Salt River Project.
The crux of SRP’s (a major Arizona utility) new fee is this: all customers who have solar arrays installed after December of 2014 will be assessed a $50 “demand charge,” which will apply regardless of how much or little power the customer’s array produces. Therefore, any new residential solar customer should expect to pay at least $600 per year, in addition to their variable utility costs. SunPower, the solar company for which I work, has determined that the SRP fees have made residential solar non-viable overnight. SolarCity has taken the same position and is now suing the utility for antitrust violations.
Such fixed charges have been a matter of much debate. On the utility side, proponents of solar tariffs and additional fixed fees argue that solar customers should pay these fees to offset the cost of grid infrastructure. Solar customers pay very little–if any–variable charges to the utility because their consumption is offset by their solar production. Therefore, non-solar customers bear a disproportionate amount of the cost of the infrastructure that bears solar customers’ utility consumption and solar energy feed-in. This is simplification of the utility’s view.
The solar industry opposes such fees. Because solar production occurs during the peak-consumption times of day, the industry states that solar customers actually help “shave the peaks” and reduce the amount of capacity strain on utility generation. In addition, the transmission/distribution infrastructure that many utilities have in place is antiquated–and therefore is a sunk cost that today’s users shouldn’t have to pay. Finally, the solar industry has long argued the utility customers need to be treated equally: that energy fed into the grid from solar arrays should be credited at the same retail rate, and that fixed charges (if they exist) should apply to all customers.
SRP’s actions will likely be a precedent for other private utilities (non-investor-owned) to implement similar charges. While I hope I’m wrong, I would bet that SolarCity’s lawsuit against SRP is probably going to fail. SRP is not investor-owned and therefore isn’t subject to many of the regulations that public, investor-owned utilities are.
The utility-solar debate is a convoluted and contentious one. If you’d like to get a high-level view of where it stands right now, listen to this podcast, which presents a nicely balanced debate of the solar technology, its costs, and the utility’s priorities.