Five years ago Forbes magazine proclaimed that “a new era for solar power is approaching.”
It isn’t the first time that the promise of solar has been touted as ushering in a new era in energy.
During the 1920s and 1930s solar water heating was gaining in popularity before cheap fossil fuels and products were introduced into the market. Sixty years ago, in 1954, US News and World Report magazine proclaimed that solar cells may one day “provide more power than all the world’s coal, oil and uranium.”
But the solar industry, largely identified today as an equipment industry, has seen its promise thwarted over the decades that followed because of economics. The entry costs have been the single largest barrier to the adoption of solar energy. Consumer concerns over equipment payback times have impeded the solar industry from facilitating a transition to an alternative future (the “payback standard” does not apply to traditional energy sources as they do not have paybacks).
Today, however, technological improvements, plummeting solar costs and increases in the price of traditional energy sources have all contributed to solar energy finally becoming a viable alternative, and in some cases the economical choice as well.
Since the solar leasing model began to take off in 2010, U.S. solar adoption has increased so dramatically that in January 2013 the Edison Electric Institute warned its utility clients that solar energy had become a "disruptive" technology posing a threat to the traditional utility business model.
Homeowners are embracing leasing because it eliminates the big upfront cost of going solar. The leasing model is also eliminating the question of payback. Leases are structured in such a way as to save customers money from the very first day.
The growing popularity of rooftop solar electric systems today is also challenging the role that electric utilities have historically played. This has led to debate about whether solar customers should pay a fee to sell excess solar generation into the grid and to have access to grid power when the sun isn’t shining. This debate over new fees is changing the economics yet again while encouraging innovation from the solar industry to offset their impact.
Still, most of the energy used in Arizona to heat and power our homes, businesses and industries continues to come from in-state generators fueled by nuclear, coal and natural gas, and imports from a variety of generation sources throughout the west. But the contribution of passive solar energy designed homes, solar water heating systems and solar electricity generation is increasing, and even large scale solar is beginning to generate a substantial amount of power for utility customers.
While we are now living in a new era of solar power, there is yet more change on the horizon. The Arizona Corporation Commission has opened a docket to foster discussion into the innovations that are making inroads into the energy services sector. Commissioner Bob Burns filed the docket that will explore the potential “Impacts to the Current Utility Model Resulting from Innovation and Technological Developments in Generation and Delivery of Energy.”
New technologies and new services will require regulators to implement new policies that ensure the continued reliability of our electricity grid and provide customers with economical and clean choices for their energy sources.
Jim Arwood
Communications Director
Arizona Solar Center
Questions: What are the major innovations and technological areas that appear to have the greatest potential to impact the current energy utility model? How should these innovations be incorporated into the utility business model? How can the existing policy landscape be changed to eliminate the barriers to incorporating new innovative technologies and services?
