The US state of Georgia is seeing an interesting battle between the dominant utility and a new upstart Georgia Solar Utilities Inc that is proposing to set up an astounding 2 GW of solar power in the state. Note Georgia does not have a Renewable Portfolio Standard (RPS) that mandates the utilities in the state to buy solar power to meet a certain percentage of its electricity demand. Georgia Power till now has managed to avoid buying solar power or setting up incentives/subsidies to increase solar power generation. However after a new competitor has proposed an ambitious plan to set up hundreds of megawatts of solar power, Georgia Power has proposed buying 200 MW of solar energy in the next 3 years.
Note while Georgia Power is hailing this is a major achievement, it was pushed into doing this and this plan is still way short of what the competitor is proposing. The plan also lacks support for small rooftop solar power generators at only 10 MW a year. It will mostly favor large ground mounted solar farms which are not preferred around the world. Note utilities are facing major challenges from the rapidly falling costs of solar energy which is challenging their business models. Power companies which can quickly adapt to the rising tide of solar power will survive while others will fail as their consumers turn into competitors overnight.
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Why Utilities should Fear Solar Power
Solar Energy does not require any fuel like other Renewable energy (Wind Energy) and the operation and maintenance costs are extremely low. Industrial and commercial customers in India have to pay very high prices for power at around 15-20c/Kwh in order to subsidize the power sold to residential customers and farmers. In fact most of the revenues of the state distributors are derived from this segment. However with solar power cost going down drastically in cost, it has become viable without subsidy for these customers. Solar power can be produced these days at Rs 8-9/ Kwh in large scale compared to the prices of Rs 10-12/ unit being paid currently. Industries can now easily generate 20-40% of their requirement by putting solar panels on their roofs. This will sharply cut the revenues and profits of the state distributors. As solar panel costs keep going down by around 10% each year, these utilities will eventually have to lower their tariffs or go out of business altogether.
A new Macon-based solar power company filed an application with the state of Georgia Thursday for authority to generate solar energy on a utility scale.
If approved by the state Public Service Commission, Georgia Solar Utilities Inc. plans to produce up to 2 gigawatts of electricity by 2016, almost as much generating capacity as Georgia Power’s planned 2,200-megawatt expansion of nuclear Plant Vogtle.
As a “beginning point” toward that goal, the company is seeking up to 500 megawatts in solar generating capacity, starting with an 80-megawatt solar power plant near Milledgeville, Ga., according to the application.
The giant utility’s request to buy 210 megawatts of electricity was applauded by solar advocates. The solar capacity will serve roughly 26,000 homes – less than one-tenth of what the two new nuclear reactors at Plant Vogtle will produce. The company is hailing its plan as a major achievement.“Overall we’re excited about this new program because it will make Georgia a national leader among states where there is no solar mandate,” said Mike Hazelton, Georgia Power’s vice president of marketing. Other states that have mandated a set percentage of energy that must come from solar sources have had to boost the rates customers pay to do it, he said. The Georgia Power plan won’t affect rates because it is based on paying the solar providers what it would have paid the biomass provider, 13 cents per kilowatt hour, which is already figured into customer’s rates.
Georgia Power’s plan is to buy no more than 20 megawatts from any one supplier and to purchase 10 megawatts of so-called distributed power in new contracts each of the next three years from homeowners or property owners looking to make a little money from their roof space.