Net Metering becomes a Death Threat to USA Utilities

The growth of solar energy on rooftops by house owners has become the greatest threat and risk to utilities worldwide. The falling prices of solar panels and installations have made it increasingly attractive for rooftop owners to install solar modules. This has been helped by subsidies from governments, who want to encourage environment friendly energy. Solar energy has been growing at a tremendous pace worldwide and there will be more solar than wind energy installed in the globe this year. In fact solar energy accounts for more capacity increase than all the other forms of energy in the US, except for natural gas.

Read more about Net Metering here.

Rooftop solar energy generation by houses means a massive headache for utilities. These giant utilities have been trying to curtail the growth of distributional rooftop solar energy in a variety of ways. The most common way that the utilities are using to fight the growth of solar is by trying to impose a fixed fee on solar rooftop owners for using the power grid. The argument given is that the grid is being unfairly subsidized by non-solar owners for rooftop solar owners. In fact Arizona has imposed a token $5 fee already, while California is considering some steps as well.

The electricity regulators are somewhat biased towards the giant corporates and can easily give a short shrift to retail solar consumers who do not have the lobbying powers of these multi-billion dollar utilities. The other way in which utilities are trying to fight solar is by petitioning the regulators to reduce the subsidies given to solar rooftop owners. Note Xcel energy wants to reduce the subside from 10c/Kwh to less than 5c/KwH, which is outrageous when you consider the retail prices of electricity in most parts of the US, which is at least 10c/Kwh.

Note utilities know that they have to fight for their lives as solar energy becomes cheaper every year and more consumers switch to solar from fossil fuels. This is not due to people suddenly discovering their love for the environment but due to economics. The fixed cost of electricity is attractive for solar panel installers and financing for the large capital costs has become quite easy. USA is set to install 4000 MW of solar panels this year which is huge growth for the industry. 300,000 homes in the USA will have installed solar panels and this is going to grow at a rapid rate. Utilities are fighting a losing battle in my view. They have to look closely at their business models in order to survive the solar revolution.