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Another round starts in the Utility war against growing Solar energy in USA

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Solar Power versus Utility companies

Giant utilities in USA such as Southern Power, Dominion Energy etc. have long been investor favorites due to the regulated nature of the electricity power business, which allows them to earn decently fat returns without doing much. They have got a pretty much captive demand. Their costs are all covered by the tariffs charged to end customers. They have a pretty good thing going, but the advent of solar power has made their lives very difficult. Their whole industry is being upturned by new solar technology, similar to how the newspaper industry was completely changed by the internet news. Now their customers can generate their own power and do not require the utilities. Till solar power + energy storage becomes competitive, users do require the utility transmission grid for banking of power. The utilities are using this to turn the tables on solar power generators by levying high fees on using the grid. Arizona’s utility recently imposed extremely high fees (~$12 a month) for solar power users. On top of this, they are levying additional fees during winter months.

Consumers in the utility’s areas are rapidly turning to solar power, as the PPAs offered by solar companies are cheaper than electricity prices sold to them by the power companies. This has made many of them turn to installing solar power panels on top of their houses. Net metering has been mandated by most of the states in USA, so the utilities cannot stop a customer from putting solar panel and using the grid. However, they can stall solar power penetration through high fees and this has already cut installation rates by 96%. SolarCity which is the largest residential installer has already filed an anti-competitive case against the utility.

The utilities are fighting a losing war as solar power costs keep inexorably coming down every year with improved technology, scale and processes. On the other hand, the costs of fossil fuels will keep increasing barring the temporary down cycles. This makes solar power more and more competitive each year with conventional electricity. It will be game over for the utility companies, once solar power plus energy storage (lithium batteries) become competitive with the utility power. These skirmishes will keep happening, but the outcome of the war is clear to me.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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