Just over one year ago, the Edison Electric Institute (EEI), the investor-owned utility policy and lobbying organization, issued a brief, but prescient report titled "Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business." The report offered its members a "heads-up" that their basic 100-year old business model was threatened by rooftop solar, and it recommended that they rethink their whole business. The costs of rooftop solar panels (called Distributed Generation or DG) have dropped so dramatically that in some places they are already cost competitive with utility-supplied electricity. The conventional economies of scale of centralized generation is simply gone — solar modules are just as efficient at small scale as large. Public pressure has been mounting for PUCs to adopt new tariffs that recognize the "Value of Solar" to society and to encourage its use by moving beyond the ancient "cost-of-service" regulatory model that does not recognize the externalized costs of traditional generation (e.g., to air, water, health, jobs, environment, etc.) or the benefits of DG.
Late in 2013 utilities in California, Arizona, Colorado, and other states began asking their regulators to slash the net metering tariffs that have encouraged the growth of rooftop solar, and to impose onerous fees for solar customers connecting to the grid. In November, the public pushed back in Arizona and won a victory with regulators, in spite of millions spent by utilities on lobbying. In another landmark decision last week the Minnesota PUC actually adopted the nation's first "Value of Solar" tariff.
The EEI study warned that a consequence of resisting the trend to solar DG would be that those who could afford to would go off-grid by adding storage to their solar, and then strand the utility as conventional costs were shared by fewer and fewer rate-payers — resulting in a utility "death spiral." Two weeks ago, the Rocky Mountain Institute issued a 70-page cost study that validated the EEI warning, "The Economics of Grid Defection: When and Where Distributed Solar Generation Plus Storage Competes With Traditional Generation."
The following general guiding principles ought to be applied in evaluating the present and any future electricity generation projects: 1) produce power as close as possible to where it will be used, and local utilities should 2) only manage the "wires and poles," and 3) let the customers generate the power wherever possible.
Some may ask, why not build large-scale renewable projects that could be located on spoiled, unproductive, or ecologically unimportant brown fields near existing transmission facilities? The answer is that society's preference should be to favor smaller-scale distributed renewables located at or near the point-of-use, and on fostering the markets for such technologies and products. Every dollar sucked up by a large utility-scale project is a dollar that cannot be invested in rooftop solar, smart inverters, battery storage, small scale hydro, smart appliances, and other mass market technologies that result in long-term community-based jobs and manufacturing. The big projects tend to be one-time deals that primarily feed short-term construction jobs for outsiders, as well as provide rewards for bondholders, investors, land speculators, and utility's rate-base return-on-capital assets. Transmission losses can waste 8-14 percent or more of the power. If Xcel builds their farm, what they will actually do with the power? Will they will then retire the Comanche (or any) coal plant?
For a glimpse of how consumers might see solar in the future in America, look at the present in Germany (http://bosch-solar-storage.com/). Xcel's 900-acre solar farm may be obsolete long before it is off the drawing board.
R.J. Harrington is with Clean Energy Action in Boulder; Timothy Schoechle is an engineer and entrepreneur who lives in Boulder.