Now that solar power is reaching prime time, the fossil fuel industry is doing all that it can to stop its growth.
For many years solar was on the periphery, installed by early adopters and helped along by government subsidy. But over the last several years, solar has emphatically become mainstream. It is still growing from a low base, but it is now one of the most preferred sources of new electricity generation. The cost of residential solar have been cut in half since 2010, and utility-scale solar has achieved even greater cost declines.
In 2015, the U.S. saw 16 gigawatts of new renewable energy capacity installed, which accounted for two-thirds of the total. Solar alone accounted for about one-third of new capacity last year. Natural gas only captured 25 percent of the newly installed capacity despite several years of incredibly low prices. The banner year for clean energy occurred while 11 gigawatts of coal-fired electricity came offline as old plants were retired amid rising costs and stricter environmental regulation. The clean energy transition is very much underway. Related: A Market Collapse Is On The Horizon
But the backlash from incumbent industries has also sprung to life. With solar and wind suddenly eclipsing fossil fuels as a preferred option for new power plant capacity, utilities and other fossil fuel interests are moving quickly to disrupt the progress of clean energy.
The industry argues that homeowners with solar must pay fees to cover their costs of using the grid. Solar proponents dismiss that argument, pointing to the costs saved by not needing to build new power plants.
However, the threat that solar poses to the utility industry is deeper than customers no longer needing to purchase electricity. Building new power plants and other large infrastructure is at the core of utility industry's business model. Since those costs can be passed onto the ratepayer in the form of regulated rates, building expensive infrastructure is actually a source of profit. Customers switching to solar ends up hitting the utility's bottom line twice by no longer buying as much electricity and upended the utility's case for costly new power plants and transmission lines.
That is why utilities have become much more aggressive in beating back solar. One of the most high-profile cases is in Nevada, where a NV Energy, subsidiary of Warren Buffet's Berkshire Hathaway, convinced the Nevada Public Utilities Commission to abruptly and harshly alter the rules of the game for solar power in the state. Related: Struggling Venezuela Buys U.S. Crude, But Who Will Pay for It?
Not only did state regulators gut the net metering payments to homeowners with solar on their rooves, but they also refused to grandfather in those that have already signed up or purchased solar panels on the basis of the net metering rule. Homeowners with solar will now see their electricity rates increase in the coming years. Some residents may see their electricity bills spike by 300 percent above what they likely would have been had they not purchased solar in the first place. Under the net-metering rules, purchasing or leasing solar made sound financial sense for more than 17,000 homeowners. Now, all of a sudden, it doesn't.
The move sparked outrage from both homeowners and the solar industry in December when the PUC made its original decision. SolarCity immediately announced its decision to pull out of the state and lay off most of its Nevada workforce. On February 12, the PUC upheld its decision, although it slightly delayed the rate increase for solar homeowners from 4 to 12 years, which was still much quicker than the utility industry had even asked for. NV Energy proposed rate increases for solar customers to be phased in over 20 years.
By the stroke of a pen, Nevada just became a much more difficult place to do business for solar companies. SolarCity's share price has plummeted by more than 60 percent since the December ruling. Related: Oil Rallies Over 12% As OPEC Rumors Reach Markets
But Nevada is not the only state where the fight to block solar's rise is taking place. The signs of obstruction abound. In 2013, Arizona regulators slapped a fee on solar customers of $5 per month after a campaign by the state's utilities. The fee was lower than what the utilities wanted after protests from a collection of solar companies and conservative groups advocating for freedom of energy choice. That fee remains in place, but the state's largest utility is reportedly looking to submit a request to regulators this year to raise the fee to $21 per month.
Rolling Stone just published a long article on the monopoly power held by the utility industry in Florida, where they have succeeded in keeping Florida a solar backwater, despite the state having the third-best solar generation potential in the country. Unlike most other states, nobody except the utility is allowed to buy and sell electricity, so the power-leasing model that SolarCity has made popular is illegal. "We live in the Stone Age in regard to renewable power," said Florida state Rep. Dwight Dudley. "The power companies hold sway here, and the consumers are at their mercy."
The anti-solar initiatives are spreading around the country. Oklahoma's utility industry is proposing new fees, which sparked protest in December. Renewable portfolio standards are being rolled back in Ohio, Kansas, and other states.
The fight will only escalate moving forward as solar makes further inroads. Worldwide, the clean energy sector enjoyed a record year in 2015, attracting $329 billion in investment, a staggering figure that is set to rise.
Utilities may be able to buy themselves some time, but as solar continues to see costs decline, more and more people will want to defect from the grid.
By Nick Cunningham of Oilprice.com
More Top Reads From Oilprice.com:
Nick Cunningham is an independent journalist, covering oil and gas, energy and environmental policy, and international politics. He is based in Portland, Oregon. More
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Comments
And oil, is oil really worth more than 4 times the price of natural gas on a per unit of energy basis? Say NG is at $2/MMBtu and 5.55 MMBtu / BOE, so $11.1/BOE. Thus, the market drives oil under $44.4/bbl. Oil has to compete with natural gas in heat and petrochemical feedstock markets. For the right price differential, you can even synthesize gasoline and diesel from natural gas. So where the price of natural gas goes, oil must follow at some ratio.
Folks, there is no sustainable price recovery for coal, natural gas, or even oil. The prices of wind, solar and batteries will just keep coming down, destroying prices and demand for fossil fuels all the way. It doesn't matter what your volume forecasts say, the marginal price for energy will be horrible. The marginal price of energy is now driven down by renewables.
Count the real costs:
land
maintenance
interest
depreciation
storage
back up
Only by ignoring most of these costs do they come up with the low solar costs.
Only nuclear can replace fossil fuels. The sooner we accept that, the sooner we can move on.
Can you say fukushima Chernobyl or three mile island or Indian point??? Talk about REAL Cost....
Solar and wind still sound like bargains and there getting cheaper and better every year.
Some utilities have the attitude of crushing solar and many homeowners
with solar have the unrealistic attitude that they are somehow above the laws
of nature. You can't expect to sell your excess power to the utility for retail.
That is just as stupid as the utility bumping the monthly set fee to a ridiculous
level. Not only that, but a homeowner can't expect to pay double what a rooftop
installation is worth and have it work out financially.
We are a 24/7 society. Batteries? lol. Apparently someone knows nothing about batteries.
Our foreseeable future is a mix of services. The main only true reason to invest in alternative energy today is to keep the technology moving forward. The cost of alternatives is very high in comparison to fossil fuels if one considers the true cradly to grave costs.
As far as the utilities go, we require them. It's like having a car that gets 100 mpg and holds one gallon of gas and thinking that you can put in gas stations every 100 miles. It does not work.
And the idea that building and maintaining transmission lines and distribution lines is a gold mine? Really? Nobody would stand for them making a mint on those items. It is expensive, but there is no bull market to invest in "wires" companies. Don't be fooled.
Meaning half of one percent of our energy consumption? That's prime time?
I live in California, and the solar market here is ridiculously overheated. I get calls at least twice a week telling me about the great opportunity. It's almost a scam.
We saw the same thing with corn ethanol. It doesn't help much at all, and it costs a lot. Same with rooftop solar. The benefits are small, and the costs large.
By the way, how many times has dirty energy taken extreme, illegal and immoral steps to stop alternative energies from emerging? Many, many times, so subsidies are JUST FINE to make up for their intimidation, coercion and general depravity. Free market my ass. Dirty energy companies have stacked the deck for years. Buh bye.
Solar is largely a expensive scam.