Tech: Fears of a 'utility death spiral' could be slowly killing solar power

A new report reveals traditional utility giants are giving millions to politicians, in order to reverse incentives for homeowners to install solar panels.

The growth of rooftop solar power has skyrocketed in recent years. Globally, there are now approximately 305 gigawatts of solar power capacity, up from about 100 gigawatts in 2012.

But solar's proliferation is slowing, partly due to a well-funded lobbying campaign by conventional utility giants. According to a recent New York Times report, several large US utility companies have been working with state politicians nationwide to reverse economic incentives for homeowners to install solar panels.

The utility companies say that rules letting homeowners sell excess power back to the grid — a process known as net metering — are unfair to those who do not want or can't afford their own solar installations. They also argue that renewable energy could be hurting traditional sources, including oil, coal, and natural gas.

Some energy writers have coined this competition from renewables as a "utility death spiral."

Five investor-owned utility companies in Indiana — some of the largest financial contributors to the state's elected officials — have contributed at least $3 million to mostly Republican candidates over the past four elections, according to campaign finance filings. In 2016, the utility industry also gave over $21 million to ballot initiative to ban third-party sales or leasing of solar panels.

Almost every state is now reviewing its solar energy policies, and some, like Hawaii, Nevada, and Arizona have already started to phase out net metering.

In many locations, utility companies bundle distribution costs for electricity, and charge a uniform per-kWh rate for solar power. When this pricing model combines with net metering, solar customers receive a subsidy partially paid by other non-solar customers in their state.

Edison Electric Institute (EEI), an industry organization comprised of the country’s largest investor-owned electric companies, is pushing to buy back solar at lower rates. That means the cost would become higher for homeowners who choose to buy solar power.

"We believe it is important to balance the needs of all customers," EEI spokesperson Jeff Ostermayer told Business Insider. "A fair system means paying private solar customers the same, competitive price we pay for other solar energy, instead of above-market rates that result in higher costs for all customers."

In spite of all this, the solar industry continues to grow (albeit slower than in the past decade). In 2016, the amount of new solar power installed worldwide increased by about 50%, reaching 76 gigawatts. China and US spearheaded the surge in solar — both countries nearly doubled the amount of solar photovoltaic panels they added in 2015. But in 2017, that growth is projected to hit just 2%, this year's Bloomberg New Energy Finance Outlook said.

"While it is true that some utilities perceive rooftop solar as a threat to their business model, rooftop solar is, in fact, thriving in many new markets and is projected to grow dramatically across the country in the years ahead. Most states have strong policies in place that support the adoption of solar, because consumers are demanding access to this form of energy," Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), told Business Insider.

According to SEIA, the cost of installing solar panels has declined more than 70% since 2010, making it a more attractive as an alternative energy source to homeowners.

David Pomerantz, executive director of the Energy and Policy Institute, a renewable energy advocacy group, believes that the new lobby campaign by utility companies could continue to hurt the growth of solar, especially in the US.

"Utilities are trying to block rooftop solar because it presents an existential threat to their monopoly business model," he said.

A new report reveals traditional utility giants are giving millions to politicians, in order to reverse incentives for homeowners to install solar panels. Read Full Story