Access to the future, or access to your wallet

Over the past decade, the amount of solar power installed has increased geometrically.  From large-scale solar power to distributed panels installed at individual residences, total installed capacity has tripled in the last three years and will double again in the next two.  For the environment, we can only hope that this pace continues and even accelerates.  For utility operators, they worry that as more homes and buildings install solar, they will see greater instability.  These operators have fixed costs that they normally pass onto customers based on the amount of energy they consume, but when renewable energy customers consume a net of zero, or near-zero, they disproportionately pass the costs on to non-renewable energy customers.

GTM Research

The solution from utility operators takes the form of an access fee. Each renewable energy provider - be it a large-scale provider or individual homeowner - pays a fee to connect to the grid.  Solar customers argue that this fee will stifle adoption of solar energy. In addition, solar advocates argue that utility operators want the fee only to milk their existing conventional assets instead of to maintain or improve the grid. As with every argument by those on opposite sides who stand to gain financially, the truth sits somewhere in the middle.

Utilities do have sunken costs in assets that we still need.  Some of these assets provide power, and some provide distribution of electricity. The distribution assets benefit both the renewable and non-renewable sources providing an additional benefit as a place for renewable energy systems to deliver energy during times of over-production as we await the development of storage technologies.  The power generating assets, on the other hand, serve no long-term benefit to us, and as such, should not receive subsidy from those who no longer desire them.

One way to reach the compromise needed to transition from dirty energy to clean energy involves allowing utilities to charge an access fee, but vary it based upon the circumstances. If a customer installs their own solar energy (or other renewable energy) system, then the utility gets a moderate fee if, and only if, the customer sells back to the grid in lieu of storage. If a customer goes "off-grid" entirely, they have no fee. However, if the utility installs the renewable energy on the customer's building, the customer pays a higher fee.  In addition, the utility can charge the customer for the energy they receive for a number of years until they recover their first costs using a mechanism titled On-Bill Financing (OBF). OBF allows customers to receive the benefits of clean energy and energy efficiency without having to pay large up-front costs.  These benefit the utility because they provide a stable, long-term funding source.

Utilities demand full compensation for renewable energy customers, but then refuse to pay the full cost of their activities - notably avoiding the costs associated with health concerns and property damage associated with electricity production. Although we need to allow utilities time to transition from energy producers and grid managers to their role in a future that relies only on clean energy, they need to recognize the hypocrisy of demanding full compensation when they do not take full responsibility.  Those who choose to install solar energy on their buildings need to pay if they use the utility grid in any way, but renewable energy customers do not need to pay at the same level as those who still use conventional, damaging assets. Those who use damaging power should pay for it, and as those costs rise, we will see the true value of clean energy. Utilities can participate in the solution, or they can continue to find more ways to get customers to pay.