Exploring Models for Regulated Utilities to Enter the Residential Solar Distributed Generation Market
Given the current trend sweeping the nation of customers interested in installing solar power on their roofs, utilities are rightfully concerned with the challenges this poses to their business model. The SIPA Capstone team was asked to propose and develop alternative business models for regulated utilities to enter the residential solar rooftop business in order to counter the threat to their market share posed by third-party solar developers.
The risk and vulnerability of a base case is too great. Therefore, two alternative models for regulated utilities to enter the residential DG solar space were analyzed: community shared solar and rooftop solar. The team concluded that the model where the utility invests in and owns residential rooftop solar installations meets the majority of stated client criteria. Such programs could potentially slow down the penetration of third-party developed solar installations as well as net metering. However, this model will most certainly encounter significant opposition from regulators, legislators and solar advocates, requiring the utility to capitalize on its existing favorable relationship with the Public Utilities Commission to implement this model.
This project has grown out of the expertise and insights of numerous stakeholders that the team interviewed from January to May 2014. Despite the conflicting viewpoints on the path the utility business model should take, most experts agreed that utilities currently have the opportunity to participate in the deployment of solar distributed generation. However, most of them also agreed that utilities should take a less defensive and more progressive approach, focusing on their strengths while allowing other stakeholders to participate in the deployment of solar distributed generation.