The Rocky Mountain Institute (RMI) has proposed an innovative Integrated Utility Services program that it says will allow utilities to embrace renewable energy sources such as solar and wind and still be profitable. Is such a thing even possible?
In many parts of the country, traditional utility companies are openly hostile to residential solar power. A new report in the Bradenton Herald details how one former Florida legislator and solar energy advocate found himself an outcast in the state house, thanks to more than $12,000,000 in campaign donations to his colleagues and current governor Rick Scott by Florida’s four principal utility companies — Duke Energy, Gulf Power, Florida Power & Light and Tampa Electric.
“Why don’t we have a bigger solar industry in Florida?” asked Mike Antheil, a West Palm Beach lobbyist who represents solar companies. “The answer is simple. Every kilowatt of solar you produce on your roof is one less kilowatt that the utilities can sell you.”
The RMI proposal was developed for Fort Collins Utilities (FCU), which is municipally owned. Recently, the city council of Fort Collins voted unanimously to pursue initiatives that would achieve an 80 percent reduction of greenhouse gas emissions by 2030 and carbon-neutrality by 2050. FCU asked RMI to help it figure out how it could support those goals.
The answer, RMI says, is to fundamentally alter the way utility companies think of their customers and the electricity business. It says distributed solar energy and other renewables offer money making opportunities that most utilities currently ignore.
RMI points to SolarCity, the largest provider of rooftop residential solar systems in the country. SolarCity has figured out how to make money by leasing solar systems to customers and using the savings realized on monthly utility bills to pay for all or part of the leases. RMI says pro-active utilities should be competing with SolarCity, not fighting them.
One significant innovation they recommend is providing creative ways to finance home solar installations that let customers pay for them directly as part of their monthly bills. Many communities across America are doing something similar by allowing residents to finance their alternative energy systems by including them in their property tax assessments. Called a Property Assessed Clean Energy (PACE) program in some areas, it is also known as the Home Energy Renovation Opportunity (HERO) program in California.
Local tax authorities collect the tax revenue and remit the money owed to lenders directly. The plan eliminates any problems that may arise when a homeowner decides to sell because the cost of the solar system financing is automatically included in the property tax assessment. Municipalities make money by deducting a fee for handling the transaction. RMI says utilities could be doing much the same thing.
They also point out that utilities can send other things over their wires besides electricity. Some electric companies offer internet access — another potential source of revenue. Extended warranties and maintenance services could also be offered to customers to provide peace of mind for people considering a home solar system.
Data can also be transmitted via the grid. Utility companies could help customers monitor their electric usage and suggest ways to conserve, perhaps by upgrading their appliances to Energy Star certified models or upgrading basic components like windows, doors and insulation. Is there any reason why a utility company could not market such services and make a profit doing so?
As electric cars and home battery storage systems become more common, utilities could save money by integrating them into the grid to reduce smooth out the demand curve during the day. It costs utilities money to ramp up production for the early evening hours when demand is highest. Being able to draw on stored electricity would eliminate or greatly reduce that expense.
What the Integrated Utility Services model from RMI is really saying is that utility companies need to stop being part of the problem and start becoming part of the solution. The only constant in life is change. According to Green Tech Media:
This business model would help customers access a broader range of energy services — including efficiency improvements, distributed renewables, transport and heat system electrification, and demand response — in one comprehensive package, with monthly payments on the electricity bill.
The IUS model could, if designed correctly, align a utility’s interest in its financial health with the interests of customers who want to invest in efficiency and distributed solar, and make these investments appealing to a wider range of customers.
Or you could use the words of Bob Dylan to educate utility company executives: “Don’t stand in the doorway. Don’t block up the hall. For he who gets hurt will be he who has stalled.” When it comes to how America develops and utilizes its solar electricity resources, the times really are a’changing.
Photo credit: Green Tech Media