Is Solar Power Threatening U.S. Electric Utilities?

  • Like on Facebook
  • Share on Google+
  • Share on LinkedIn

Source: Thinkstock

A persistent warning light is flashing for U.S. electric utilities. The utilities — big and small, for- and not-for-profit — are facing serious disruptive technology. The old business models are in danger. The unlikely disruptive technology that is causing the trouble is rooftop solar power.

Back in the energy turbulent 1970s, solar was a gleam in the eye of environmentalists who dared to dream of renewable energy. It looked like a pipe dream. Very simple solar had been deployed to heat water in desert homes since indoor plumbing became the norm. Making electricity from the sun was many orders of magnitude more complex and it was, anyway, too expensive.

The technology of photovoltaic cells, which make electricity directly from the sun, needed work; it needed research and mass manufacturing. Hundreds of millions of dollars later in research and subsidies, the cost of solar cells has fallen and continues to go down. Today, solar certainly is not a pipe dream; it is looking like a mature industry. It is also a big employer in the installation industry. It is a player, a force in the market. But solar has created a crisis for the utilities.

In order to incubate solar and to satisfy solar advocates, Congress said that these “qualifying facilities” should be able not only to generate electricity for homes when the sun is shining, but also to sell back the excess to the local utility. This is called “net metering” and it is at the center of the crisis today — particularly across the Southwest, where solar installations have multiplied and are being added at a feverish rate.

More Articles About:

To contact the reporter on this story: staff.writers@wallstcheatsheet.com To contact the editor responsible for this story: editors@wallstcheatsheet.com

Yahoo Finance, Harvard Business Review, Market Watch, The Wall St. Journal, Financial Times, CNN Money, Fox Business