Can Utilities Champion Solar Power?


But First, Two Questions for You:

  1. Do you remember taking that one college course that drove you nuts because the subject matter was either too complicated or too foreign to learn within a limited time frame, thus forcing you to get a lower grade than you had hoped?
  2. Corollary to the first question, do you remember an instance when a teacher, professor, or tutor provided you help for a particular class that you were sure helped you achieve a better grade?

Relating question #1 to the real world scenario to fight global warming: let's just say that the consequences of not learning or adjusting to the laws of nature (i.e. our behaviors and economy) will be a lot worse than a lower grade on a transcript. Good thing that my colleagues and I at NRDC are quite able and willing to tutor (ref. question #2) key decision makers and folks working in the utility and utility-regulation sector in designing policies to achieve A+ quality to lead in the upcoming green energy decade.

Utility Revenue Decoupling 101

NRDC has long advocated for utility revenue decoupling, whereby utility revenues are decoupled from its sale of energy.  This fundamentally changes a utility's identity - going from an exclusive energy seller to energy system steward, as well as changing how utility regulators set the rules for utility compensation (e.g. "cost recovery" and "revenue allowance").  If decoupling is a brand new concept, then I recommend taking ten minutes to read an excellent case study and enhanced description on utility decoupling written in NRDC's spring 2006 NRDC On Earth magazine.

Decoupling Effects: Energy Efficiency

Utility revenue decoupling has been in play for nearly 3 decades in California with very visible positive effects on growing green jobs, incubating new technology, and saving billions of dollars on consumer energy bills. Decoupling has allowed energy efficiency to thrive in California because it not only removes the disincentive for utilities to promote using less energy, but redirects incentives (read: higher profits) for utilities to reach even greater levels of cost effective efficiency.  But can decoupling open new avenues of clean energy beyond energy efficiency?

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Decoupling Potential: Clean Distributed Power Generation

In the same way that decoupling removes the disincentive for utilities to sell energy for higher revenue gain; decoupled utilities will open new channels to partner with clean, distributed power providers (e.g. rooftop solar photovoltaics).  The Solar Electric Power Association (SEPA) has realized this opportunity afforded by utility decoupling and released a recent report describing how a decoupled utility model would favorably position both the utility and solar power provider to achieve long-term financially positive outcomes.

Co-author of the report, Mike Taylor, said of the Report's findings:

The impact of solar energy has been limited on utilities' revenue streams to-date. But with significant solar industry growth in the future, utility and solar industry personnel should begin to educate themselves about this emerging policy instrument that is being discussed on both federal and state levels.

The report also made several insightful analogies to other industries that have recently undergone major transformation.

Similar to the personal computer versus the mainframe computer or the cell phone to the wired phone, net metering represents a growing source of revenue loss over the medium to long-term.

While utility decoupling may not be an easy subject to master, I am encouraged by the efforts that SEPA has made in educating us on the virtues that we can all profitably benefit our environment.

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