Starting in April, solar users across Arizona will be subject to an additional rate charge of about $50 per month. This new “demand charge” will be based on a solar users’ peak power demand during the month and will be levied regardless of how much electricity is offset by their residential solar units.
The Salt River Project (SRP), one of the nation’s largest public power utilities, has been fighting for this and other renewable energy fees because of what the company argues is needed to cover grid infrastructure and maintenance costs. This final approval of the plan by the elected board, which also includes a 3.9 percent rate increase for all customers, actually dropped proposals to raise existing solar customers’ charges in ten years as well as a new charge on buyers of solar homes.
“Reliability is our most important product,” said Chief Financial Executive Aidan McSheffrey. “To retain the level of service our customers have come to expect from SRP, we must continue to invest in modernizing our energy grid to adapt to new technologies and that will improve reliability and allow for more customer choice.”
What is the progression of solar power going to be? Now that the solar panels themselves are getting competitive with traditional utilities, people hook up to the utility along with their solar and presumably buy less power from the utility, while maybe even sometimes putting power in for a credit.
From the utility’s perspective, they have all the same responsibilities, plus the added task of dealing with the incoming power. They probably buy it back at a reduced rate. And they are selling less power. This changes their business model, and it really should not be too difficult to come up with income models, given estimates of sales that companies like SolarCity include in their shareholder filings.
For this model, everyone still needs to be hooked up to the grid.
Once affordable batteries are available, the model will change again. This is kind of inevitable given the intensity and $ investment going on in battery research. Places that have abundant renewable energy, like desert areas, and windy areas, will see users drop off the grid completely. Not a few, but a lot, maybe majority in some places. As this occurs, the business model will have to be modified again. And again, as this begins, it should not be difficult for the utilities to come up with models for how their business is changing.
What will the end result be? Will there be haves and have-nots, based on availability of renewable energy? Will there be co-ops for small communities that are, for instance, down in a shaded valley, that set up large solar and/or wind community resources on the higher elevations above, and use the old utility assets for distribution? Or will the utilities find some way to remain relevant to consumers?