Selected tag(s): Utility Business Models

Big-Box Retailers Turn To Solar, How Can Electric Utilities Adapt?

Source: Costco

The electric utility industry faces the risk of declining revenues as more customers install solar panels on their homes and businesses.  Solar power currently supplies 2% of the country’s electricity needs, and is projected to grow to 16% by 2020. In 2013, solar panel prices for commercial installations fell 15.6%, from $4.64/watt to $3.92/watt.  To protect their revenues, some utilities are raising electricity costs for solar panel owners – but with mixed results.  Credit ratings agencies are also expressing concern.  Is there real cause for alarm or are these companies crying wolf?  Judging by one customer segment – big-box retailers – the threat is real.

The Solar Energy Industries Association (SEIA) ranks U.S. companies based on their solar energy capacity, and the top five companies on the list are big-box retailers:

  • Walmart tops SEIA’s list with 65,000 kW of solar power, which is enough to supply the annual energy needs of over 10,000 homes.  They recently installed ten new solar rooftop systems in Maryland, totaling more than 13,000 panels.  Walmart is the largest retailer in the U.S. and in the world by revenue, with 4,423 U.S. stores and over 10,000 stores worldwide. Walmart and EDF have been working together since 2004 to reduce the Walmart’s environmental footprint.  With more than 200 solar installations across the country, Walmart plans to have 1,000 solar installations by 2020.  Walmart’s goal is to eventually supply 100% of its energy needs with renewable energy.
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Net Metering And Rooftop Solar For The Utility Of The Future

John FinniganLike the tide washing upon the shore, new technologies are gradually eroding electric utility revenues.  These new products enable consumers to use cleaner energy and use it more efficiently.  Electric utilities worry this trend will ravage their industry just as wireless technology convulsed the telecommunications industry.  The utility industry urges its members to stem the tide by, among other things, increasing consumers’ net metering costs.

Net metering makes small-scale renewable energy, such as rooftop solar panels, more affordable by crediting the “distributed generation” owners for the excess energy they produce.  The electric meter measures how much electricity flows back to the grid from the distributed generation unit.  A corresponding credit is applied to the consumer’s monthly energy bill.  The Energy Policy Act of 2005 requires public utilities to offer net metering to all consumers upon request.

Why the new focus on net metering?  The cost for rooftop solar panels has fallen 80% since 2008, including 20% in 2012 alone.  Installed rooftop solar energy has increased by 900% between 2000 and 2011.  As consumers install more rooftop solar panels and net meter them, utility revenues will decrease. Read More »

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